Amazon vs. Barnes & Noble

Topics: Amazon.com, Amazon Kindle, E-book Pages: 7 (2195 words) Published: May 1, 2014
Introduction
The qualitative services department was hired to provide an in depth analysis of two leaders in their industry, Barnes & Noble and Amazon. The purpose of this report is to provide all the necessary data in an unbiased manner, so that the accounting partners may make their investment decision knowing all the facts and figures about both companies.

Our report was developed as a result of conducting independent and group research about each company’s background, competitors, philosophical differences in management, success stories, challenges (past and future), strategic moves, as well as key comparative statistics. Our research was compiled using a variety of online sources. The analysis of these key areas will provide greater understanding as to which company to invest in, Barnes & Noble or Amazon.com.

Background
Barnes & Noble was founded in 1893 in Wheaton, IL as a printing business but has developed into the largest book retailer in the United States today. Headquartered in New York, Barnes & Noble has 675 stores worldwide and partners with 686 collegiate bookstores. It is traded on the New York Stock Exchange and employs more than 30,000 employees. Barnes & Noble has a significant presence in the United States as a physical retailer of books and magazines.

Amazon was founded in 1994 and is headquartered in Seattle, Washington. It is traded on the NASDAQ, and as a strong historical performer, is a component of the NASDAW 100 and the S&P 500. Amazon was founded initially as an online bookstore but soon into seemingly every segment of consumer goods. Amazon is heavily involved in the Internet as an online retailer and producer of various applications linked to its tablet products. Amazon does a significant amount of business in books, both online and print, but differs from other book retailers in that it is a selling platform for seemingly anything you could think to purchase on the Internet.

Competitive Strategy
Barnes & Noble has a significant competitive advantage over Amazon and a number of other book retailers in that they have a physical location. While online shopping is a significant competitive force, it is very difficult to beat a physical store. Barnes & Noble goes to great lengths to ensure that their customers are comfortable in their stores, outfitting them with plush couches and chairs. In addition, Barnes & Noble often has cafes in their store locations. The goal is to keep customers in store as long as possible, even if they spend most of the day reading a magazine or a book, to ensure that they are making some kind of purchase. The store locations serve a two-fold purpose; they act as a physical showcase for books that can be purchased online and have environment that fosters community.

The college textbook business is a very profitable segment of Barnes & Noble’s business. There is a great degree of markup on college textbooks that is deflected to students, and when students sell books back to colleges, it is at a greatly reduced price. Books repurchased by Barnes & Noble are repackaged and resold for a price greater than cost. Barnes & Noble is set apart from competition in this regard because no other retailer has a similarly structure partnership.

The simple model that Amazon operates under is its key to success. Amazon uses little more than a bare bones online platform to sell its products meaning a minimal cost structure. At the same time, this business model requires no asset investment in physical store locations. Through an online platform, Amazon can offer products from a variety of sellers on a global scale, allowing them to mitigate expensive shipping costs. This online platform also means increased transferability to mobile devices, meaning they can offer the same services through application stores and exchanges.

Amazon’s Kindle product line is a competitive advantage because it was first to market for handheld book readers. Since releasing the...

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