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Retailer goes for e-growth
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January 27, 1999: 11:14 p.m. ET
At barnesandnoble.com, the strategy is to build revenues first, chief says
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NEW YORK (CNNfn) - Barnes and Noble, the nation's largest book retailer, finds itself in an unaccustomed place on the Internet -- a distant No. 2 to an e-commerce upstart, the chief executive of barnesandnoble.com acknowledged on Wednesday.
But even if the conventional retailer was a little late getting to the party, it is still early in the Internet party, Jonathan Bulkeley said on "Moneyline News Hour with Lou Dobbs."
While profits may still be years away, the company is growing its revenues rapidly, and that growth will lay the foundation for future profits, Bulkeley told host Lou Dobbs.
Here are highlights of that interview:
LOU DOBBS: You've got quite a market going. You're getting beaten by an upstart on the Web. What's going on?
JONATHAN BULKELEY, CEO, BARNESANDNOBLE.COM: Well, Barnes and Noble (BKS) was a little late to the party, but the party just started a little while ago. So we're the only retailer in the world that is in the top 25 Web sites.
DOBBS: You're the only retailer in the world -- in terms of traffic on your Web site?
BULKELEY: Correct. In the top 25. We're No. 24, but we broke the top 25 this month for the first time.
DOBBS: And is Amazon.com (AMZN) quaking?
BULKELEY: They're No. 14.
DOBBS: Are they quaking at this?
BULKELEY: If you look at some of the numbers over the last few months, I think we're actually gaining market share on them, which is good news.
DOBBS: Gaining market share -- but one of the things that has more traditional investors scratching their heads -- they look at Amazon.com, Barnesandnoble.com. They're waiting for you to go public. Are you going to go public?
BULKELEY: I can't really comment on that right now.
DOBBS: Well, you were a year ago. The market conditions have switched. I mean, would it seem an interesting possibility?
BULKELEY: It would seem an interesting possibility.
DOBBS: All right. I'll go with that, Jonathan.
BULKELEY: You can't push me that far.
DOBBS: I hear you. But let me ask you -- with that situation in which we're looking at the prospect of no earnings for three to five years, in some cases, what makes you guys so intriguing to investors?
BULKELEY: I think first and foremost is top-line revenue growth. These businesses are growing -- if you look at e-commerce businesses, and ours in particular -- 300, 400 percent per year. It's hard to grow a business. If you look at any industry and you said, we're growing at 400 percent, there aren't too many that can grow at that level and be profitable. So we're really investing in the future.
DOBBS: You're growth ramp is impressive -- the industry itself, yours as well. At the same time, we're seeing other competition enter the marketplace. Buy.com (BBY) selling books. You're seeing other brands move in selling books and videos.
What kind of complication is that for your model?
BULKELEY: Well, I always believe (you) look at the real world and figure out what's going on, and then that translates to the virtual world. And Wal-Mart (WMT) sells books and Kmart (KM) sells books, but it doesn't crush Barnes and Noble's business in the retail business.
Online, lots of people will sell books. What I'm trying to do with barnesandnoble.com is create the best book site in the world. For book lovers, I want it to be the best place to shop, and I think we're almost there.
DOBBS: And at this juncture, how much -- give us your projection on market share and revenue growth over the next couple of years.
BULKELEY: Well, it's tough to pinpoint. We're at 15 percent now. And during the holiday season, which was a six-, seven-week period, we did $17-1/2 million in sales. I see exponential growth from here over the next five to 10 years.
DOBBS: You have heard the jokes, just as we all...
BULKELEY: I've probably told some of those jokes.
DOBBS: You may have even told some of the jokes, Jonathan. But we talk about Amazon.com, we talk about Barnesandnoble.com -- they're losing money on each sale, but they're making up for it in volume. Where is the future? And where, more importantly, is the money?
BULKELEY: I did all of my shopping at Christmas online.
DOBBS: Right.
BULKELEY: Building a customer base, building that top-line revenue growth will pay off in the future. There's no question about it.
The players with the most customers and the most sales will be able to create economies of scale across the board and will be profitable. There's no question in my mind.
But for the next couple of years, it's growth. It's growth, growth, growth. 
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