To make a list of the most successful digital marketing firms inthe world, Amazon.com is probably one of the first names that would come to mind.In fact, Amazon was one of the world's first e-commerce companies that was founded way back in 1994.Now, since it's founding, Amazon has experienced enormous growth andit's currently one of the world's largest retailers.In 2016, Amazon's sales $136 billion and this number keeps growing.Amazon sells nearly everything, but it is especially dominant in the book category.Today, Amazon sells nearly four out of every ten books.As a result of Amazon's success in the book market, many analog based bookstores have suffered declining revenues andseveral bookstore chains have simply gone out of business. For example, in 2004, there were over 38,000 bookstores in the US.

Today, there are less than 23,000.That's nearly a 40% decline.So it's probably fair to say that digital booksellers suchas Amazon are the enemies of the traditional analog bookstore. Given this rather adversarial relationship,you may be surprised to learn that over the past year, Amazon has beenestablishing retail outposts in a number of college book stores across the US.

In fact, there was oneat the University of Illinois at the Illinois Union Bookstore.

Why would an analog bookstore welcome its biggest rival andallow it to set up shop inside its store?Could there be some possible synergies between the analog and the digital?

This store is located in the middle of our campus, a place where students cometo buy their textbooks or just relax with their friends over a cup of coffee.We're going to speak with Jim Trail.Jim is the operations manager of the bookstore.We're going to ask him about the goal of this alliance with Amazon and what sortof synergies he has seen between this merging of the analog and the digital.What sort of services do you provide forthe students, faculty and staff on campus?We are required by campus statute to carry all required designated textbooks, soif a professor wants something as an optional course material we do that.We provide, obviously, spirit gear for the campus.One of the things that we've been transitioning towards is our main level isreally kind of convert it into more of a service model.So we are the place that the university as a whole,all three campuses, has a contract with PNC Bank.So they're the official banks of the campus.Those people come here.We also have a partnership with iCard.So if you need an id or you need various other entry points.We work with iCard.Their location is in the back.A few years ago, we entered into a contract with Starbucks wherewe actually run the operation, we hired all the staff, we do the staff training,but we work at Starbucks' standards.So we don't really own it, but we also, we're in a partnership with them.Our latest model is of course the Amazon store.Get them delivery of course materials in the quickest way possible but alsomaybe alleviate some of campus mail issues that come about with residence halls. They've worked on several different campuses.One of the things that I think it's kind of a misnomer as far Amazon'sbusiness plan is that people assume that they're going to take overtheir campus bookstore.That's really not what they want.They're only two campuses where they do that.One is at UMass Amherst andone is at Purdue where there was no on-campus bookstore to start with.So those campuses felt, well, this is a way to serve our students andalso get an online presence.In most of the other ones, they are working as they work here.

They come in and they acquire a space.They tell us what they need, we tell them what we need out of this space andwe develop a partnership based on mutual benefit.Our main goal is really service to the students always.So one of the things we're able to get out of this contract is we've been tryingto get the funds together to make a major remodel on this building because it hasn'thad one since 1994.Amazon, we are paying Amazon back out of our agreements that they pay us.They basically did the building for us, they contracted with a general contractorbuilt to university standard, but we were able pay fora major rebuild that we wouldn't have been able to afford without them. We have mutual reporting.So we talked to them about the textbooks that we order.They gave us some insight on some of the things that are selling on their sites.And then we've actually brought in some new product lines andsome other things that students have shown that they wanted through amazon. Amazon has also increased their ability to do that.Amazon also enables the students here on the campus to get sixmonths of Amazon Prime for free to start off with andthen it's $49 a year after that for the four years that they are in college. That enables them to get to this drop off site where they have literally millionsof products that they can get same day.If you order by 8 AM it'll be here by 5 PM.So again, helping the students get, maybe not class success butalso some food items, some dorm items, regular supplies that they would need. Amazon made their bones in selling books.It's a way to attract those dollars back to us.Some of the things that are interesting about the university campus that are notreally the same as some other large universities is that academic freedom isextremely important to the professors here on this campus.Amazon just can't source some of the books and haven't been able to get that.We can still do that because we've had such a long-term relationship with them.I think that every time you have a new situation,there's a level of fear that you have with any business that'scoming into your location and then wants to take your lunch money so to speak.I haven't really felt that with Amazon when we've done it.But it's still obviously being a retailer; I'm in competition with them.I want to be able to do the best I can so it's made us up our game.One of the things I do think is interesting is we havea similar customer base but I don't think we have the same customer.What I mean by that is, a lot of the Amazon customers are looking forthe convenience items.They're looking for things that they can get to their dorm, comfort items.We're more the nuts and bolts store,where if they need specifics on a textbook, we're the people they come to.It gives us a chance to show off our expertise.I'll be honest, I've shopped Amazon, I've done it.I don't think there's a person probably in America who has an Internet connection whohasn't at least been on the Amazon site looking for something that they can buy.If you can find a way to attract those dollars and then work your businessinto those areas, I don't see that, it's not beneficial to both sides.

