Last week, I read an article that analyzes the performances of the two companies, Amazon.com and Barnes & Noble, in the U.S book industry. Where in the marketplace are the companies placed now?? Who has been the winner and who has been the loser? How has that happened?? I would like to write down my own analysis on the two companies based on the article and put my two cents....
1. How the birth of Amazon has changed the Book Industry?The U.S book industry can be divided into two eras; the time before and after the online bookselling. Barnes and Noble and Amazon.com are the companies that could represent these two eras. Barnes and Noble had been a leading company in the industry, which focused on creating special experience for its consumers with its in-store services like unique décors, café, etc. They tried to create special spaces for consumers where people could find “fun” that could be gained from other substitutes such as movie theaters or shopping centers. The company also emphasized on expanding its stores, which helped their distribution systems as well as increasing their brand awareness. However, the advent of online bookselling, especially the birth of Amazon.com changed everything in the book industry. Unlike Barnes and Nobles, Amazon.com took a different approach in offering their services, distributing the products, and generating sales leads. Following are some "absolute" factors that have enabled Amazon.com to dominate Barnes & Noble and further become the best in the industry.
2. How has Amazon been able to dominate the market?
First of all, by selling books online only, Amazon.com has been able to save significant amounts of fixed costs that other competitors have struggled with. One of the great examples would be the number of employers. While Barnes and Noble has spent a big portion of their money on human resource, which is the main source of their services for the consumers, Amazon has managed to spend their money on R&D to further develop effective and efficient e-commerce systems and their solid infrastructure.
Secondly, it has taken different approaches in providing special experience to its consumers. Unlike its competitors, Amazon has distinguished itself from others by providing information about the books it sold, posted author interviews, offered free book reviews, and gave links to other sites and features. It might attract attentions from people to provide coffee and play some jazz music in a book store. However, people who are interested in purchasing books look for information that could be helpful to their buying decisions. With tons of information about thousands of books provided on the website, Amazon has been able to attract online users, increase their constant visits, and build strong fan communities online. This also gave the company another opportunity for success in their business. Due to the high volume of web traffic, the company has made profits from other businesses who wanted to place their advertisements on the Amazon’s website.
3. My Two cents…Given the increase in online users and technological advances, it seems that there are few chances for Barnes and Noble to get market shares back from Amazon.com. Like Barnes and Noble had enjoyed offline bookselling market with their experience and business practices in the past, it seems obvious that Amazon.com will keep significant market shares in the book industry with their endless investments and experience in online bookselling. Even though Amazon’s competitors like Barnes and Noble also started online selling, it seems like they just tried to follow what Amazon is doing. In other words, while Amazon keeps evolving itself to the next levels by integrating consumer services (not just for books) with highly advanced online technologies, other competitors seem just to follow the company without specific focus (or strategy). Other technological devices like Kindle or iPad have been even a strong leverage for Amazon in attracting more online users to their services. Instead of following the Amazon’s strategies, it is recommended that Barnes & Noble should build on their current strengths, focus on producing unique products and services offline, and try to distinguish itself in the offline bookselling market.
