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Amazon vs Bn

In: Business and Management

Submitted By krato001
Words 2141
Pages 9
Measuring Price Competition Online:
Amazon vs Barnes and Noble

Kristofer Rato
Panther ID 1947207
FIN 6644 Global Financial Markets
Dr. Krishnan Dandapani

Abstract In the paper, we will focus heavily on measuring prices and price competition online between the two leading bookstores, Amazon and Barnes and Noble. You will see a comparison of publicly available data on the ranking of sales of approximately 20,000 books. By matching this information to prices, we can directly measure the demand facing both companies as well as create a price comparison for online books. As you will see throughout the paper, the results will show that the demand at Barnes and Noble to change in its price is much more than is the demand at Amazon.
Background and Data Amazon began selling books online in 1995 and are considered one of the first electronic commerce firms. Only 4 years thereafter, books were the second largest retail segment sold over the internet (BCG, 2000). According to Forrester, online book sales grew from essentially nothing in 1995 to more than $2 billion in 2000 (Forrester, 2001). In the US today, online book sales make up between 7.5% and 10% of total book sales (American Booksellers Association, 2002). The two most dominant competitors in today’s online book sales are Amazon and Barnes and Noble. These firms account for more than 85% of online book sales. We are not going to mention that Amazon’s book, music, and DVD sales are approximately four times the amount of Barnes and Noble because we are just strictly focusing on book sales. What is considered to be a major upside for online bookstores, is that they tend to have a much larger selection of books than even those of the largest physical bookstores. If you were a customer and you are visiting one of the sites, you would search for the book and the screen would give you vital

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