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Custom Comparing Amazon.com and Borders Books Essay

Amazon.com is an e-commerce company based in Washington and it’s the world’s no. 1 online retailer. The firm was founded in 1994 by Jeffrey Preston Bezos. He launched the company as an online store so as to take advantage of e-commerce. Later the company started trading in other products so as to command the online market.  Amazon has experienced remarkable growth from being a small bookstore to a big superstore company. The company is very popular and highly rated. Since its launching it has gained a lot of recognition through building its reputation and continuous branding.

 Borders bookstore was founded in 1971 by two brothers, Tom and Louis Borders while students at the University of Michigan. Its headquarters are found in Michigan. Since its launch, Borders was the most admired bookstore with stocks in reading materials and music. But with the emergence of e-commerce in the mid 1990’s competition increased and Borders found it rather difficult to shift into e-trading. This eventually resulted in market decline year after year till it became bankrupt in February 2011. In 1992, Borders was acquired by Kmart and merged with Waldenbooks which was in the verge of bankruptcy (Lee & Carter, 2005). This was not received well by Borders senior management team as most of them left the company. This was a major setback to the company which was struggling to keep at par with emerging competitors such as the Barnes& Noble and Crown books.

Internet has changed the way we used to do business by making it easier for customers to purchase products online. A customer placing an order for a book online and having it delivered to him/her is a matter of hours. Geographical barriers are a thing of the past as online trading can take place from anywhere in the world as long as you are connected to a network. Amazon.com has taken the advantages brought about by the internet. Amazon.com has been able to diversify in terms of both geography and products on offer. This has seen it grow its operations in Europe and Japan hence giving it a global exposure. It trades in a variety of products such as videos, CD’s, books, online auctions and house items. The main aim of Borders Group was to create richer and satisfying lives through entertainment and knowledge. Its main products of sale were books, CD, and educational items. In addition, it offered other services aimed at enticing customers to visit the stores more often. Borders is a leading and well-known retailer of media materials with branches in a number of countries and approximately 600 stores.

To enhance internet marketing and sales, Borders decided to upgrade their online systems and processes through a two stage plan. The first one was a locally grown plan called Common Systems while the second was a "buy and integrate" approach aimed at implementing their online service delivery.  These two plans failed unanimously. It was at this point that the management out-sourced Amazon to handle its online services as it focused more on offline service delivery. As for Amazon, their approach to internet sales and marketing was labour intensive. The company invested in developing new systems that were vital to its customers’ needs. The systems had to be convenient, user-friendly, and cheap while making transactions. The company also turned to web advertisements, re-branding and online promotions as a means of marketing its services.

Amazon.com was able to continue being in the business despite incurring losses in its first 6 years in the industry as a result of its effective strategies on inventory management. The company focused on four elements that were core to its success. These elements were price, customer service, competence and convenience. Their online site was open to clients all the time. In addition, users were provided with a wide range of products to choose from. The inventory was much higher than one might find in a typical store. In order for Amazon to expand its operation, it decided to partner with other firms such as Living.com, Drugstore.com and Della.com. This also ensured that it spent less on expansion. The idea of the company’s founder was to sell books without incurring any major operation costs. However, with time he realized that to achieve customer satisfaction and cost efficiency, he had to build several warehouses in major towns. This led to the issue of bonds in 1999 and resources obtained were used in building warehouses.

One of the major reasons that made Borders to go bankrupt was the failure to adequately address the issue of internet sales and marketing. They entrusted this to Amazon.com which was a rival competitor in the industry. The effect of this was helpful in the short run but with time their branding, strategy and customer base was negatively affected resulting to massive losses that they never expected. Another reason was over-reliance on music sales such that most revenues were re-invested in music. In the 90’s the business of music CD was doing quite well but with high improvements in technology especially internet, consumers were able to purchase or download music to their computers. Furthermore the need of CD’s was replaced by flash disks and hard disks. Music revenues were the backbone of Borders and when sales went down other products of sale suffered as well. The third reason was the company’s failure to develop successful and efficient systems for its online customers. Many attempts to build reliable systems failed at final stages of their implementation making the company to lose lots of money and time. Borders’ expert system was thought to be effective but reluctance of the management to develop new and up-to-date supply chain systems and processes did cost the company in the long-run.

So as to deal with changes in sales and marketing segment, Amazon.com has developed Customer Relationship Management (CRM) and Information Management (IM) support systems.  These two support systems are continuously being improved to keep up with the changing technology and abreast of the competition. The recent technology employed by Amazon is Linux-based.  To take care of security threats Amazon uses Netscape Secure Commerce Server which stores bank details of its customers in a different database. In its attempt to conquer the market, Amazon has employed a multi level e-commerce strategy which aims at facilitating consumer to consumer transactions such that it’s now possible for anyone to sell anything through its platform. The company gets a commission for any product sold.         

Borders, on the other hand tried some efforts such as lowering the prices of its products amid high competition from firms in the same industry. Before its liquidation, the company was struggling on putting efficient mechanisms in their ground advertisement such as the use of billboards and media channels. The decision of Borders to focus on offline sales and marketing amid transition of major companies to online sales may be seen as one major factor that led to its downfall. Lack of good management and bad decisions especially in situations when the industry is facing stiff competition, economic crisis and pressure to perform leads to the suffering of the company both in terms of reputation and revenues earned.

The world of business is characterized by a number of elements: complexity, competition, turbulence and change. For firms to do well in business, they must develop mechanisms of continuously transforming themselves with the trends in the corporate world. They should also review their strategies periodically to determine their weaknesses and strengths so as to conform to the expectations of the customers. The management should streamline functions that give them a competitive advantage, reengineer and restructure key strategies for optimum effectiveness. Strategic flexibility is paramount for a company to succeed in today’s world. It involves an organization’s ability to determine changes in its external environment, generate new actions to counter those changes and act in an effective way so as to get good results. In addition, the firm should identity when to halt their responses or reverse them if they proof to be ineffective. The organization should not be reluctant to commit their resources to new ideas and courses of action.

When opportunities emerged, Amazon was first in taking advantage of them through committing calculated resources and acting promptly with high expectations of making good returns in the long-run. Borders would take time to make changes in its course of action, for example, it decided on venturing into online business when most of its competitors had already done that way back. Its management strategies were rigid even when the whole industry was going through a transformation. An organization must view change as a vital part of its growth in order to adapt to market changes.

Organizations should not only focus their energy on executing their current strategies but also on preparing for future unknowns. Flexibility is brought about by learning from past mistakes. Managers should analyze the negatives and work on mitigating their effects in case they emerge again. They need to understand what leads to both positive and negative outcomes. They should also encourage togetherness in the organization through involving other employees to give their opinions before decisions are made. This encourages participative work and minimizes wrangles between the managers and the employees. When Borders was acquired in 1992, most of its senior management resigned due to wrangles between them and the new owners. Such a move leads to loss of experienced and skilled employees who are important in formulating strategies for the company.

The differences in continuous growth of Amazon and eventual downfall of Borders can be attributed to management skills, competency, flexibility and adaptability to changes. Dynamism has helped Amazon in its growth from a small company to a giant online store. Borders rigidity and lack of prompt course of actions when faced by challenges led to its decline. Internet sales and marketing is vital for companies that want to command the market as more people nowadays are turning to the internet to purchase for items they need.

Custom Comparing Amazon.com and Borders Books Essay

Code: Sample20

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