Question

Read, and write a 1-page reaction on a single topic 400 WORD or more WITH YOUR opinion about the topic -Which you choose and whether you support or reject the idea you should use this word : I will discuss the ....... because I believe it is ......... > I also agree or desagree with the book that ......

Finding Growth and Profitability in Bookselling: Barnes & Noble and Amazon

Barnes & Noble and Amazon were the bookselling industry’s leading companies. Yet Barnes & Noble’s revenues were declining by 10 percent per year, and in the second quarter of 2015, Amazon had lost more than $0.4 billion dollars (see Exhibit 11.1). The bookselling industry was experiencing vast technological change with the introduction of e-books and tablets, and Barnes & Noble and Amazon had to figure out what to do next.

Data source: Quarterly financial reports Exhibit 11.1 Financial Performance of Major Booksellers, 2nd Quarter 2015 Barnes & Noble and the Superstore Leonard Riggio, Barnes & Noble’s founder, believed shopping was a recreational activity. Relying on the philosophy that people bought books based on emotion, he transformed bookselling into a giant industry.1 Too poor to attend college full time, Riggio had worked during the day as a clerk in the New York University bookstore. In 1965, he created a campus bookstore of his own. During the next six years, he established four other bookstores on campuses in New York City. In 1971, Riggio bought Barnes & Noble, then an unprofitable New York textbook seller, and in 1974 he opened a Barnes & Noble annex in Manhattan where he aggressively marketed low-priced books that had been returned to publishers. By 1986 he owned 142 college bookstores and 37 Barnes & Noble’s stores. When he bought B. Dalton from Dayton-Hudson, Barnes & Noble became the largest U.S. bookseller. Barnes & Noble’s main competitor had been Borders, an Ann Arbor, Michigan, chain.2 At the time, Walden Books was a part of Borders. Kmart had bought Walden in 1984. In the late 1980s, B. Dalton and Walden owned more than 600 mall-based stores. Borders pioneered the concept of the bookstore as a superstore. Barnes & Noble was an aggressive follower. The son of a professional boxer, Riggio learned from his father to be quicker on his feet and more nimble than his opponents. 203

Barnes & Noble acted more quickly than Borders and expanded more rapidly than Borders. The superstores had a special atmosphere. They were meant to serve as gathering places for people. They tried to get people to linger with comfortable seating, coffee to drink, and late-night hours. Some stores were decked out like small or full-scale libraries. Most had comfortable chairs and writing tables. They hosted readings by famous authors and other events. They played pleasant jazz and classical music in the background. The stores made an effort to build a sense of community. Advertisements featured pictures of literary greats like Hemingway and Virginia Woolf. Barnes & Noble, in particular, tried to create a literary climate. It paid a great deal of attention to décor, layout, furniture, display, signage, and selection of books. The special atmosphere meant that customers spent time browsing, and of course, the more time they spent browsing, the more they bought. Customers bought twice as much merchandise at a superstore as at a mall-based store. Barnes & Noble chose about 50,000 titles to display at each superstore. Local managers adapted the rest of their selections to local tastes. The result was that the typical store offered about 175,000 titles packed into 30,000 square feet. The competition between Barnes & Noble and Borders was fierce. They were in a race to see which would expand most rapidly. Both feared that Walmart and massmarket retailers would take away their business. Kmart spun off Walden in 1995 because it could not keep up. In that year, Barnes & Noble and Borders captured about one-quarter of the U.S. market for books, with Barnes & Noble having a market share of about 15 percent and Borders having a market share of about 10 percent.3 The focus of both companies was on aggressive expansion. The number of superstores in the United States kept growing. It jumped to nearly 800 in the mid1990s. Many independent bookstores could not keep up and folded. Barnes & Noble and Borders were focused on the competition between them and their commitment to continued expansion. When Amazon.com began operations in 1995, neither company paid much attention.4 Barnes & Noble’s goal was to expand at a pace of about 100 new stores per year. Yet by 1997, the estimate was that there were several hundred online booksellers operating on the Web and that, by 1998, they already had captured 2 percent of the adult book market.5

