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Amazon vs Barnes & Noble: The Battle of the Bookstores

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

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Amazon vs Barnes & Noble: The Battle of the Bookstores

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  1. Amazon.com vs Barnes & Noble: The Battle of the Bookstores GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  2. 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"

  3. Amazon.com • Founded in 1994 in Seattle • Virtual storefront on the internet • No physical stores • 2 warehouses • 1600 employee • 30 million cumulative customers • more than 3.1million titles in 2000 • Since 1994 no profit GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  4. Barnes and Noble • Established in 1873 • Holding company • Barnes&Noble • B.Dalton(Scribner Bookstore, Doubleday Bookshop) • GameSpot Inc. • Launched Barnesandnoble.com in May1997 • More than 1000 stores in 49 states • 32,000 employee • 7.9 million on-line customers • more than 1 million titles on shelves and 2.5 million titles inventory • All together profitable GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  5. Competitive Forces Model Substitute Products & Services New Market Entrants Other Traditional Competitors Amazon.com Barnes&Noble Customers Suppliers GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  6. Business Models & Core Competencies Amazon.com: a virtual store front • Leader in e-retailing • Superior knowledge in e-retailing • 1 to 1 marketing • Data mining • Cross and up selling • Low cost structure Inventory, overhead costs • Real time ordering system Reverse operating billing-payment system: $25 million float • More global www.amazon.co.ukwww.amazon.de www.amazon.frwww.amazon.co.jp GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  7. Business Models & Core Competencies Barnes&Noble: traditional company + e-retailing • Brand name • Long traditional social dimension • Offers more experience than shopping Open cafés, reading sessions for kids etc. chat auditoriums on web site • Barnes and Noble traditional business size • discount power (economy of scale) • Wide-spread distribution channels • Catalogue sales • Order by phone – pick from the store GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  8. Key Competitive Strategies&Investments Amazon.com : “GET BIG FAST” • Sophisticated IT • Inventory, billing and shipping systems • Easy to use, attractive web site • One-click patent • Collaborative filtering • Personalization of the web site • Bought Junglee Corp. and PlanetAll ( $270 million) GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  9. Key Competitive Strategies&Investments Amazon.com : “GET BIG FAST” • Expand in different product groups • Music, DVD, auction, health&beauty products, travel packages, toys, magazine subscriptions etc. • Internet Movie Database (www.imdb.com) • Drugstore.com • Heavy advertisement • Associate 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"

  10. Key Competitive Strategies&Investments Barnes&Noble: “PRICE-WAR DISCOUNTS” • Getting large in physical size (economy of scale) Before e-retailing • Bought bookseller B.Dalton • Added Scribner Bookstore and Doubleday Bookshop After barnesandnoble.com launched • Partnership with Bertelsmann AG ($200 million for %50) • Bought Ingram Book Group • E-commerce partner MSN Network (Microsoft) GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  11. SWOT Analysis of Amazon.com GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

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

  13. WHICH COMPANY WILL DOMINATE THE BOOK RETAILING INDUSTRY ? GROUP #7 - MIS CASE Presentation "Amazon vs Barnes&Noble"

  14. 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"

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

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