Sanjay

Rahul Sharma
Sudeep D’Souza
Sushmita Banarjee
Vidyarth V

Vs.

How would you contrast amazon’s business design with that of

Barnes&Noble before Barnes & Noble went online?
amazon’s business model is Barnes&Noble is a Brick-and-
completely online Mortar model

Headquarters
Seattle
New York

Year Founded
1995 1917

Founder
Jeffrey Bezos William Barnes/G. Clifford Noble

Number of employees
7600 50,000
Value Chain
 Business Strategy

Innovative Economies of Scale

Virtually Integrated Vertical Integration
Online Monopoly Retail Monopoly
•Acquiring B Dalton in 1986, the 3rd
largest bookseller in America
Unable to physically connect with Customers come to the store and
customers get an overall experience

Easy to replicate Requires large amount of capital to

replicate.

Shipping

Free shipping on orders over $25; No waiting for purchase to arrive

personalized recommendations in the mail
based on past purchases
 Customer Experience

For customers who are looking to For customers who are looking
save time, search for books quickly for a more relaxed experience to
and buy them. browse books at their leisure
with a cup of coffee.

Customer Reach

Since amazon is an online industry B&N being a physical outlet can

its customer reach is very high sell to customers only located
since it can sell to all round the around it.
world.
Inventory
amazon requires a low inventory Require 160 days of inventory
carrying capacity and has a since books are directly sold to
negative working capital cycle. customers and high working
capital.
Porters 5 forces - elements

New Entrants
It was difficult to enter this market A wider selection and the ability of a
segment due to the high distribution customer to more easily return
costs required and the variety of books were contention points which
selection offered B&N used as leverage.
Industry Competitors

amazon was a monopoly in the B&N had Borders bookstore to

online retail market but later on had contend with.
to compete with B&N and Borders
online version.
Buyers
amazon requires people to have a The bargaining power of the
higher form of education and make consumer is based on each active
use of technology to buy the firm in the industry. If the buyer finds
products. Buyers can also choose to one retail store too expensive he will
wait longer to receive a lesser price. shift to another.
Porters 5 forces - elements

Suppliers
amazon sourced from publishers at B&N source books directly from
a discount of 48% and a wholeseller suppliers but also publish books
at 41%. themselves.

Substitutes
Was a monopoly, but then later B&N B&N had Borders to content with
and borders came in with their online apart from several other smaller
retail stores as substitutes. bookstores.

Technology Interface

Technology Technology

Customer Server Customer Server

   
References:
Forbes.com Monday Matchup: Amazon.com Vs. Barnes & Noble by Julie Watson

Amazon.com’s : European Distribution Strategy – HBS Case, June 30 th, 2005

Sterling Publishing and Barnes & Noble Books by Morris Rosenthal, July 25th , 2005

Amazon.com versus Barnes & Noble: The Battle of the Bookstores and the Future of
Electronic Commerce by Elise Balance
URL: http://strategy-guide.blogspot.com/2006/01/amazon-vs-barnes-noble.html
Accessed on: 4th Aug, 2010

Amazon, Barnes & Noble, and the Battle for E-Books by Rita McGrath
URL: http://blogs.hbr.org/hbr/mcgrath/2009/08/amazon-barnesnoble-and-the-battle.html
Accessed on: 4th Aug, 2010
Thank You