We just came back from the Independent College Bookstores Association recently,and this was the hot topic, this is what everyone was talking about,because they are going to so many different locations. There is a level of fear.There is the idea of why would you do this, as you said,the wolf in the hen house idea.But the issue is, again,I think that you have to find out what you're comfortable with.If you are comfortable with staying as the bookstore on your campus andyou believe that your model is the best, I think that you need to do that.You need to reinforce that and you know your customer better ninetimes out of ten than anybody's who's going to come in from the outside.But you also have to recognize the realities of the Internet.We have a website, we've tried to innovate and we've tried to do these things.I don't Amazon on their success in any way andI don't think anyone on this campus does they're good at what they do.I think I am good at what I do, and we're in the same business realm,but I don't think we're in the same business.One of the questions that was asked at the end of the discussion, that my boss andone of the California stores who've brought them on campus, is if you knew.Then, what you know now, would you do it?For Todd and I, it's an absolute, yes, we would do that.For some of the other managers, it's a, I don't know.I think they just haven't sorted it out exactly how they want to do things.I think that you have to be willing to adapt to the new situation.

They can get everything from Ramen to beard trimmers I mean, it's really an eclectic mix of what they can get.Really they can get anything that's on the Amazon site delivered here.They do have a narrower view of that, butit literally is still millions of products that they can get same day delivered.They are concentrating again on the dorm supplies, and the food, and the hot plate,

Microwave or fan type of idea versus the larger, books or things like that.So you can get anything delivered here that you would like,as long as they can hand it to you, if you carry it out of the store.You can't order a couch here but you could order cushions or pillows.One of the things that we got asked is well;can I have it delivered here instead of my apartment?Absolutely you can, and it is a more secure location.I think it's the wow factor, really,of them coming in, because Amazon really does a good job.You get to pick your window on when you're going to pick it up.They send you the contact information.Save, pick your time, you go over, and scan it.Locker pops open.It's amazing the smile that it makes on people's faceswhen that locker pops open just from scanning your phone.The other thing that students really like are the returns.Because really, it is a painless process.We've had to go through it a couple of times where obviously you getsomething online.It's not everything that you expected.

It's smaller or bigger If the tool doesn't work the way you expect it to,you just bring it back to them, they package it up for you.And as long as you have the receipt you can drop off the item, they'll put it inthe box and put it on their truck and get it back to their location. It's absolutely critical.People vote with their feet, that are something that I try andimpress to all my staff, and has been impressed to me from the very beginning.If a person nine times out of ten will not come andtell you that they have a complaint.They will not tell you they had a bad experience.They will not come back though.I try and go and I try and look at Yelp every couple of days.And I don't look at the good reviews;I always look at the bad reviews to see what they are.And then Not to Big Brother-ish about it, I try andengage the customer in ways that, to that we can do better.How we failed them and admit that you failed them.If you admit that, most people will give you a second chance.If you try and get defensive and say these kinds of things, any kind of excuse theywill not be responsive to you and they won't come back.Again, if you want someone to spend their dollars with you,people have hundreds of choices.People have Amazon, people have 100 different places.They have all these other places that they can buy their booksthat may be as good as us.But I think the one-to-one contact and being able to get people to come intoyour store on a regular basis and feel comfortable working with you, andfeel comfortable enough to tell you when you've screwed up I think that'sinvaluable, that's one of the things that Amazon does spectacularly well, andI think most businesses should emulate.I'll be one of the first people to admit that I'm kind of a Luddite with things;I prefer to go into stores.I don't prefer to spend a lot of time in stores. And it really has been overall a win, win. Sometimes it's taken longer for people to see the benefit, butI think it's been a good experience for us.We're at bookstore.illnois.edu that's our site andthen illinois.amazon.com.

First, of the various factors that Jim discussed,which do you believe were most important from a strategic perspective;in terms of allowing Amazon to establish this pick up location.

Second, what impact both good and bad, you believe this alliance will haveupon the future of the bookstore in the few years down the road.

Third, what did you learn from this video caseabout the synergies between the digital and the analog.