Option 2) amazon.com vs. bn.com). Student will use the list of \"do\'s and don\'

Question

Option 2) amazon.com vs. bn.com).

Student will use the list of "do's and don'ts" from http://www.exante.ca/internet-marketing/website-top10-tips.html to compare the two sites, along with other criteria you might like to add.

Student will review the range of information resources and services used in the sites and the ways in which they are organized, de­signed, and presented.

Each student will write an APA style report (4 -5 pages, excluding cover page, table of contents and references) covering the following outlines:

How well the sites support the conduct of ebusiness.

Strengths and weak­nesses of the two sites.

Draw a conclusion as to which one you think does the best job of attracting customers to the website and retaining them once they get there.

Comment on how well each site:

Offers a fast and convenient shopping experience

Provides access to help or additional information

Selects desirable products and displays them and describes them in an attractive and easy-to­ understand manner

Describes its method for getting purchases to customers promptly

Uses online ads, affiliate programs, viral marketing, and email marketing

Explanation / Answer

Amazon, the world's largest e-commerce platform has been the role model for many new e-commerce websites all over the world. It's a common practice to generally copy the best to achieve successful results. However Barnes & Noble have won the hearts of millions of people by their efforts in e-commerce

As I began to read the case study, “Amazon.com verses Barnes & Noble: The Battle of the Bookstores,” I thought of how the Internet has offered opportunities for retailers to bring in more money. However, the Internet can also have adverse effects when too much money is invested in hope that a business will prosper. When a company decides to become a clicks-and-mortar store, they must make sure that their business models are able to adapt their business processes, create new business strategies, integrate new information technology, and re-organize their supply chain management

HOW AMAZON WORKS:

Amazon.com Using the Value Chain and Competitive Forces Models:

Amazon.com developed many competitive strategies in order to succeed in their market using the value chain and competitive forces models. Amazon.com produced a supply chain system and customer relationship system, which let them expand their business. To stand apart from Barnes & Noble, Amazon.com used the value chain model to increase the competition by broadening their inventory to attract a variety of different customers. Amazon.com learned that they would be more successful if they were to offer unique services and enlarge their market to provide more than books. By offering speedy online ordering and their collaborative filtering system that creates personal product recommendations based on past purchases giving more value to the customer. To bring their customers in, they spend millions of dollars to advertise across the Internet. As they provide suppliers with organized billing and shipping systems, orders can be completed fast making business processes run smoothly. The competitive forces model is used at Amazon.com when they react to new entrants into the market, continue to learn about new products and services, and address the position of traditional industry competitors. To keep their standing of one of the most successful companies on the Internet, they constantly introduce new products to their existing book database. Sales began to rise as they added new products to their website. “. . . in the first three months of selling CD’s, Amazon. com’s sales surpassed established on-line music seller Cdnow.com’s performance during the same period. To compete with other Internet and store front companies, they offered other products that would appeal to people while they were buying books at their website. As they established partnerships with companies such asDrugstore.com, they attracted customers who may have taken their money to other websites or brick and mortar stores.

Furthermore, with their excellent customer response systems, they were able to respond to the demands of the customer based on their buying habits and customer feedback. In turn, Amazon.com was able to gain lasting relationships with vendors and customers. Amazon is also looking into technologies like using drones to deliver to the customers in PRIME-AIR scheme.

Barnes & Noble Using the Value Chain and Competitive Forces Models:

Like Amazon.com, Barnes & Noble tries to find competitive strategies in order to be the lead retailer of the book market. The company uses the value chain model to try to appeal to customers who want a wide selection of books but still feel like being in a small bookstore. Their shelves that carry more than 150,000 titles appeal to the customer who doesn’t want to go online. Barnes & Noble’s size allows the company to stock a variety of titles and obtain discounts from distributors, thereby offering discounts to customers. By constructing a value web with companies such as Microsoft, Random House, and The Ingram Book Group, Barnes & Noble can create business relationships that will provide value for the irin-store and online customers .Barnes & Noble uses the competitive forces model to address the threats of new entrants into the market and the pressure from new products and services in the marketplace. When Amazon.com came into the book selling market, Barnes & Noble had to figure out how to compete. Unlike Amazon.com who added more products other than books, Barnes &Noble developed a relaxed in-store environment that could appeal to people who wanted to sit and physically see a book before buying it. In-store and online customers received lower discounts forcing Amazon.com to purchase their books from more expensive sources. With the construction of Barnes &Noble’s online store they were able to compete by offering a more specialized inventory that would leave Amazon.com struggling to catch up

The Business Model Used By Amazon.com:

Amazon.com is regarded as "the first significantly successful enterprise to sell traditional consumer goods over the Internet. The company’s business model is to use the Internet to attract customers to buy products. Many Internet users flocked to their website to buy products such that in 1998 they earned more than $500 million annually. To achieve this large income, Amazon.com provided services to make users have a more valuable and pleasant online shopping experience. Their core competency that puts them ahead of their competitors is their knowledge of e-commerce and a user-friendly site.

