Comparing Borders Group and Amazon - Assignment Example

? Comparing Two Similar Businesses of Institute Borders Group, Inc. a public owned retail book store was the nation's second largest retailer of books, music, and other educational, informational, and entertainment products. The Borders Group owes its history to several separate bookstore chains--Borders, Waldenbooks and Brentano's. Borders began its journey as a bookstore in Ann Arbor, Michigan in 1971and was founded by two brothers Tom and Louis Border; initially it served the demand of academic community of the area (About.com, 2011). With the passage of time, it grows from just a book store to a super store that offers its customers a relaxing and comfortable environment to linger, and also provides ubiquitous espresso bars. The Borders Group expanded internationally beginning with a store in Singapore 1997, and then eventually expanded to more than 40 stores in Europe, Asia and Australia/New Zealand (About.com, 2011). With the advent of information era, things changes globally; it’s the era of internet. Many new companies emerge on the face of internet, offering products at competitive prices; present a threat to brick and mortar store. So borders recognize the need of the hour that they could not survive by just being a brick-mortar company, hence they created their online presence in 1998 (Reuters, 2011). Amazon.com is an American based e-commerce company that was pioneer in online business. The company is based in Seattle, Washington and was founded by Jeff Bezo in 1994 (web hosting report.com, 2011). The primary focus of the company is to become a leader in online bookstore and to achieve this goal, the company offers a very different experience from a regular bookstore; it allows book writers to write book reviews about their books, which greatly adds to Amazon success. And now it became the largest internet sellers of media in the world today, and has expanded its selections to include clothing, beauty products, house wares, and thousands of other items. Borders however were late in embracing e-commerce as they entered the cyber world in four years after Amazon.com; by just offering online website. It was not a success for the company as market was monopolized by the Amazon, who had been serving customers for four years and had established a trustworthy place in the consumer’s mind. Borders had been lacking skills that were required to do internet marketing i.e. it announced a deal with Amazon.com Inc to re-launch its e-commerce site. In 2008, Borders finally established its own e-bookstore, and made partnership with Kobobooks.com to facilitate its eBooks sales. To retain its customer it further offers free Wi-Fi almost in all its stores and start providing self-publish facility to its customers (About.com, 2011). Key success factor in internet marketing and sales is attractive and user friendly interface; which amazon.com initially lack i.e. amazon start was shaky. But by injection of more capital; it offers a better looking website and hosting capabilities. Being pioneer and new entrant in the online book selling industry, Amazon demonstrated innovation, impressive management and creativity to get it registered in online business. Its company’s core business strategy to make online experience easy and user friendly and for this very purpose they introduces a very secure credit card processing system and 1-click ordering system; which proved helpful in achieving its mission. To acknowledge Amazon efforts in innovating a unique online ordering system; the U.S. Patent Office awarded its 1 click technology Patent No. 5,960,411 on September 28, 1999 (Amazon.com, 2011). Amazon management also made some useful decisions like changing its location to avoid additional sales tax; changed headquarters that made it close to largest books wholesalers. Another unique feature that Amazon offers to its customer includes the use of personalization tool that allowed it to offer unique storefront for every individual customer, according to their needs. Amazon, during beginning of its journey as online bookstore, did not receive a warm reception. It was not profitable for first few years due to unattractive website and poor marketing strategy but when owner creativity comes on the map situation changes and soon it starts gaining customer. While comparing Amazon and borders bookstores we find out that factors that contributed in Amazon success can be summed up below: Availing the advantage at the right time or capitalizing over the opportunity. As Amazon’s see that in near future internet will rule the world, so it comes up with an online bookstore. Not only zero inventories are required but also, large customer base can be attracted; while working online. Lead the change rather than adapting the change like offering 1-click technology, personalized storefronts, and move from click to mortar to add delivery advantage. Great marketing strategy like it spent 60% of sales on marketing because Bezo believed that customer valued selection connivance over price i.e. focused on its brand image. Now we would shed light upon the reasons for borders filling bankruptcy. Borders started losing its market share when Amazon made entry in the industry. Market was taken over by e-bookstores and value of paper-books declines. Borders liquidity was disturbed when it bought unnecessary stores. This is the beginning of borders going out of business as amount of debt increases; Borders’ management faced formidable constraints, such as store leases, that inhibited its ability to shift with the market. Furthermore, borders failed to understand the importance of agility in today’s market; this identifies that whatever firm has been spending should bring advantage to the customer, brought change and newness in their lives, which borders lack. We can summarize the reason of borders going out of business as below: Late in adapting to change; made an online presence in 1998, four years after Amazon, a leader in e-commerce then entering into a e-book store in 2010 (Reuters, 2011) while Amazon was already moved into digital books with the kindle reader in 2007. Faces fierce competition as Google and Apple entered the fray (the wall street journal, 2011). Ignore the internet sales and fail to attract online customer. Although, borders tried to enter the e-bookstore list but unlike its leading competitors--specifically Amazon and Apple-- Borders e-bookstore did not offer digital magazines or newspapers for sale. There was also poor branding and management strategy, as it didn’t recognize the changing needs of customers. The world has seen about a 50% decline in bricks-and-mortar shelf space for books within five years, and is expected to see 90% within 10 years; this suggest that Bookstores are going away. Poor leadership, as observed in the company decision to transfer its Internet operations to Amazon.com Inc. a rival about a decade ago. Financially weak position because of management decision of financing overseas expansion projects and stock-buyback program swelled the company’s debt. Borders also underwent major executive and board changes which ended the year 2010 in financial disarray. From the above discussion we find out that those companies that lead the change eventually win the race in rapidly changing markets. This is the reason of Amazon success as being pioneer in e-commerce it got the opportunity to lead the online web market by offering wide range of products. Amazon management shows enough flexibility which can be observed in company’s decision of selling other firms product on its site. So we conclude that the idea of adapting to a change in the environment and then utilizing ‘change management’ processes to execute the adaptation is no longer effective. This is what that happens in borders case “if you are adapting to a change, you are already in a follower position” (Prweb.com, 2011). The winners in today’s market are the highly agile companies that are making change happen. References About.com. Web. 21 October , 2011. . Amazon.com. Web. 21 October, 2011. . Prweb. Web. 21 October, 2011. . Retuers. Web. 21 October, 2011. . The Wall Street Journal. Web. 21 October, 2011. < http://online.wsj.com/article/SB10001424052748703373404576147922340434998.html> Read More