Amazon Vs Barnes and Nobles – How both companies differ in online book selling business

Since 2000, the competition between http://www.amazon.com/ and www.barnesandnoble.com/ has become intense with the entrance of competitors such as Borders and Books-A-Million Inc. Currently, as per the last traded values – 60.60 & 40.77 (Yahoo! Finance, 2007, April 27) and customer ratings – 97% & 92% (BizRates.com, 2007, April 27) , Amazon is ranked #1 in online bookselling. The best tool to analyze how the battle went on till now, is the last traded chart available for the entire company history at Yahoo! Finance.

The chart is as follows for Barnes and Noble –

The chart is as follows for Amazon.com –

Comparing the two charts, its evident that B & N was constantly trying to keep up with Amazon’s high market values and there was constant falls where it took time to come up with a competitive alternative or introduce the same technique that Amazon has already implemented. Amazon on the other hand was constantly improving its market share, expect for the time of recession during 2001. When we come to the end of 2003, the situation is interesting as B & N picks up, denoting introduction of new functionality to their web site as major enhancements. Amazon on the other hand, has a constant increase in traded value till now and continues as the leader. Right now, the technology innovation is almost stable and the graph looks stable in both cases.

Amazon’s game plan is to become a mass Internet marketer that sells a variety of products, not only books. Looking at B & N’s current web site (www.bn.com), its quite interesting that it is tuning its systems towards this trend too, by selling other products such as toys and such. This looks like deviating from its stated TOB that concentrates on selling books. Thus, looking at the history and current trends, it is evident that Amazon is the leader who initiates all major innovations and is likely to continue its trend creating substitution threats (William, 2007). Possibility is also there for Barnes and Noble to emerge as the leader, if they concentrate fully on books and when mainstream book consumers come online.

Mutual Funds and company stocks are unique product domain that is not so ubiquitous as books. The amount of individual knowledge required to market, sell and consume these products is very significant when compared to books. Such web sites will make more money by marketing these single product offering. Whereas, in the case of online selling of books, the competition is so high that companies can only make considerable profit if they utilize the e-commerce medium to implement innovation streams and try to stay ahead of others, like Amazon.

References:
1. Yahoo! Finance. (2007, April 27). Amazon.com Inc. Retrieved April 27, 2007, from http://finance.yahoo.com/q?s=AMZN
2. Yahoo! Finance. (2007, April 27). Barnes and Noble Inc. Retrieved April 27, 2007, from http://finance.yahoo.com/q?s=BKS
3. BizRates.com. (2007, April 27). Consumer Ratings for Amazon.com. Retrieved April 27, 2007, from http://www.bizrate.com/ratings_guide/cust_reviews__mid–23.html
4. BizRates.com. (2007, April 27). Consumer Ratings for www.bn.com. Retrieved April 27, 2007, from http://www.bizrate.com/ratings_guide/cust_reviews__mid–625.html
5. Knowledge@Wharton. (1999, October 27). It’s a Page Turner: Amazon vs. Barnes & Noble. Retrieved April 27, 2007, from http://knowledge.wharton.upenn.edu/article.cfm?articleid=91&CFID=11410451&CFTOKEN=17476760&jsessionid=a83021dbf34e10756a6b
6. Erhart V. (2007, April 7). Amazon vs. Barnes & Noble: Battle of the Brands. Retrieved April 27, 2007, from http://www.bloggingstocks.com/2007/04/07/amazon-vs-barnes-and-noble-battle-of-the-brands/
7. Williams C. (2007). Management: Innovation and Change (4th ed., ch. 7, p. 204-210). Thomson South Western