Why Sainsbury's bought Amazon competitor

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SainsburysIan Nicholson/PA Wire/Press Association Images

Sainsbury's has announced its purchase of a stake in an e-book website called Anobii from HMV for £1. The site is a competitor to Amazon, and while it sells books for iPads and smartphones, it doesn't sell them for Amazon's Kindle device.

So why did it make the purchase, and what does this mean for e-book buyers?

The strategy

The aim, apparently, is to invest in the site - at which point it will hold 64% of the business. At the moment there are over 600,000 users worldwide, with a library of over 60,000 e-books. That's significantly less than Amazon's million titles, but the supermarket is said to be working with publishers to boost the number on offer.

It fits with Sainsbury's strategy which it states as a "commitment to becoming a key player in the digital entertainment market." It follows on from the launch of Sainsbury's Entertainment in November 2010, the purchase of online entertainment company Global Media Vault in October last year (which was already driving the Sainsbury's site) and the launch of a music download service in May.

The differentiating factor which makes the site attractive to the supermarket is that it is integrated with social networking sites. Readers can rate, review, share and discuss their choices with other Anobii members and across related social networking sites. Mark Bennett, Sainsbury's Head of Digital Entertainment, said: "Anobii's innovative use of social media is a clear differentiator."

The competition

The competition is clearly tough. There are no official figures for the penetration of each e-reader in the UK, but some have claimed that Amazon's Kindle has 80% of the market - which is a tough base on which to compete.

However, with Microsoft and Waterstones also investing in e-readers and e-books, some have speculated that it is only a matter of time before standardisation hits the market - where all e-books can be read on all e-readers - at which point the Anobii brand becomes more valuable.

What it means for us

What this means for us is that there is more money in the market, and more pressure for standardisation - which can only be a good thing for a consumer who will suddenly get much more choice about where they buy e-books from.

It also shows that Sainsbury's is refocusing some of its attention elsewhere. Some analysts highlight that its planned store expansion is slowing dramatically and that the 'space race' for stores on the ground may be coming to an end. For those concerned about the homogenisation of UK towns this may well be a positive development.

For those attached to their local, friendly bookshop, this may be a less welcome development.

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