Situational Analysis
Online Retail Bookselling
Chip Cherry
Jeff Grivno
Ellee Hilley
Jason Hayes
Thermando Stephens
Industry Overview
• Top 5 book online retailers (Amazon, e-Bay,
B&N.com, Wal-Mart, Books-a-Million) grew their
sales by 48.5% compared to 19% for all other eretailers in 2005.
• 2,295,000,000 books were sold in 2005
• 44 million less books were purchased in 2005
compared to 2004.
• McGraw Hill published that total books sales will again
decrease 3-4% in 2006.
• Book revenues increased 2.8% in 2005
• China's e-book sales volume reached 8.05 million
with 148,000 types published
e-Commerce: Effect since
2001
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E-books
E-textbooks
Content created for Mobile devices
Lower Margins as a result of competition
Advantage of proprietary systems are lost as
these systems become available “off the
shelf”
e-Commerce: Industry
Threats and Opportunities
Threats:
• Box retailer incentives, shop online for research and
comparison then purchase from local book store
• Increased Completion due to the reduction of market
barriers
Opportunities:
• Web Portal/Purchasing Portal, using existing infrastructure
to support marketing and sales of other non-related lines
• Virtual Web-based Library where customers would
purchased access to a book’s text on line for a period of
time instead of buying the book outright
Economic Globalization:
Industry Threats and
Opportunities
Threats:
• Pricing Pressures
• Transaction Security
• Legislative intervention
Opportunities:
• Comparison Shopping Portals
• Anything, Anytime, Anywhere
• Localized Partnerships
Economic Globalization:
Effects since 2001
• Online Retailing: $90 billion in revenues for the U.S. retailers
in 2004, compared with just $8 billion in 1998
• Retailers without stores may be "efficiency machines" or
"niche leaders"
– Internet provides worldwide scalability for low margin products
– Global activity locations
• Sourcing and fulfillment processes: USA, Europe, Japan & China
• Development centers: Europe & India
• Customer Service Operations: Europe, Japan & China
– Partnerships with traditional bookstores and retail stores
• Traditional Bookselling
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Traditional bookstores opening international stores
Booksellers turning to publishing
Publishers re-entering the distribution business
Reentry of small sellers into the market place
The Amazon Model
The Amazon Model
Company Opportunities
and Threats
OPPORTUNITIES
•Third Party Relationships
•Entry in Internet Search Market
•Expansion into China
THREATS
•Aggressive pricing and marketing
from competition
•Seasonality of business
•Internet Regulation
•Expansion in to web-based marketing
of other retail products
•Required to charge and collect state
or federal sales tax
•Service and license their own
software suite for small book sellers
•Pressure of free shipping policy on
their ability to maintain a positive
•Work with suppliers to develop a
bottom line
system of just in time supply or have
vendors pay for the cost of inventory
•E-books and E-text books – sold
directly from the publishers or authors
•Provide a venue for authors to Epublish their books through a on-line
•Loss of used book and textbook sales
service they create and manage
because of E-books and E-textbooks
Competitors
Class Discussion
• What will the effect of e-books have on this
industry?
• What other competitors may challenge for market
share?