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Amazon and Internet Commerce Jeff Bezos, the founder of Amazon, was a summa laude graduate of Princeton in 1986 with a degree in computer science.6 He had worked for a telecom start-up and a hedge fund. Seeking to begin a business of his own, he examined 20 possibilities for Internet commerce before settling on bookselling. He understood the opportunities in books to be high because the industry was very fragmented and because Internet selling offered many advantages over conventional book stores, including enabling larger selection, greater inventory turnover, higher sales per square foot, and higher sales per operating employee. Bezos moved from New York City and started his business in Seattle, Washington, to take advantage of the software talent and proximity to Ingram’s large bookstore and electronics wholesale warehouse in Oregon. Before building its own warehouse complex, Amazon relied on Ingram. There also happened to be no state taxes on retail purchases in the state of Washington, which made Internet sales more competitive with retail. To begin operations, Amazon had to innovate. It had to pioneer in the development of software for Internet shopping. It created the look and feel of an Internet shopping site that now has become common. It provided information about the books it sold, posted author interviews, offered free book reviews, and gave links to other sites and features. Amazon spent vast sums of money on research and development (R&D), in 1999 obtaining a patent for its oneclick technology, which allowed customers to order from its site with a simple click of the mouse instead of going through several steps. In contrast to a physical store, which had fixed times when it opened and closed, Internet shopping could take place at any time of the day. The venture capital firm Kleiner Perkins Caufield & Byer invested $8 million dollars in Amazon to help it get started, and the business grew rapidly. In less than a year, Amazon had nearly $1 million in sales. Repeat customers provided more than 50 percent of its business, and the average transaction was greater than $50. Technical and business books made up a high percentage of the early orders. The company went public in 1997, and its market capitalization rose to $560 million on the first day. Bezos suddenly was a multimillionaire because he owned 42 percent of the stock. Investors continued to have confidence in Amazon’s business model year after year, although Amazon did not report that it was profitable, and it was not clear when it would be. The company stayed afloat by means of the positive cash flow it generated. Customers paid Amazon with credit cards; Amazon collected the sale price within a few days from the credit card company, but it was weeks before it paid its suppliers. Barnes & Noble launched its own book-selling website in the spring of 1997.7 The website featured personalized book recommendations and deep discounts every bit as good as Amazon’s on most items. Barnes & Noble used its brand name to capture leadership in the general interest and fiction categories. Because of its

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warehouses and greater experience in shipping books, it tried to beat Amazon’s delivery times. It built new warehouses, in Atlanta and Reno, which it added to its existing warehouse in New Jersey to ensure prompt distribution. It also built its own version of the one-click technology, which it called “express lane” ordering. However, the company was not able to seamlessly integrate brick-and-mortar operations with the Internet, which permitted Amazon to make the claim that it, not Barnes & Noble, was “earth’s biggest bookstore.”8 Since 1970, Barnes & Noble’s slogan had been that it was the “world’s biggest bookstore.” Barnes & Noble sued, arguing that Amazon was not a bookstore at all, but a book broker. Amazon, in turn, counter-sued, and it sought an injunction against Barnes & Noble for stealing its one-click technology. In 1999, Barnes & Noble had an IPO, which spun off BarnesAndNoble.com, its online business, as a separate company. Bertelsmann, a German mass media corporation, owned 36 percent of the new company, Barnes & Noble owned 36 percent, and 36 percent of the shares were sold to the public. One month before the spin-off, Amazon took a number of aggressive steps to counter any success that BarnesAndNoble.com might have by adding 1.5 million more titles to those it already listed, introducing a personalized book recommendation service, and starting to sell bestsellers at a 50-percent discount. The 50-percent discount was especially galling to BarnesAndNoble.com, which was forced to match the discount and thus sell books at cost. Amazon’s aggressive moves had their desired effect. The stock of BarnesAndNoble.com climbed just 27 percent on the first day of the IPO, a huge disappointment in an era when stocks routinely doubled or tripled the initial asking price. Amazon was beating BarnesAndNoble.com on the most important Internet criterion: “eyeballs.”9 It had 8.4 million registered Internet customers compared to BarnesAndNoble.com’s 1.7 million, and its Internet market share was 75 percent whereas BarnesAndNoble.com’s was 15 percent. Barnes & Noble made an offer to buy Amazon’s Oregon supplier, Ingram’s Book Group in 1998, only to be rebuffed because of antitrust scrutiny

Answer 1

Amazon has implemented and new brick and mortar store in New York to provide an enriching experience to its customer by entering the store and buying the books.

