One might say that the business world is moving at a fast pace, a pace that is almost impossible to keep up with. This could be the result of the almighty Internet and the world of technology. In todays society, technology has revolutionized how we as consumers make decisions and procedures regarding the process of consumption. The Internet has made many vast improvements within our culture, both online and off, which is allowing the average consumer to buy retail by using little to no effort. Online retailing is a fairly new industry, and new companies are jumping on the bandwagon at a very fast pace.
This is causing competition to come into play, which is forcing online retailers to change their initial goals. Amazon. com was one of the first online retailers to introduce online book selling. Amazon started strictly as an online bookseller; however, through time they have evolved into the largest online retailer, offering over 16 million items for sale on the Internet. Only a few online retailers are a threat to Amazon; they are Borders. com and Barnes and Noble. com. The purpose of this paper is to focus on the online booksellers and how they are homogeneous within their market.
Online booksellers are booming within the market they stand, and with thousands of books to offer, why would the everyday consumer choose physical shopping over using the Internet? Could it be because they would rather feel the excitement personally and take advantage of the assistance provided by the book superstores, or would they rather shop within the convenience of their own home? The online booksellers offer just as many if not more selections on the Internet. They even offer reviews, both good and bad, suggestions and comments, and more information about the book at interest.
Could online booksellers put the million dollar retail stores out of business? On a survey conducted, we found that out of 50 samples, 40 of them would rather shop for a book on the Internet. 25 of those 40 have already switched from physical bookstores to online shopping. We also learned that 16 out of those 25 used Amazon. com. 5 used Barnes and Noble. com, and the remaining 4 consisted of Borders. com and other small online booksellers. The top three online booksellers are Amazon. com, Barnes and Noble. com, and Borders. com. Amazon. om is the number online retailer in the market; however, they recently had to swallow a stunning 124. 5 million-dollar loss last year. With over 16 million items for sale through their web site, they try and stay focused on the book market because of their intense competition.
As mentioned before, Amazon. com plummeted into the online retail market as a bookseller; however, management noticed an overwhelming demand for retail in general, which led to expansion. Expansion is what caused Amazon. com to lose money last year. Of the three major online booksellers, Amazon. om is the only vendor that such a diversified selection. For Amazon. com to stay afloat in the market, they will have to stay focused on their original plan, to be an online bookseller. Amazon. com consists of Jeffrey P. Bezos, CEO, 3000 employees, and an ever-changing web site. Their web site is updated daily, adding best sellers to the site and also informing consumers with book reviews, which can be the critical point for a purchase. The goal of Amazon. com is for it to be the most customer-focused company ever, both online and off.
With decreasing obstacles involved in the purchasing process, Amazon created the one-click ordering, which lets buyers store credit cards and addresses after the first purchase. They have also installed software that assesses what past customers have bought and suggests other purchases. The result: Repeat purchases account for 66% of sales. (Article): Cover Story, 1999. Amazon. com vs. E-bay. Business Week, May 31, 1999. P128-140. The idea for releasing customers opinions and suggestions can reduce a risk that one might uphold regarding the purchase of a book.
They also have a star rating system which gives 5 stars for a book that was well liked, and 1 or 0 stars that was either boring or poorly written. These procedures put relevant opinions and information in perspective for future customers; therefore, can influence a sale. For the time being, online shoppers experience the asset of not having to pay sales tax on purchases. All online retailers are currently benefiting from this, not just the online booksellers. Online shoppers are paying shipping and handling charges instead of sales tax.
Unfortunately, congress is in the process of putting this to an end, which will force online consumers to pay a sales tax. The average sales tax in the United States is 6. 3%, and this percentage will most likely be the nationwide Interned tax on purchases. According to a Business Week article, online shopping will decrease by 30% or more. (Article): France, Mike, 1999. A Web Sales Tax: Not if, But when. Business Week, June 21, p104-106. According to Business Week there are currently 457 on-line booksellers. This statistic would seem to indicate that any on-line book retailer faces stiff competition.
However, many of these on-line booksellers specialize in selling only specific categories of books. Two of Amazon. coms major competitors are Barnes and Noble. com and Borders. com. What makes Amazon. com the “Earth’s Biggest Bookstore? One reason is that they are more than just an online bookseller. Their Internet site offers extensive book and music catalogs as well as a variety of other resources including customer reviews, personal recommendations, and gift suggestions. At Amazon. com a buyer can search for books by author, title, subject, or keyword. A music search can be made by artist, CD title, or song title.
