In the late eighteenth century, London-based businessman James Lackington revolutionised the way books were bought and sold. An innovative combination of technology and marketing was the driving force behind his success. Lackington used an early version of the disruptive model Amazon is deploying now to dominate e-commerce.
Amazon’s disruptive strategy has made it the most valuable company on the planet. How does it compare to what Lackington did – and to what all tech businesses should be doing? We’ll go through the five steps that made Lackinton’s model so uniquely disruptive.
1. Never overlook technology’s potential
The technology which made Lackington’s new business model possible had been around for centuries, but in all that time, no bookseller saw its true potential. The first printing press with moveable elements, which allowed for the exact reproduction of texts, was invented in China around the year 1040. (This version was, admittedly, made of porcelain, which was not the most practical.) Yet the first metal moveable type printing press was invented by Johannes Gutenberg in Germany around 1450.
Gutenberg’s innovation allowed for the swift and accurate production of books on a mass scale. Nevertheless, it wasn’t until Lackington came along that books were sold in large numbers for the general public to enjoy. So how did he do it?
2. Find the right business model
Was it Lackington’s strategy that was so special? Or should we be asking what his competitors were not doing? Let’s take a look at his business model:
1. Buy surplus stock in bulk
2. Drastically reduce prices
3. Sell for cash to the public in high volume
Lackington bought books on the cheap in huge volume, dusted them off, then sold them directly to the public at rock bottom prices that were inconceivable to his competitors. His motto? Small profits do great things. In all its simplicity, this model proved devastating to his opposition, who were stuck in their ways.
3. Respond to the market
Before Lackington, it was common practice for booksellers to buy a lot of remaindered books and then destroy as much as three quarters of it. By creating an artificial scarcity, they were able to maintain high prices. In doing this, they prevented the rising middle class from gaining access to affordable books. Literature remained a luxury item reserved for the wealthy.
Lackington started out life as a cobbler’s apprentice. He fought the odds to teach himself to read. His life experience allowed him to identify the demand for books in the lower end of the market. Thanks to the Industrial Revolution, the middle classes had more spending money and leisure time than ever. A perfect opportunity to sell some books, right? Not according to his competitors. As Lackington put it in his memoirs:
“Thousands [. . .] have been effectually prevented from purchasing (though anxious so to do) whose circumstances in life would not permit them to pay the full price, and thus were totally excluded from the advantage of improving their understandings, and enjoying a rational entertainment.”
Lackington realised that there was a huge opportunity in the convergence of a large surplus of stock and an emerging untapped market. He positioned himself to be able to exploit the full potential of production enabled by the printing press. Instead of destroying the surplus, he offered it to the newly literate middle class, in a way that suited their unique needs.
4. Find the right platform
Whether you’re an ecommerce giant or a bookseller, the right platform is indispensable to business success. In Lackington’s case, he created an aspirational space that combined shopping with leisure. His flagship store in London, the Temple of the Muses, became synonymous with his brand. The huge building became a tourist attraction, where the likes of John Keats spent their days in the lounging rooms. Lackington even published the first edition of Mary Shelley’s Frankenstein from his Finsbury Square store.
5. Market the new model
In spite of celebrity authors’ endorsement, Lackington’s new model took some getting used to. Perhaps surprisingly from a modern perspective, there was opposition from religious quarters. This caricature from 1795 shows Lackington outside his London store, stepping on the Bible to get into his coach, which has his “small profits” slogan on it. A dog strains over his autobiography.
Yet these symbols of Lackington’s presence in London indicate exactly why he was so successful. His Temple of the Muses was iconic. What’s more, he was truly modern in his understanding of personal branding. Lackington really did go around town in his coach with that slogan on it. And he invested precious time in writing his own marketing material, including a ground-breaking catalogue of around 12,000 items, and the memoirs in which he defended his business practices.
A licence to print money?
Lackington’s approach to business embodied everything the man himself stood for. He united market insight with the power of technology, and a timely strategy to engage the public. It made him rich, and brought books to the masses, just as he had envisioned. As he described in a letter:
“[T]he sale of books in general has increased prodigiously within the last twenty years. According to the best estimation I have been able to make, I suppose that more than four times the number of books are sold now than they were sold twenty years since. The poorer sort of farmers, and even the poor country people in general [. . .] now shorten the winter nights by hearing their sons and daughters read tales.”
No matter how entrenched in the market your competitors are, there is always a next step to be taken. Lackington’s life story teaches us that by persevering through hardship and resisting complacency, even the biggest industries can be shaken from their slumber. In technology’s ever-shifting landscape, your business could become the next Amazon.