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Kindle will now go on sale in Waterstones. Photograph: Bloomberg
Kindle will now go on sale in Waterstones. Photograph: Bloomberg

Waterstones deal with Amazon puts Kindle and ebooks instore

This article is more than 11 years old
Waterstones will sell Kindle e-readers for the first time and offer free Wi-Fi, so customers can buy a book or download it instore

Waterstones has announced a surprise tie-up with Amazon that will enable shoppers to pluck ebooks as well as physical books from its shelves.

The companies did not reveal the terms of the deal, but Waterstones said it was planning a digital revolution in its stores, with Kindle e-readers on sale for the first time and free Wi-Fi, so customers can choose between buying a physical book or downloading it there and then. It is also opening instore cafes as part of an upgrade of the 30-year old chain.

Its managing director James Daunt, who once described the website as a "ruthless, money-making devil", struck a more positive note, calling the new venture an "exciting prospect".

"We needed to solve the digital question," he said. "We think this makes the Kindle experience better as you can now read digitally and enjoy the pleasures of browsing in a physical book shop."

Signalling his commitment to move with the times, Daunt posted a YouTube video explaining the rationale for the deal.

The announcement came as a surprise because Waterstones was thought to have been in talks with US bookseller Barnes & Noble over using its Nook device. Daunt described the "Kindle family" as the "best digital readers" on the market and said the retailer had left it too late, and did not have the resources, to develop its own technology. WH Smith has gone with rival gadget Kobo.

A partnership with Amazon had seemed unlikely as the success of its heavily discounted book offer is judged to have been at the expense of Waterstones which is the last "range" bookseller – the largest of its near-300 stores stocks 200,000 titles – of any scale left on the UK high street. Daunt, the founder of Daunt Books and a former banker, was parachuted in to lead Waterstones last year after it was sold by HMV to Russian billionaire Alexander Mamut for £53m.

Philip Downer, a director at retail consultancy Front of Store, said the deal was a "big surprise" for the book trade: "It's a huge disappointment really. There are alternatives out there. Waterstones falling into the arms of Amazon feels like a victory for Amazon." Downer said an alternative would have been for publishers to remove software locks, called digital rights management, so readers could switch more readily between retailers and e-readers. "That would do a lot to break down the wall of the walled gardens and create a diversity of players to compete," he added.

Daunt denied Waterstones was "forsaking" the physical book: "Digital is very much an adjunct to the reading of physical books," he said. "They in no way replace the pleasure from having a bookshelf at home, and the tactile experience of reading a physical book. This will complement and strengthen the traditional attributes of the bookshops to which the company remains fundamentally committed."

Mamut is ploughing "tens of millions of pounds" into the store refurbishment programme which will see roughly 100 of its stores refitted this year. The new look stores will feature dedicated digital areas, likened to the Apple store, where customers can test out the different Kindle models and receive tutorials from staff. The exact details of the collaboration are still being thrashed out but ideas include "Kindle Bundles" – giving discounts on the ebook version of any hardback that a shopper bought – and an online digital library that would let shoppers browse through any title stocked by Waterstones. The retailer will "get a cut" when a customer buys a Kindle ebook using its Wi-Fi connection.

Amazon founder and chief executive Jeff Bezos was full of praise for the book chain. "Waterstones is the premier high street bookseller and is passionate about books and readers – a dedication that we share deeply," he said. "We could never hope for a better partner to bring together digital reading and the physical bookstore."

Amazon is, however, a controversial player in the books industry. Its dominance has seen it taking on the role of retailer, publisher and even librarian, causing both publishers and retailers to complain that its aggressive pricing is undermining the success of the industry as a whole. In its most recent results Bezos boasted that 130,000 titles were now exclusive to the Kindle store and that its "Kindle Owners' Lending Library" was also proving popular.

Last month the Guardian reported that Amazon.co.uk paid no corporation tax on the profits generated by last year's British sales of £3.3bn – and is under investigation by the UK tax authorities.

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