Since amazon.com has been one of the major Internet retailers, they have the advantage of knowing how users surf the web; where they go for information, what they want to shop for, and where they will probably go to buy. Soon after sales boosted with CD’s, Amazon.com added The Internet Movie Database that helped them boost video sales. To keep their sales up and attract customers, they needed to create a user friendly website. For example, they added single mouse click checkouts and user accounts, which archive customer billing options and shipping address for faster future purchases. Their collaborative filtering information system targets specific customers with recommendations and reviews on products that change continuously. Potential customers can also find reviews on books from authors, staff, and other customers who bought the book. These personalized features are convenient and let a user interact with the site leaving with the feeling of quality customer service. In addition to these services, Amazon.com bought out the companies Junglee Corp. and PlanetAll, to give benefits such as birthday reminders and gift ideas, which attract returning customers. As they broaden their product database, Amazon.com appeals to a wider range of customers because when a customer is looking for a book and also sees a DVDlink nearby then instead of going to another website they can buy what they need in one place

The Business Model Used By Barnes &Noble:

Similar to Amazon.com, Barnes & Noble’s business model is to offer a pleasant shopping experience with product at a lower price. However, Barnes & Noble wants to offer an option of in-store or Internet shopping. The company’s core competences are to offer a pleasant shopping experience and to have a variety of books. The company has over 1000 super-size stores but wants to give the customer a feeling of being in a small town bookstore. To achieve this, Barnes & Noble encourages customers to bring coffee and read and participate in "childrens story-time"readings. With In-store author signings and Internet services such as online links to author and book reviews, it allows customers to have a variety of ways to shop.Barnes & Noble readily re-stocks shelves and updates its Internet databases with new titles allowing for more diversity than a traditional bookstore. This space provides room for best sellers and a variety of other books promoting customers to return to search for new titles.

How Viable is Amazon.com’s Business Model?

As more people learn how to shop online and learn about Amazon.com’s website, the company looks as if it may succeed. As well as pleasing the customer, their efficient and speedy business processes show how the company succeeds in its market. With its organized cash flow, they are able to gain revenue faster thereby making more profit. For example, when a customer’s item is shipped,Amazon.com charges their credit card and gets a payment from the credit card company within a day. Since Amazon.com doesn’t have to pay the distributer for about a month and a half, the company uses their profit to expand their store and improve customer service. However, from this case study there are details that lead me to believe that Amazon.com maybe spending too much money on services such as advertising and not bringing in enough profit. For example, In 1998 Amazon.com spent more than $50million dollars on advertising at sites such as AmericanOnline (AOL), Yahoo!, and Excite in hopes of gaining customers. The company also launched an Associates Program in 1998, which allows any website to display a link to Amazon.com’s website. When a sale results from the link, the website would get 15% of the sale. Furthermore, the company seems to gamble with their money to offer new services and product in hopes that customers will buy their product. In the long run,Amazon.com could lose customers resulting in bankruptcy.

How Viable is Barnes & Noble’s Business Model?

While Amazon.com dominates the Internet marketplace, Barnes & Noble continues to expand its physical stores and is slowly offering new services to their online store. By serving customers in their brick-and-mortar and online stores they become more versatile, attracting new customers, and gaining more profit. Since they don’t spend as much money on advertising and different products, they are able to expand on their existing services such as customer discounts and a more variety of book inventories. Barnes & Noble is able to gain revenue with their brick-and-mortar stores and can slowly build on their Internet site to compete better against Amazon.com.

So who is better?

