Can Barnes and Noble Be Saved - Case Study Example

Case Study on Can This Bookstore be Saved? s Question The advent of the internet disrupted the bookselling industry due to the rise of the e-book and e-readers which led to the closure of firms like Eastman Kodak, Borders, B. Dalton, and Crown books except Barnes and Noble (B&N). This was as a result of the inability to match the use and immediacy of web papers. These traditional book sellers closed as a result of increasing online sales and new electronic downloads, especially to the e-readers. Retailers create value by bringing together different products and present them in a manner that is convenient to the consumer. The advent of the internet has enabled the book publishers as well as book retail stores like B&N to sell e-books, devices to read them on, and apps that improve the reading experience. The publishing companies have been forced to commence releasing books as apps in addition to physical books. Book apps are adding new features, such as flip through photo albums, image enlargement, listen to music characters within the book, and read instant messages. The online booksellers as well as e-books do not have overhead costs. Following Porters value chain analysis, the primary activities are directly associated with physical creation, sale and support of the product (Porters, 2006). They comprise of: inbound logistics are processes related to receiving, storing and distributing inputs internally. The publishers print the books and store them internally; operations involve the activities that change inputs into outputs sold to consumers. This entails transformation of content to digital form; outbound logistics entails delivering the product to the customer. This is usually attained through apps; marketing and sales of e-books has been very competitive with firms like Amazon and B&N outdoing each other; service involves maintaining the value of the product. The booksellers have ensured that they develop an e-reader, market it, and set manufacturing and retail operations for the device. The publishing industry has been significantly affected by the new market entrants. The major competitors of B&N in the e-selling of books include Google, Amazon and Apple. The publishing companies are investing in resources like Kindle and iPads as delivery platforms for their books. In order to gain market share, a company needs to contend with increased competition. In the case of B&N, for them to gain market share and stay afloat they needed to contend with stiff competition from Apple, Google, and Amazon. Competitors such as Amazon aims at eliminating the publishers and go ahead and print the books directly, as well as selling books at an exceptionally steep discounts in order to promote the sales of its kindle devices thus gaining competitive advantage. Question 2 Booksellers and publishers are striving to survive in the inevitable era of e-books. The web-based bookstore industry has become intense and it involves discounts, fast delivery, and varied selections whereby all firms are changing their business models to remain competitive. For instance, Amazon aims at cutting out the publishers and publish books directly , selling the books at very low discount so as to boost sales of Kindle devices something which the publicists, editors, and other related parties do not agree with. As a response to Amazon’s aggressive pricing strategy, the publisher in addition to Apple settled on an ‘agency pricing’ model where the publisher sets the price and the retailers take the commission. Online book sellers are partnering with Google, Microsoft, Amazon and Apple so as to share revenue from the book sales. Firms like B&N uses Nook to drive its e-book selling revenues. When an application like Nook is included in the Microsoft’s Windows 8 operating system, it will provide the firm with additional points of distribution from hundreds of millions of Windows users around the globe. Besides, both firms will share the revenues from the sale of e-books along with other content. In 2010, a study conducted by Coburn, Burrows, Loi, and Wilkins (2011) reported that Apple launched a multi-function iPad and reached an agreement with 5 of the 6 biggest publishers allowing Apple to distribute e-books Publishing organizations have been forced to regulate their allocations of printed books together with new titles for stores. Besides that, books are being released as apps together with physical books. The apps for the books are adding more features quite often, like image enlargement, watch videos, flip through photo albums, listen to the music of characters, and read instant messages. Since publishers are aimed at developing enhanced e-books, the publishers and e-reader manufacturers are coming together on enhanced e-books project. In this case study, for example, Apple is working with various publishers to develop interactive digital versions of textbooks. In the same way, the reputation of e-readers and e-books has influenced the advertisers to offer e-advertising a chance. Unlike in the traditional books, in e-books targeted advertising can be replaced with ease. Every work that is on the online can be distributed by being located through a search engine devoid of being prepared or selected. Works that are best prepared and selected reach audiences translating into commercial success. E-technology has also enabled the one-one-one communication between the readers and the authors something that only happened during the tours. The internet has led to the creation of numerous publishers tasked with connecting audiences and works. Question 3 Various publishers are attempting anything within their reach to support the efforts of Barnes and Noble bookstore to remain afloat. This is due to the fact that the survival of physical book retailers is core to effectively market and sell books. The strategies used by B&N will be successful because even if the competitors such as Google, Amazon and Apple were faster to react to the consumer’s demand for e-books, it is very unlikely that they would have made inroads that B&N has attained into the e-book market. Reaction to the Nook was also very positive since the firm had captured a significant market share from Apple as well as Amazon in the e-book marketplace. In 2011, B&N grabbed a significant market share from Amazon as well as Apple in the e-book market place controlling about 27% of the digital book market. A wider market translates into commercial success. On B&N’s web-site, customers usually purchase three digital books for every one physical book. B&N Nook business has been growing rapidly with an estimated $970 million of total e-book sales in 2011. Microsoft plans to invest about $300 million in a new company that comprises of B&N Nook tables and e-reader business in addition to its college division. This will offer B&N with additional avenues of distribution for the numerous Windows’ user around the globe. The development of a Nook e-reading app will also improve the efforts of Microsoft to come up with digital stores to market apps, e-books, and other content which is crucial to plans for entering the tablet market. Studies have demonstrated that by 2020 about 400 million people will own tablets. This is likely market for the e-book sellers and publishers. The firm has also expanded its store space for toys and games. It has also added space for its Nook devices. This makes it very easy for the customers to access the product of their choice. On the other hand, the B&N’s strategies may fail for various seasons. In 2011, the firm incurred losses of $73.9 million in 2011 as compared to the $36.7 million profit in 2010. This was as a result of launching and promoting Nook. However, it is not clear if Nook will bring in the revenues justify its steep development along with marketing costs. It is also unlikely that Nook will assist direct traffic to B&N’s brick-and-mortar stores. The other setback is that booksellers still make more money on print books compared to e-books. Finally, B&N still relies on its physical brick-and-mortar stores to propel its business. Question 4 There are various strategies that book sellers can adopt to stimulate more business: they need to incorporate e-ads so as to add additional revenue in addition to the book sales; increasing their flexibility in negotiation; e-book price fixing; offering the e-books in various formats; need to have a company that archives the e-books; mergers and consolidation as well layoffs so as to increase profits; incorporate social media in the promotional activities; finally, ensuring a balance between print and electronic books. Reference List Coburn, M., Burrows, P., Loi, D., & Wilkins, L. (2011). E-book reader’s directions in enabling technologies, New York: Routledge. Porter, M. (2006). Competitive advantage: Creating and sustaining superior performance, New York: Simon and Schuster. Read More