Amazon vs Barnes & Noble: The Battle of the Bookstores

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Amazon.com vs Barnes & Noble: The Battle of the Bookstores. OUTLINE History of Companies Competitive Forces Model in Book Retailing Industry Business Models and Core Competencies Key Competitive Strategies and Investments Viability of Business Models: SWOT Analyses - PowerPoint PPT Presentation

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  • Amazon.com vs Barnes & Noble:The Battle of the Bookstores

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • OUTLINE History of Companies Competitive Forces Model in Book Retailing Industry Business Models and Core Competencies Key Competitive Strategies and Investments Viability of Business Models: SWOT Analyses $1.00 QUESTION: Which Company Will Dominate?

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Amazon.comFounded in 1994 in SeattleVirtual storefront on the internetNo physical stores2 warehouses1600 employee30 million cumulative customersmore than 3.1million titles in 2000Since 1994 no profit

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Barnes and NobleEstablished in 1873Holding companyBarnes&NobleB.Dalton(Scribner Bookstore, Doubleday Bookshop)GameSpot Inc.Launched Barnesandnoble.com in May1997More than 1000 stores in 49 states32,000 employee7.9 million on-line customersmore than 1 million titles on shelves and 2.5 million titles inventoryAll together profitable

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Competitive Forces ModelOther Traditional CompetitorsAmazon.comBarnes&NobleNew Market EntrantsSubstitute Products &ServicesSuppliersCustomers

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Business Models & Core CompetenciesAmazon.com: a virtual store frontLeader in e-retailingSuperior knowledge in e-retailing 1 to 1 marketing Data mining Cross and up sellingLow cost structureInventory, overhead costsReal time ordering systemReverse operating billing-payment system: $25 million floatMore globalwww.amazon.co.uk www.amazon.dewww.amazon.fr www.amazon.co.jp

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Business Models & Core CompetenciesBarnes&Noble: traditional company + e-retailingBrand nameLong traditional social dimensionOffers more experience than shopping Open cafs, reading sessions for kids etc.chat auditoriums on web siteBarnes and Noble traditional business sizediscount power (economy of scale)Wide-spread distribution channelsCatalogue salesOrder by phone pick from the store

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Key Competitive Strategies&Investments Amazon.com : GET BIG FASTSophisticated ITInventory, billing and shipping systemsEasy to use, attractive web siteOne-click patentCollaborative filteringPersonalization of the web siteBought Junglee Corp. and PlanetAll ( $270 million)

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Key Competitive Strategies&Investments Amazon.com : GET BIG FASTExpand in different product groupsMusic, DVD, auction, health&beauty products, travel packages, toys, magazine subscriptions etc.Internet Movie Database (www.imdb.com)Drugstore.comHeavy advertisementAssociate program (140,000 participant web site)Spent $50 million in 1998 (1/4 of total revenue)

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Key Competitive Strategies&Investments Barnes&Noble: PRICE-WAR DISCOUNTSGetting large in physical size (economy of scale)Before e-retailingBought bookseller B.Dalton Added Scribner Bookstore and Doubleday BookshopAfter barnesandnoble.com launchedPartnership with Bertelsmann AG ($200 million for %50)Bought Ingram Book GroupE-commerce partner MSN Network (Microsoft)

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • SWOT Analysis of Amazon.com

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

    Strengths

    Being leader in e-commerce

    Strong in-house IT

    A huge database of customers

    Wide variety of products & services

    One-click purchase patent

    Low inventory and overhead cost

    (Inventory turnover=26 times)

    Current alliances

    Weaknesses

    High advertisement costs

    High delivery costs

    Low bargaining power on suppliers

    No profit

    Opportunities

    Future growth in internet

    Increase in usage of e-commerce

    Fast adaptation of technical innovations

    Decreasing advertising costs

    Threats

    Strong traditional competitors

    Traditional companies going online

    Increasing IT employee salaries

    Technological innovation

    Trade limitations

    Unpredictable future of e-commerce

  • SWOT Analysis of Barnes & NobleSTRENGTHS Brand name Physical presence Shear size Bargaing power on suppliers Affiliations Strategic Alliances Selling on Campuses Catalogue sales Internet expansion

    WEAKNESSES High inventory and overhead costs Being 2nd in e-commerce Low annual inventory turnover (3 times) No profit on e-retailing Lack of innovative IT knowledge

    OPPORTUNITIES Expanding in European Market Joining/purchasing another strong Internet book seller

    THREATS Other on-line bookstores Increasing IT employee salaries Technological innovation(e-books)

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • WHICH COMPANY WILL DOMINATE THE BOOK RETAILING INDUSTRY ?

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • Revenues and Expenses(in millions of U.S. Dollars)each color represents firms first column=revenues ; second column= expenses

    GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  • GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

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