BUS 302- Management Concepts
Professor: Justin U. Harris Ph.D.
Comparing Two Businesses
James M. Gordon, Strayer University
Correspondence concerning this paper should be addressed to James M. Gordon,
Comparing Two Similar Businesses
Amazon.com, Inc. (NASDAQ: AMZN) with a +$100 billion market capitalization is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and China. It may also launch websites in Netherlands, Sweden, and India. It also provides international shipping to certain countries for some of its products. Jeff Bezos founded Amazon.com, Inc. in 1994, and the site went online in 1995. It is named after the Amazon River, one of the largest rivers in the world. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games, electronics, apparel, furniture, food, and toys. Amazon uses the internet as the sole method for selling goods to its consumers. Amazon's competitors, such as Barnes and Noble, and Borders use brick and mortar as their main distribution channel. This method of using many store fronts is extremely costly. Stores such as Borders and Barnes and Noble have very high overheads because they pay premium rents to be in central locations, and must pay salaries to sales representatives. Amazon does not share this same high overhead, which gives Amazon a competitive advantage. This advantage is a result of the fact that Amazon's business model allows for a central distribution center in an area where the rent is low. As a result, they are able to sell their products for a much cheaper price. As people become more accustomed to using the internet, they view ordering books online as a time-saving and cost-saving experience. A recent trend for brick and mortar stores such as Borders and Barnes and Noble has been to make their books available online in an attempt to compete with Amazon. However, Amazon's competitive advantage, combined with the good reputation they have established over the years has made it extremely difficult for such stores to compete with Amazon online. Jeff Bezos, the founder of Amazon, had great confidence in the World Wide Web even before the dot.com boom. He used the internet as the core of Amazon's business model which proved superior to brick and mortar stores. Today, this website remains superior in comparison to the sites of its competitors. As one great advantage, Amazon customers are now able to search inside the book before buying it, read customer ratings on products of interest, as well as to purchasing products at prices far below those of other online booksellers. As a competitor, The Borders Group, Inc. sells books, music, and music through superstores, mall stores, and small format book stores. The Borders Group owes its history to several separate chains--Borders, Waldenbooks and Brentano's. Brentano's was the longest-lived of the three bookstore chains that eventually made up the Borders Group. The original Brentano's store was founded in 1853 in New York City, by August Brentano, a newspaperman. The second oldest of the three, Waldenbooks, was founded by Lawrence Hoyt, a rental library entrepreneur. Hoyt opened the first Walden Book Store in 1962 in Pittsburgh, Pennsylvania; he named the bookstore for Henry David Thoreau's Walden. Borders Group, Inc. is the nation's second largest retailer of books, music, and other educational, informational, and entertainment products. Its Waldenbooks bookstores were in over 1,000 mall stores by 1995. Furthermore, it owned the rapidly expanding Borders Books...