Amazon was previously only dealing in online books as well as e-books but since 2015. Amazon has entered the means to market by opening a store in New York. By targeting on the tourist as well as the royal Shoppers who directly experience and ability in shopping in person.

Amazon's main go to market strategy includes that day off physical shopping that is given by some store. By actually looking at the book while shopping them is one of the best feelings for a book buyer.

Amazon's Retail store is very profitable and generating good profit for the Amazon. This book store also provide a physical identity for the company in the eyes of the customer which directly improve the overall brand image between the society as well as the customer.

Company is dealing in brick and mortar store since 2015 in Seattle. After setting up their First Source company plant out to take 13 more stores in United States of America. By setting up multiple stores company has started traditional book store which is directly related to people as well as the society it is located in.

Amazon Book Stores are doing very good and their generating expected revenues from the stores. Customers are also happy to see their books in physical form rather than ordering online. By implementing different task to the organisational structure of Amazon brick and mortar stores, amazon has successfully started a traditional system.

3 business strategy with which Amazon can improve the brand value are as follows

• Creating an on ground ad campaign

By creating an on ground campaign just I hate the store in Seattle as well as other cities of United States Amazon can easily create and maintain strong brand identity by going into the people and telling them about the book store they open as well as advertising their brand.

• Getting direct interaction with customers

By providing direct services to customers Amazon brick and mortar store would be very helpful in interacting with them. Interaction would leave a positive impact on the customers and provide a positive brand image as well.

• Improve corporate culture

In house culture in the brick and mortar store of Amazon good leave a direct effect on the customers who are shopping inside the complex. By maintaining good cultural diversity as well as working environment Amazon can easily build a clean brand image among its customers.

From selling online to coming on the offline store was the main need for Amazon. Amazon has successfully analyse the offline market and created it store in various major cities of United States of America. Maintaining a strong brand identity among its customers Amazon has easily get the credibility and became a mainstream provider of books.

Company started a new inventory system specifically for their stores and forecasting the need of available books for the customers. By improving the overall supply chain management for the specific set of stores company implemented the amazons online strategies in their stores which help them creating a better environment for the management system. By increasing the number of adopted data from the service as well as providing coupons in exchange to filling up the service for the amazon.com, amazon has successfully implemented the customer understanding as well as data management.

By listening to the voice of the customer using different surveys as well as providing platform to its employees to be on a ground store for interacting with the customers is one of the main strategies of Amazon to be in the mainstream market.

Be specific changes made Amazon as one of the most promising books provider as the brick and mortar store industry.

This specific innovation of Amazon has disrupted the Barnes and nobles market, as the direct competition was Barnes and nobles as well as other Book Stores which are directly dealing in books in the mainstream market. As the Amazon came into the light it's huge inventory as well as book selling system turns offline from online and this specific provision of books created a very efficient system.

The system has successfully adopted the new environment and disrupted the business of other market competitors by a large margin.

Barnes & Noble's Marketing Strategy

Barnes and noble is one of the biggest book stores in United States . It is the only long lasting book store chain in the united states.

Barnes and Noble's strategies are as follows.

• Targeted customers.

Barnes and noble has targeted their customers and they have been very succesfull in it . by using diffrent market strategies these barnes and noble has succesfully integrated their sytem to adopt according to the customers.

They are spanning from the shop related stores to the online book stores.

• Value in products and competitive advantages

B&N has always given the value for money products and have provided an excellent quality. The products which are not upto the marke are rejected from the stores .B&N provides an excellent platform to read and buy the book as they have lasrge number of offline stores.It also provides toys and other educational materials for the events and also does gathering and other services.

Because I believe that implementation of new technologies are definitely driving a change for Barnes and Noble as well as its competitors. Barnes and nobles is changing its way of operation in the respective environment, other organisations and competitors are also having similar efforts which is creating an impact on the technological orientation of both of the organisations. Barnes and Noble definitely have an advantage due to its extensive availability of books and database which could be used positively for the organisation.

P.S.- Please leave a comment if any explanation is needed.