Saturday, August 9, 2014

Business: Who Can Compete With Amazon?

So, I have a sort of minor obsession with Amazon. The way that the retailer has come to dominate the world of online shopping is simply amazing to me. What is even more amazing is that the company's profit margin is so minuscule; the quarterly profit margin for June 30, 2014 was -0.65% (yes, a negative profit margin!). Despite this, Amazon's valuation is quite high. So what gives? Well, that is a discussion for another day.


What I want to bring to your attention now is Amazon's competition, particularly with regard to book sellers. In recent years, the company has made itself the go-to for consumers of books who want a title delivered to them, and quick! Amazon's online success as a book seller has made it difficult for physical stores (even giants like Barnes & Noble) to survive. If some company does not come up with a way to compete we may essentially have a monopoly on our hands!

Well, two companies have partnered up to take a stab at giving Amazon some much needed competition: Google and Barnes & Noble. The two plan to provide customers with same day delivery by using Google's already existing Google Shopping Express and customers' local Barnes & Nobles. This approach is different from Amazon's because instead of using a warehouse for merchandise, the partnership will use local stores so they will be able to deliver in a short window of time (they are predicting 3-4 hours).

Amazon's same day delivery service costs $5.99 for Prime members while the Google and Barnes & Noble partnership will cost $4.99 per delivery and will be free for subscribers to Google Shopping Express. Will this be enough to convert Amazon users and attract new customers to Google and Barnes & Noble? Time will tell if this trial is going to be something Amazon has to worry about. If I was a gambling woman, I would bet that Amazon will not loose many customers to this new competition and will continue to gain new customers. However, this is certainly something which should be monitored closely!

What do you think? Will Google and Barnes & Noble give Amazon a run for its money?

-Alyssa J Freitas

P. S. You can check out a more in depth article here.  

3 comments:

  1. I'm a frequent Amazon shopper as well! I think Google could be some true competition, but not sure about Barnes and Noble!

    Makeshift Munch

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  2. I love Amazon for books because it is so affordable. I think in the future there will be two types of shopping experiences: Major online discount retailers like amazon and mom and pop shops because people love to support local non-chain retailers. I think Barnes and Noble is slowly fading to extinction, and I'm not really sure Google is going to help too much.

    Cynthia
    www.sensiblysharp.com

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    Replies
    1. That's an interesting take on it. I didn't really consider mom and pop shops but they could very well survive because people like to support them and because of the atmosphere they create.

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