Comparing Two Similar Businesses
Introduction
The internet as a technological innovation has led to the establishment of various online businesses. This development in business has resulted on customers’ reliance on online stores instead of purchasing goods from retail stores or shopping malls (Byers, 2006). Border Group and Amazon are some of the large and competitive online businesses. In light of this, the paper focuses on the history, business approaches, management and marketing of Amazon and Border Group by comparing and contrasting these features.
The History of Amazon
Amazon.Inc refers to an American online and global Corporation headquartered at Seattle, Washington. At present, Amazon is the largest internet trader all over the world. The name originated from the Amazon River at the time of its founding in 1994 by Jeff Bezos. Amazon commenced online business in 1995, primarily as an online retail store, though later varied its operations to selling music, video games, food, toys and furniture (Vine, 2000). The primary idea that led to the establishment of Amazon was based on comparison between brick-and-mortar and online store. The pioneer of Amazon realized that online stores would earn enormous profits that mortar stores. Amazon sold its first product, a book titled Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought, having been included in the Washington State. In 1996, the store reintegrated into Delaware and traded in the stock market for the first time. In addition, the store offered its first initial public offering (IPO) in may 1997 under the NASDAQ stock exchange (Gant, 2008). Unfortunately, Amazon continued experiencing slow business growth that resulted in complaints from shareholders, because the business did not make the anticipated profit. However, the case was not different to other online stores since they also experienced extremely low profits. Despite the losses, Amazon managed to make it through the hard business times and it first realized profits in the late 2001. This implied that online business was growing and was a profitable venture. By the end of 1999, Amazon had garnered sufficient popularity resulting to the recognition of Jeff Bezos as the person of the year.
History of Border Books
Border Group.Inc refers to a global retailer headquartered in Ann Arbor, Michigan (Gant, 2008). Tom and Louis Borders, who were, by then, undergraduates of the Michigan University, established Border Group in 1971. During the initial period of the establishment, Border Group Company had a customized book inventory for all its clients. Tom and Louis later established another company named Book Inventory System (BIS) that acted as a wholesale. The company commenced business by selling second hand book in a two-roomed building. As the company grew, it moved to the Maynard apartment. Border Group made a remarkable step by purchasing the 80-year old Wahr’s Bookstore (Gant, 2008). Tom and Louis Borders stocked the newly acquired bookstore with rare books and handed over the management to Michael Hildebrand and Harvey James. The management of the rapidly growing company later relocated to another large venue in the State Street. The new venue initially belonged to the Wagner and Sons clothing shop.
In 1992, the ownership of Border Books changed when Kmart purchased and merged it with the Waldenbooks. The primary reason behind the merging was to save the already declining Waldenbooks by providing it with senior management from the Border Books. However, the senior management had left, leading to a too large business for the Kmart managerial to handle. In addition, various competitors such as Crown Books and Barnes & Noble were emerging creating additional challenges to Kmart and his Challenges.
Border books established various branches all over the world with Singapore having the largest international store at that time (Gant, 2008). The company also established other forty-one stores in various countries such as New Zealand, Australia, Ireland and UK. The UK branch became the Borders Group supplementary in 1998. Unfortunately, the UK store faced a lot of competition from other firms leading to its closure through selling to a private investor in 2007. Border (UK) was subjected to the administration, which is similar to Chapter 11 bankruptcy in the US. Other branches of Border Books subsequently went to closure, until all the stores resorted to liquidation.
Marketing Approaches to Internet Marketing and Sales
Online marketing requires effective management approach due to its competitive nature in order to realize profits. Border Group and Amazon were online competitors and each company had its own approach to survive the online competition (Vine, 2000). The two companies differ on how they handle the stiff competition resulting from the elastic nature of the online market. The first distinction is that Amazon focused in growth and expansion of new businesses and economies of scale. Amazon grew as the best online store because it was capable of expanding its trademark and providing customers with exceptional shopping experience. Moreover, Amazon also provided advance sales to take in the economies of scale. Various approaches deployed by Amazon include provision of a wider variety of products for customers to choose from and low prices on goods (Byers, 2006). The provision of a wide variety of goods had significant effects to the business such as increasing convenience and enabling clients to compare prices. Essentially, Amazon offered free shipping costs for goods worth 25 dollars and above as an approach to deal with the competition. On the other hand, Border Books appeared unable to deal competition. The Border Books site was offered an extremely slow search engine, which disadvantaged it in dealing with the stiff online competition. The slow search engine and substandard marketing approaches were the main problems faced by Border Books. As Amazon was focusing on offering quality and exceptional services to clients, Border Books concentrated on opening global branches that later collapsed due to competition and poor management. In addition, Border Books did not cover for shipping costs and it charged relatively higher prices on goods sold.