These are just a few of the characteristics that make Amazon stand out from the others. Both Borders Group, Inc. and Barnes and Noble, Inc. operate book and music superstores. They also run mall-based bookstores throughout the world. Amazon. com is different in that they sell strictly online. It was thought that name recognition would make a major impact when Barnes and Noble initiated their online site a few months ago. However, this has not been the case. Savvy online buyers are motivated more by price not name recognition, and have remained loyal to Amazon. com.
Accordingly, Business Week has announced that approximately 101 million United States adults (52%) recognize Amazon. com (Amazon. com: Business Week #5). ” I give a good belly laugh when I see folks still trying to compare Amazon. com to Borders. com or Barnes and Noble. com. I think a comparison to Wal-Mart might be a more accurate, but even that falls short of the mark. Amazon is without equal. Books, videos, music, drugs, groceries, pet supplies…. the list just keeps on growing, and I guarantee it will continue to grow in a big way. -Paul Larson. For most investors, the first thing that they request when making financial decisions is the company’s statistics. When you compare the statistics of the three companies, evidence states that Amazon. com is prosperous, and is handling the competition well. Borders Group, Inc. – for the thirteen weeks ended April 25, 1999, Borders Group, Inc. had increased their sales by 13%. This put their profit right at $618. 7 million. Their net loses amounted to $4. 1 million versus an income of $3. 8 million (Borders. com General Information #8).
These results are a reflection of higher sales from new store openings and comparable stores, offset by Borders. com expenses and higher debt levels. Barnes and Noble, Inc. – Barnes and Noble is primarily engaged in the retail sale of trade books, mass market paperbacks, children’s books, off-price bargain books, and magazines. These items are sold through 1,009 bookstores in 49 states, and through Internet sales. For the thirteen weeks ended May 1, 1999, revenues for Barnes and Noble rose 9% to a total of $718. 3 million. Net loses before accounting changes fell 57% to $1. 4 million.
These statistics are a result of opening additional stores, and lower pre-opening expenses (Barnes and Noble. com. General Information #6). Amazon. com- Cumulative customer accounts represent the number of people who have made a purchase from Amazon. com. In the quarter ending March 31, 1999, cumulative customer accounts increased by over 2. 2 million to more than 8. 4 million. This shows an increase of over 250 percent from 2. 3 million customer accounts at March 31, 1998. Sales grew from $148 million in 1997 to $610 million in 1998. This reflects a 313% increase (Amazon. com. Investor Guide #4). Amazon. om is the premier bookseller on AOL. com, Yahoo! , Netscape, Exite. com, the Alta Vista Search Service, and the Prodigy Shopping Network. Amazon. com offers a catalog of 2. 5 million titles, easy-to-use search and browse features, e-mail services, personalized shopping service, Web-based credit card payment, and direct shipping to customers. Amazon. com has the largest online shelf space. Amazon offers customers a vast selection through an efficient search-and-retrieval interface. Amazon. com, Inc. and Barnes and Noble, Inc. announced their agreement to a settlement of a lawsuit filed by Barnes and Noble.
On top of the lawsuit, there were counterclaims filed by Amazon. Neither party admitted liability of any type, nor neither party paid damages of any kind to the other. Both parties decided that they would rather compete in the marketplace than in the courtroom (Amazon. com. Company Info #2). In its role as the number one on-line bookseller in the world, Amazon. com operates two international Web sites: www. amazon. co. uk in the United Kingdom and www. amazon. de in Germany. Last year, Amazon. com entered the European Book Market by purchasing the leading online bookseller in the United Kingdom and Germany.
They now offer thousands of titles published in the U. K and Germany as well as those sold in the United States to expedite shipment to books to their European customers and has set up distribution centers in England and Germany. Another move, which expanded Amazon. coms global market, was its Global Merchant Agreement with Yahoo! This agreement allows Amazon. com to take advantage of Yahoo. com’s worldwide Internet sites. Internet users throughout the world are familiar with Yahoo. com, and this agreement greatly strengthens Amazon. com’s position as the world’s leading on-line bookseller.
Although Amazon. om faces competition from various on-line bidding companies such as U-Bid; it has recently announced an alliance with the well-known art auctioneer, Sotheby’s. Now online bidders worldwide will be able to participate in live auctions for fine paintings and other valuable art objects. Amazon. coms strongest feature is that they offer a lot more than books. They offer everything from groceries to fine paintings to its online shoppers, included in the 16 million different items for sale. Online shoppers around the world can go to Amazon. com and find the best prices for books as well as many other items.