Amazon'Com vs Barnes

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Amazon.Com vs Barnes Noble

• Saundra Burleson
• Keri Robillard
• Jennifer Mahaney
• Heather Pitstick

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History Amazon.com

• Founded in 1994 by CEO Jeff Bezos
• Started in a garage in Seattle
• Has always been internet based the company has
  never worked out of a retail store

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Amazon.com
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History Barnes Noble

• Was a century-old storefront on New Yorks Fifth
  Avenue when Leonard Riggio purchased it in 1971
• Launched barnesandnoble.com in 1997
• Today the company has over 1,000 stores with
  plans to open 500 more in the next decade

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Barnes Noble
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Advantages of Amazon.com

• Clients can search more than 3 million book
  titles in addition to CDs, electronics,
  software, toys, videos, hardware, lawn goods, and
  kitchen goods
• Clients only have to enter shipping and credit
  card information once, it is then stored in
  Amazon.coms information system and then it only
  takes a mouse click to complete an order
• The company normally only orders books after a
  client has ordered them. This enables the
  company to avoid overhead and carrying charges
  that comes with having an inventory
• Cash flow looks good due to the fact that they
  immediately charge the clients credit card, but
  dont pay their distributors for 45 days
• Amazons competitive advantage lies in the fact
  that they have a greater wealth of customer
  reviews, sales histories, sales lists, buyer
  profiles, and other buying pattern behavior that
  allows them to better target individual buyers.

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Disadvantages of Amazon.Com

• Since they have no stores for people to visit,
  they must invest large sums of money in marketing
  and advertising
• In order to operate, they rely on expensive
  sophisticated information systems.
• If their system goes down, the entire business is
  down
• Due to these factors, the company has lost nearly
  1.2 billion since 1995.

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Advantages of Barnes Noble

• Stores are considered modern village greens
  where people can relax with a cup of coffee and a
  danish
• The stores offer a soft environment with
  cathedral ceilings and hand-lettered signs.
• The company has also joined the internet industry
  with barnesandnoble.com.
• They have teamed up with Microsoft and AOL to
  become the exclusive bookseller for users.
• The company is profitable.

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Disadvantages of Barnes Noble

• The company must carry huge inventories
• More than 1,000 stores requires a large number of
  employees
• Physical locations create an expense
• They are behind Amazon.com in the internet retail
  industry

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Net Income Comparison
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Amazon.com Facts

• Uses information technology called collaborative
  filtering. This technology enables Amazon.com
  to recommend books based on past purchases of
  buyers.
• Amazon.com gives readers the ability to post
  their own reviews of books, offers profiles of
  authors, and also includes recommendations by the
  Amazon.com staff.
• Amazon.com currently has around 7,600 employees
• Their best feature according to Forbes is that
  they offer free shipping on orders over 25

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Amazon.com Facts

• Although information technology has been their
  strength, it is also a weakness. Two different
  times in 1998, Amazon.com was put out of business
  for up to nine hours due to an inadequate backup
  system.
• Spent nearly 200 million in marketing in 1999
  this a 50 increase over the previous year.
• In 2000, Amazon.com fired 150 employees to
  tighten up costs.
• Offers a Spanish help center

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Barnes Noble Facts

• Recently bought out one of the largest book
  distributors in the book retail industry.
• Offers ability to order by phone, but pick up in
  a store
• Offers frequent flier mileage
• Currently has around 50,000 employees
• Best features according to Forbes are the cafés
  in the stores and the no waiting for purchase to
  arrive in mail feature

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Barnes Noble Facts

• Uses information systems to track sales of
  individual titles so that they can remove the
  nonperforming titles within 120 days.
• Due to Barnes Nobles size, they are able to
  negotiate discounts from book distributors and in
  turn offer them to their customers.
• They purchased the B. Dalton chain in 1996 making
  them the largest bookseller in the nation.

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Interesting Fact

• In December 1999, a judge in Seattle granted a
  preliminary injunction prohibiting
  barnesandnoble.com from using the one-click
  shopping technology for the reason that it
  infringed on Amazon.coms shopping tool.
• Barnes and Noble immediately ceased using the
  disputed technique and implemented Express
  Checkout.
• On February 14, 2001, a federal appeals court
  overturned the injunction stating that BN has
  mounted a substantial challenge to the patent in
  the suit.
• The case is still open.

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Conclusion

• While both companies are large competitors in
  the retail book industry, it is more likely that
  Barnes and Noble will continue to be successful
  in the future, whereas if Amazon.com continues in
  the current fashion, it could possibly go out of
  business due to their sales not effectively
  compensating their expenses.