Amazon vs. Barnes and Noble
Case Analysis Questions on Leadership Online (A): Barnes & Noble vs. Amazon.com Q1: Summarize Barnes & Noble’s business strategy and business model based in the case descriptions. How have these strategy and business model been evolved since the case was written? Ans. Barnes and Noble applied a combination of Economies of Scale and Vertical Integration and Monopoly as its Business Strategy in the 90s. They were the dominant sellers of books, CDs and Videos. Barnes and Noble acquired B. Dalton in 1986 the third largest book seller in America. After acquiring, the chain, B&N started converting its stores to Super stores. It also achieved some of its growth by cannibalizing the sales or growth of smaller mall-based stores. Business Model – B&N super stores relied on destination shopping rather than convenience, to build traffic in their stores. Most Super stores had convenient access to major roads and parking. They tried to replicate the feel of an old world library in their stores with their fixtures and furnishings, and typically offered a café as well as ample public space and restrooms. They encouraged browsing, staged book signing events and tried to build a sense of community. There was no pressure on consumers to buy any books, but studies suggested that there was a positive relation between the amount of time consumers spent in the stores and the money they spent. The average transaction in super store was double the average of mall based stores. In 1997 Barnes and Noble went in to online booking selling with its subsidiary BarnesandNoble.com and in two years announced the IPO for B&N.com. It was the largest Internet IPO at that time. Sales for the full year ended December 31, 1999 were approximately $203 million, more than three times 1998 sales of $62 million, and significantly higher than the sales of any other traditional retailer online. Barnes and Noble implemented the strategy of multi-channel access to customers by launching its