#146 - 10 to 20% more e-commerce revenue through physical stores! Thalia's success story

Joubin Rahimi

Brilliant that you're back for a new episode of insights! My name is Joubin, Joubin Rahimi, and joining me today is Hendrik Müller from Thalia. Hi Hendrik.

Hendrik Müller

Hello Joubin.

Joubin Rahimi

It's a real treat to have you here, because I'm a Thalia fanboy. I'll explain why in a moment. But maybe you'd like to say a couple of sentences about yourself, your role, and then we'll dive into the topic.

Hendrik Müller

Yes, very happy to. So first of all, thank you for having me here. A really nice opportunity. I'm Director Customer and Commerce at Thalia, so in particular responsible for the e-commerce business. Everything around the sales channel, everything around digital marketing, loyalty and social media are also part of that. In parallel also for the digital product, so our software development that we run in-house, for all digital touchpoints, but also for the omnichannel services. And relatively new is also the service, because service is also increasingly becoming a sales channel and goes ever deeper into the value chain. That's also my newest hobby, being responsible for that too, helping develop it too.

Joubin Rahimi

And I'm really pleased about Thalia, because everyone who's followed a bit of synaigy's history will know. One of our first customers was WBG. It was an association, actually a really lovely one, set up to reprint books that had been burned during the Nazi era. But people said: I want to have that book, and a thousand of them chipped in together and it got printed. I thought that was a lovely idea, and it was one of our first customers, and our children love Thalia. They're from Cologne and they also love the Remscheid Thalia. That's quite different. People from Cologne easily spend an hour in there and, well, we say they can have all the books they want. We always buy books, never pocket money, and they love it, always coming out with one or two books.

Hendrik Müller

That's exactly the goal we have. Ultimately, you can illustrate this well with children. With you we hit the bullseye, because every child who walks past Thalia shouldn't walk past, but should definitely come into the bookshop. That's exactly why we put so much effort into creating quality of stay, having reading and learning corners, and also trying to build many partnerships with schools and so on. Bringing this reading back up playfully, especially for children, in connection with toys – that's exactly what we want to achieve. Bricks-and-mortar quality of stay, and I think Cologne here at Neumarkt is actually a very, very good example of this.

Joubin Rahimi

And that's not easy at all. With Amazon a lot has changed in the book market. All the bookshops have diffused away and you haven't. You made it online and made it in bricks and mortar. What was your secret? Because now the world is changing so fast. But what was your secret?

Hendrik Müller

In fact we're already proud that we've outperformed the market too, and even compared to Amazon we haven't just won back market share, we're actually genuinely market leader in the German market. What's the secret? I think it actually lies in a very honest and very structured omnichannel approach. That means, many people always tend to view that quite critically, but for us it's not just a word written down somewhere, we actually live it, and you always see that with services like in-store pickup, click & collect, where we let the customer choose whether they want click & reserve and perhaps would rather have a chat with the staff member when picking up, or if on the other hand they're more the search customer, the target customer who wants to pick up, giving them the option to pick up this book, in the end, via a locker standing outside the bookshop. Those are the different models we see there, and ultimately for us it's also about digitalising this bookseller expertise, so not just algorithmic linking, but at the same time also intellectual linking, experience-based linking from our booksellers, and then in turn passing that on to our digital customers too.

Joubin Rahimi

Let's take the Cologne branch, with the café and the rooms, the break rooms, or didn't you call them break rooms?

Hendrik Müller

These aren't lounge areas, but spaces that also encourage people to linger.

Joubin Rahimi

Have you measured or do you know how that pays into omnichannel too? So are the Cologne fans also buying online at Thalia?

Hendrik Müller

It's actually a really fascinating question.

Joubin Rahimi

That would need measuring.

Hendrik Müller

As I said, you could say that for someone responsible for e-commerce, the truth lies only in digital. That is actually different, it really is different. Every opening we have anywhere, every new bookshop we open, automatically boosts my e-commerce revenue in that region too. You can say that quite openly, somewhere between just over 10 and just under 20 percent. That is already a simple, straightforward setup that I have there. And because omnichannel is genuinely not just a buzzword for us, as soon as we engage the customer across both channels, we often manage to increase share of wallet, achieve some cross-selling, upselling somewhere, ultimately not just getting more money out of the customer's pocket, but also delighting them with value-added services and good prices, with good advice too. That is at least the goal.

