This is a great observation. I think that every business looking at option 1 would run away in terror, as that would mean competing directly with Amazon. My local bookstores have pursued this to some degree out of necessity in covid times, but it doesn't seem sustainable, and I never got the impression that they prioritized it.
The bookstores local to me that have thrived have pursued the latter strategy with events, but primarily by having an opinionated selection that is a joy to browse. Amazon cannot compete on this for two reasons:
First, they cannot have a uniquely opinionated selection. They can have an "Amazon" selection, which will by its nature be the lower common denominator, or they can have a "personalized" selection, which will by its nature play to the customer's pre-existing interests and the generic global recommendation insights from Amazon's ML models. People do have lists on Amazon, but this isn't a profitmaking endeavour worth a full time commitment. No single perspective will be rich enough to engross the consumer for more than a minute or two, or call them to return regularly.
Second is that Amazon does not provide the physical experience of browsing physical books.
As you said, this still leaves the problem: even given all the above, why wouldn't someone just browse the in person bookstore and buy the books online? Thankfully, the survival of these stores shows that there enough buyers are "non-rational" to financially support the experiences they enjoy.
I don't think pivoting online is a suicidal move for many business, but it takes a different type of mindset to make it work. I'd like to highlight heatonist.com as an example of someone doing it right. It's a NYC based hot sauce boutique with a web presence. They create quality web content and use it as advertising (https://www.youtube.com/playlist?list=PLAzrgbu8gEMIIK3r4Se1d...). Their inventory is a curated list of high quality products. Their web reviews are all from people in the same tribe of hot sauce fans. Their website and shipping practices are all _good enough_.
There are many, many affiliate based places online to looks for book curation. It's really not that hard to discover interesting books.
Agree
I think that's the reason why IKEA stores are so popular
You get the full experience of living in a house and can have a feeling of the different setups
The furniture per sé are not great, but the experience is way more satisfying than the average furniture store, at least in Italy
$9,000
Easy answer: because they'll walk out with the book they were going to buy and the book next to it. We used to have second-hand bookstores that would send you catalogs that you would peruse (by subscription, you'd actually pay for the catalog), and you could order from that. It was worth the money, no recommendation engine comes close to browsing a well-curated store.
Edit: the parent comment's calcs are wrong too
Your points about alternative revenue streams by providing alternative services are directly covered in 20 year old tv show (black books) where a 'dysfunctional' bookstore either has them already implemented or trials them. For example, coffee is about keeping the customers in the store and browsing, people leave if they get hungry or thirsty. If you're actually deriving substantial profit from your hot drinks, then you're running a niche cafe, and you're in competition against legitimate baristas with fancier machines. It also takes up a large amount of space, and can cause volume issues otherwise.
Most secondhand bookstores are small, and items have a large volume-time footprint i.e. the turnover of any individual item is low. Get rid of all the low margin books for dining, and you ruin the browsing experience in multiple ways. You're just suggesting the secondhand bookstore should ditch it's secondhand books, and instead sell only high turnover popular stuff i.e. compete with modern normal bookstores, which are already doing beyond what you've suggested.
If you don't have a database of your inventory, you don't know what's selling and what's not, apart from hazy memories of employees and the amount of dust on the shelf.
Ultimately all physical retails spaces have the same common problem -- why should someone go into your store when they can get the same products online. This problem is even bigger during covid-19. I personally think there are two answer, one is to move the core retail business online, and the other is to create experiences people will keep coming back for. If you're making unique products it might be best to pivot online. If you're into the classic buy wholesale sell retail business than the online market can be very competitive.
A used book store can be a great place to have experiences. Authors can come and talk, you can have children story time, book clubs can meet, coffee shops pair well with book stores. You have to clear inventory to make space for experiences, but you can use it as an opportunity to remove inventory that wasn't selling anyway.