On September 21, in a crowded lecture hall at the Wharton School, Christine DiPietro, director of planning and development at
On September 21, in a crowded lecture hall at the Wharton School, Christine DiPietro, director of planning and development atbarnesandnoble.comwhich is now bn.comlisted the highlights of the online bookseller’s first two years of operation. In May, bn.com raised $486 million in pre-tax proceeds in the largest ever Internet IPO. Since first launching in 1997, the company has been named the fourth largest e-commerce site by Media Metrix, with $61.8 million in revenue in 1998 and 2.2 million customers in over 200 countries. "And we’re only at the beginning stages of this game," DiPietro said. She cited research that indicates 47.9 million people purchased books in 1998, and 41 million are considered "heavy book buyers" (purchasing an average of seven books per year). Of these, eight million have purchased books online. "The gap between eight million and 41 million is what we intend to fill in," she said.
During a question-and-answer period following DiPietro’s talk, an audience member stood up and asked the rest of the audience if they had ever purchased a book through bn.com. A few individuals raised their hands. The next question, however, was the clincher: "Has anyone purchased a book through Amazon?" Nearly two-thirds of the audience members confirmed that they had.
DiPietro responded in good humor. "Boy, you guys are really giving me the warm fuzzies," she said, smiling. But the fact remains: with over two years’ lead time in the e-commerce market (Amazon began its operation in 1995), Amazon.com is still the undisputed king of online book retailers, a fact it widely publicizes.
In truth, bn.com does have enough going for it to feel warm and fuzzyat least for the moment. Revenue for the company quadrupled between 1997 and 1998. Strategies to help reach the growing online population include an extensive, expanding affiliate network with over 160,000 cooperating web sites along with exclusive corporate and institutional partnerships. In addition, bn.com is the exclusive bookseller to America Online, which has more than 16 million subscribers. Owned 40% by Barnes & Noble, Inc. (with another 40 percent owned by Bertelsmann AG), bn.com’s identity is closely aligned with the bricks-and-mortar Barnes & Noble operation. According to DiPietro, the association between the two operations fuels one of the most important advantages bn.com has over its online competitors: an unparalleled inventory and distribution system. With more than 1,000 bookstores across the country (including Barnes & Noble superstores and B. Dalton bookstores) Barnes & Noble, Inc. allows bn.com to have access to over 750,000 in-stock titlesthe largest standing inventory of any online bookseller.
"Our developed distribution channel is something our competitors don’t have access to," DiPietro said. "Finding, packing, and shipping quicklyall of these things are important, unseen aspects of delivering value to our customers." These unseen operations combine with the front-end components of a search engine, editorial content, and "one-click" ordering.
Bn.com’s recent addition of one-click shopping technology is in fact the source of the pending lawsuit between Amazon and bn.com. According to a statement by Amazon, the company spent thousands of hours developing its "1-Click" technology, and it claims that bn.com "meticulously copied" the technology for its own use. Bn.com’s only issued statement regarding the suit calls it "a desperate attempt to retaliate for [bn.com’s] growing market share," and that the allegations are "completely without merit." In the statement, bn.com also thanked Amazon for its publicity over the matter, which it says significantly increased traffic to the bn.com web site.
Such turf struggles indicate that the stakes are much higher than corporate rhetoric might let on. When asked how bn.com plans to compete with Amazon.com, Lisa Lanspery, manager of corporate communications at bn.com, stated that the key challenge will be to "continue educating the public about our brand and our strengths." According to Lanspery, the main advantage bn.com has over Amazon is its clearly defined focus as a bookseller. "We don’t sell lingerie and the other things you’ll find at Amazon. We don’t sell everything. We sell books, music and software, and we intend to stress that through our marketing strategy."
In general, analysts seem to think that the lawsuit filed by Amazon will not go far, because one-click shopping technology is already in widespread use on the web in various forms. One thing is for certain, however: despite the rhetoric or strategizing on either side, the race for the number one spot in online book retailing is only likely to get tighter.