Amazon’s Success
Amazon emerged among the profitable online businesses in 2001 despite making losses continuously during its establishment period (Gant, 2008). The company remarkably succeeded because of various factors. First, Amazon came up with a content strategy by enabling online customers to access products; hence buyers developed a motive of checking on Amazon during the buying process. In addition, the strategy enabled Amazon to achieve search engine traffic because of the right website content. The second reason for the success of Amazon is that it linked its business with other businesses. For example, the company paid publishers to instruct people to purchase from Amazon.com. Modern business, not only online businesses but also brick-and-mortar, should implement the affiliate market strategy to realize success in the present market (Byers, 2006). The third reason for the success of Amazon is that it provided surety to clients. Amazon might not provide the cheapest prices to its customers but the marketing strategy instills surety among customers. Notably, consumers are prone of comparing prices upon realization that the price of a product is not fair. Charging more than the competitor results in less or no clients and no business can succeed with fewer customers. The relatively low prices maintained the current and attracted new clients resulting in profits.
Reasons for the Failure of Border Books
Border Books.Inc went to closure after an extremely long period of business activities. Border Books commenced business earlier than Amazon; hence, it should have total control of online business (Gant, 2008). There are various factors linked to the decline of Border Books as a worldwide online store. The first reason is that Border Books primarily majored in the music trade, which was extremely beneficial during the earlier stages of the internet development. The music business declined because of the decline in CD business, which resulted in massive losses to Border Books. Overinvestment in the music business not only consumed much of the capital but also created more losses. The decline in the music business later affected other business categories since music attracted a majority of their clients.
The second reason for the failure of Border Books is over-independence on various business products during the establishment period instead of effective business operations. The wider range of products was beneficial after establishing a firm business foundation and after the establishment of Amazon and other competitors. The huge number of clients left Border Books for other retailers. According to Byers (2006), the company went bankrupt because it failed to adapt to the changing business operations. For instance, they failed to upgrade their expert system. Notably, Border Books could not keep pace with the changing technology as other firms such as the Barnes & Noble devoted resources in process systems.
Failure to adapt to the changing market conditions is also a reason for the failure of Border Books. Market conditions refer to the market characteristics, including competitors, market’s growth rate and the level of competition. These conditions can either be favourable or unfavorable in nature. Amazon responded to the market conditions by offering a wide variety of products at relatively cheaper prices. This resulted in many customers to Amazon. Border Books also provided a wider range of products but ended up failing.
From a personal point of view, firms should make strategic decisions when market conditions change to maximize profits (Vine, 2000). Firms also need to reduce supplies in the off-peak periods to avoid making losses and increase supplies when demand is high. Advertising is another recommendation that firms should implement when competitors are many since it increases sales. However, advertising can increase operational costs. This implies that firms should reduce advertising and focus on effective business operation when there is competition.
In conclusion, Border Group and Amazon portray the nature of the competition in the online business. Various firms, including Border Group, have been forced to quit businesses because of the stiff competition. Other firms such as Amazon continue capitalizing on the opportunities provided by the internet. The history of these two firms reveals that Amazon brought competition; hence, revolutionizing the online market. Amazon commences business by suffering losses but later emerges successful as Border Group goes bankrupt.
References
Byers, A. (2006). Jeff Bezos: The Founder of Amazon.com. New York: The Rosen Publishing Group.
Gant, T. (2008). International Directory of Company Histories, Volume 96. Chicago: Gale.
Vine, D. ( 2000). Internet Business Intelligence: How to Build a Big Company System on a Small Company Budget. Medford, N.J: Information Today, Inc.
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