Porter's Five Forces
Threat of new entrant:
Threat of new entrant remained high because it is inexpensive to set up similar infrastructure compared to setting up a physical bookstore. This simply means that, anyone that has the resources and knowledge could set up a similar website to compete with Amazon.com. Established bookstore would also have the advantage of expanding their business to the Internet easily as they have the resources obtain from their physical bookstore business. Example of physical bookstore that has expanded their business to the Internet is Barnes and Noble (BarnesandNoble.com), Borders.com, BookSense.com and BookSite.com. Low However, threat of new entrant remained low in areas where it is very costly to set up similar information system because of the underline technology that is fortified by innovation making it rather unique. This is particularly true by looking at Amazon.com's One-click shopping technology
where Amazon.com has patented it to deter their competitors from copying the technology. In this case, they have successfully barred Barnes and Noble from copying this technology.
Amazon.com has also brand recognition in selling books online thus this would make it rather difficult for other competitors, namely Barnes and Noble, to enter to the online business. This is true because Amazon.com has successfully create an awareness among the public where buying books online would be linked to Amazon.com.
Bargaining power of buyer:
Bargaining power of buyer remained high because there are a wide variety of choices to purchase any given books from various sources. Example, a buyer has a choice to buy either from Amazon.com, Barnes and Noble or even from other sites such as BookSense.com and BookSite.com. In Amazon.com other businesses such as selling their online music business,
the buyer would also have the advantage as they could buy their music from other sellers such as CDNow that has been into...
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