Indigo Books and Music Inc.’s eReading revenue has fallen by nearly 60 per cent since 2013.

According to the company’s 2016 annual report, its eReading revenue has decreased  to 1.5 per cent of the company’s total revenue.In 2013, the company’s eReading revenue accounted for 4 per cent of its total revenue.

Senior Partner at J.C. Williams Group, John C. Williams, says, the decrease in eReading revenue is a pretty substantial drop.

The Toronto-based retail consultant says, “it’s more than worrisome, it’s a huge problem.”

Indigo acknowledges that eReading market is growing. In its annual report, the company warns that the increased retail competition may have a negative impact on revenue.

Increase in eReading market The dip in Indigo’s eReading revenue comes as more Canadians say they’re consuming books electronically.

In 2015, EKOS Research Associates released a report measuring the reading habits of Canadians. The study was conducted on behalf of the Association of Canadian Publishers, and concluded that almost half of Canadians, 48 per cent, reported spending more time reading eBooks in the past year.   

Source: Public Opinion on the Value of Books in the English Language Book Sector, EKOS Research Associates Inc. 

Close to half, 45 per cent, said they access digital books exclusively on eReaders.

Kobo

Indigo has a retail partnership with Kobo, a Toronto-based eReading service with over 12 million readers in 190 countries.

The company’s eReading revenue is based on revenue from Kobo eReaders, eReader accessories, and Kobo eBooks.

According to the 2016 annual report, Kobo is “now the world’s second most popular eReader.”

A spokesperson for Indigo declined to comment on the state of eReading revenue. She deferred all comment to the company’s recent annual report.

Williams points to competitors, like Amazon, who have cornered the market, as a reason for Indigo’s declining eReading revenue.

Amazon, ‘They play a better game.’ 

He says Amazon has a ‘superior’ model.

“The sheer amount of books covered by Amazon, the pricing and the speed, everything about their website, the overall experience is just better.”

He says, “they play a better game.”

“When somebody’s chewing away at your core product, you have to look at creating a different playing field and play a different game,” he says.“When you’re attacked, you have to diversify.”

Williams says, that’s what Indigo is doing by diversifying its offerings. He says you can see it. Some Indigo stores have shifted to focus more on lifestyle, gift, and department store model.

“They are diversifying into broader assortments, including decor and toys,” says Williams.

Indigo 2015-2016 Stock Market Chart 

Indigo 2015-2016 Stock Market Chart by kathleennapier on TradingView.com

Source: TradingView

Diverse offerings

While eReading revenues have dropped by close to 60 per cent, general merchandise revenue has grown.

It’s increased by more than 10 per cent of the company’s total revenue over the past four years. Between 2013 and 2016, general merchandise revenue grew from 23 to 34 per cent of total revenue.

Since 2013, there has been a slow decline in print revenue. It’s decreased from 70 to 62 per cent of total revenue in the last four years.

Williams emphasizes that the increased competition from Amazon isn’t exclusive to Indigo, and eReading.

“This is going on in all commodities that Amazon is in. They’re just an amazing, amazing company,” he says. “They might just rule the world.”