Joubin Rahimi

And earlier you also spoke about the community, that's not just one word, you actually have a completely different mission. So take us through it. I don't want to repeat what I've just learned, you can say it far better.

Hendrik Müller

What we saw is that a social media channel gave us back a new target group, one we'd struggled with for many years. So exactly this target group between 12, 14 to 29 was really, really hard to tackle. And TikTok, Booktalk, BookTok actually managed to bring so much movement into it, and that digital world too, we then managed to translate that into the analogue as well. Meaning, this supposedly digital target group buys analogue, i.e. printed books, and preferably in bricks-and-mortar stores too. A huge topic for us, and ultimately community means fo

Joubin Rahimi

Let me jump in here, my children don't read books digitally.

Hendrik Müller

Not digital.

Joubin Rahimi

Yes, that's absolutely books in physical form.

Hendrik Müller

And there are these lovely coloured edges now, or the signed books or similar. For us, those are really rarities that have extremely high demand too. So I don't know if you know this, but these coloured edges - your kids might be into that too. That's actually the hot stuff right now. They really enjoy going into town for that, spend several hours in the bookshop, and also, again, the social media cubes we have set up in Cologne, for example, are then used to share the purchase they've just made with their own fan base somewhere. So for us that's a real win-win. And to come back to community, we of course also play that strongly through external communities, let's not kid ourselves, but that's exactly the goal - to bring the customer to us too, ultimately from inspiration through to purchase, through to usage, reading, listening, having everything with us in the Thalia app. And on the other side, with Book Circle we're currently building a community. We've already piloted a lot, also the year before last we built a small community in Hamburg, always in the combination of digital and analogue, so also running events in the branch with merch, feeding this whole community regionally somehow. And the response was incredible. So we had such an influx during that time, certainly always for a genre that happened to be trending at that moment. But that's certainly one of our goals for the future - to have and build our own community and ultimately bring our readers into exchange within that community too.

Joubin Rahimi

They're scaling down here right now. And you're addressing, that's younger target group you address, not older ones really, where you'd say they read either way, they're used to it, you address younger ones and bet is paying off, that's my feeling, way you put it. Now you've got another new bet on top, toys, so experience, our kids are same age and when someone else has birthday, where do they go to buy toys, if not online? Because there are hardly any shops anywhere in city centre anymore.

Hendrik Müller

And that's, I think, the big problem. Especially in the toy sector, a lot of retailers are disappearing from town centres. And that's exactly where we want to go. We see a great symbiosis between children's books on the one hand and toys on the other. And that's exactly what we want to bring together even more strongly, these two ranges, and that's why we founded Spielzeit. The first shop has already opened in Lüdenscheid, and 40 further shops are currently being converted over the coming months and years, so that we convert them as well, and ultimately it's exactly as you just said, it's about fascination too, about exactly this online and offline thinking, this omnichannel thinking, making that tangible for toys too. And the success so far certainly proves us right, creating a quality of stay there too. We see lots of fascinated eyes among the children, lots of children who love coming to us, and on the other hand also good expertise for the next perfect gift. Maybe I can mention that too. The gift boxes, I don't know if you know them. A child has a birthday party, and ultimately such a gift box gets put together, and the invited guests come along and pick out the individual items themselves. Works brilliantly, I have to say. Works hugely well. Great story.

Joubin Rahimi

Playtime isn't really aimed at the parents, but actually at the children. Parents too.

Hendrik Müller

Yes, indeed the focus during playtime is more on the children. That's indeed correct and

Joubin Rahimi

That's mega smart. I mean, think about it, children don't distinguish between playing or reading. They have fun, and it doesn't matter whether it's a game or reading, or whether they read something and then play the things.

Hendrik Müller

And this creativity from reading can often be translated well into play. If we simply manage to offer a good, valuable alternative to playing on a PlayStation or similar, then we've actually achieved a lot

Joubin Rahimi

And that's also, I think, for the listeners, I want to pick this out again, to think about this target group and think how this target group thinks. A brilliant example of that.

Hendrik Müller

Thanks.

Joubin Rahimi

Yes, we'll keep watching this. I think it'll get even wilder here with the reduction, and I'd like to suggest we do a calmer second take sometime, if you have time and feel like it. I think we could dive much deeper there.

Hendrik Müller

We'll gladly do that.

Joubin Rahimi

Thanks for the time, and then good luck with Spielzeit and everything else you're doing.

Hendrik Müller

Thank you.