What Model Is Working Best? To further my evaluation of Amazon.com’s and Barnes & Noble’s business models I created a two question survey to see what type of shopping people are conducting online today. Similar to Lauren Cooks Levitan’s survey, I questioned people about what Internet site they thought of when they heard Internet shopping. 37% of users thought of Amazon.com and only 3% thought of Barnes &Noble. 60% of users chose other sites on the web. When I asked the “Other” people why they chose their sites, they said that they liked going to company websites that sold their favorite product. When I asked those people if they would consider shopping at Amazon.com or Bn.com(Barnes & Noble), they said that they would probably go there for reviews and suggestions but look on other sites to find the cheapest price. Some people said they would look on Ebay.com or Craigslist.com before they would go toAmazon.com or Bn.com. The second question I asked was what store people would think of if they were to buy a book online. There was a dramatic change; 56% of the people stated they thought of Amazon.com, 27% thought ofBn.com, and 17% said other websites. Everyone who chose Amazon.com said they liked their pricing, suggestions, recommendations and the ease of finding books on the site.

The people who answered Bn.com said they recognized the name from when they shopped in their brick-and-mortar store and knew that they had an online website. However, all participants said that they would shop around until they found the lowest prices, even if the book they wanted was on another website. As I look at my survey results, not so different from Levitan’s survey conducted around 1998, it leads me to believe that Amazon.com has a better business model and knows how to bring customers in to buy at their site.

Amazon.com Dominates the Book Retailing Market Based on the information found in the casestudy I believe that Barnes & Noble is the company that will dominate the book retailing industry. By having thousands of brick-and-mortar stores around the United States and an online branch, the company can let customers have the option of shopping in both places and still make a profit. Furthermore, by offering more benefits, cost discounts, and a more variety of books, Barnes & Noble will attract more customers. However, since the case study is outdated I decided to look at the online sites and compare options and pricing before I made a final decision. The business market has changed since the twentieth century and now more customers are going online to buy books. When I clicked on Amazon.coms book tab I found many options that were similar at Barnes &Noble’s site. For example, there were categories for textbooks, bestsellers, and new and future releases.Amazon.com also has a link to a third-party site that sells eBooks that appeal to specific groups of people, which Barnes & Noble does not have on its site. Although customers will be shopping for these eBooks on a separate site, Amazon.com will still get profit off the sale. To see if Amazon.com raised their prices and did not have the selection of books that Barnes &Noble had, I went to Bn.com and compared them to Amazon.com. I chose twenty different books and found each book on both sites. Furthermore, In most cases I found that Amazon.com had the better price for a new copy of a book and even offered it cheaper. In many cases Bn.com had a similar discount as Amazon.com; however, you need to have a $25 per year membership in order to get the low price.

Although Barnes & Noble offers a relaxing in-store environment and specialty links on their website such as "Meet the Writers," Amazon.com offers lower prices, special deals, reviews, and a user-friendly website, which promotes returning customers.

Amazon.com and Barnes & Noble Today

In summary, I realized it began to bother me that the case study did not have current information about the profit of the two companies. Due to the explanation in the case study that Amazon.com was losing money rather than gaining a profit, I decided to search for more recent information on the Internet. I found two articles which stated some more recent earnings of the company. In his 2015 Internet article, Amazon.com made an annual profit of $92 million dollars while it lost 126 million the last year. Bock explains that much of this profit was due to acquiring and keeping lasting customers with services such as free shipping and discounts on products and advanced web services. By offering products by other merchants on Amazon.com’s site its earnings would most likely not come from books. In a article posted in April2007, "Amazon.com reports quarterly net profit more than doubles," CNN money” states that Amazon is worth 264 billion. With their variety of inventory, satisfied returning customers, and user friendly site, the company no longer operates in there.

In contrast, Barnes & Noble seems to be losing money. Today, Barnes & Noble relies on products other than books to gain revenue. At their website they sell a variety of products such as DVDs, music, video games, toys, and office supplies. In the February 2007 article, “CNN money” states that Barnes & Noble’s sales have fallen in 2015. Shares of Barnes & Noble (BKS) plunged nearly 30% on Wednesday after the company reported a surprise loss of $34.9 million, a wider loss than the same period a year ago. (The stock rebounded 7.5% on Thursday but is still down more than 15% this year).Sales fell 1.5% from the same period last year. It was the fifth quarter in a row that revenue was lower than the previous year. The company is continuing to close stores.

The reasons for Barnes & Noble's woes are fairly obvious: a shift to online sales for physical books and the increased popularity of digital books and e-readers and tablets, such as Amazon's Kindle and Apple's iPad.

Final Verdict:

In my opinion I think amazon has the best business model which lay in sync with the advancement in technology and in satisfying customer needs.

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