Amazon vs Blendle
Suggestion to disposition of the assignment – what should it entail:
1. Introduction to paper â” 1page
a. Motivate choices we have made and argue reasoning. Why is this interesting to compare?
2. Business 1 (âIncumbentâ)
a. General description (include customer segment)â” 0,75 page
b. Business model â” 2 pages
i. Value proposition
ii. Revenue model
iii. Market strategy
iv. Sustainability (how to maintain in the market?)
v. Competitive environment
vi. Competitive advantages
c. SWOT analysis â” 2 pages
3. Business 2 (âentrantâ)
a. General description â” 0,75 pages
b. Business model â” 2 pages
i. Value proposition
ii. Revenue model
iii. Market strategy
iv. Competitive environment
c. SWOT analysis â” 2 pages
4. Discussion: Comparing the two businesses based on SWOTs and the market analysis (Porter) â” 2 pages. Point to success factors required in the industry based on analysis.
5. Conclusion/summary â” 1 page
—> include âpricing informationâ article in comparison
BLENDLE (NOT DONE – WORK IN PROGRESS)
Blendle is a Dutch media start-up founded in 2013 by two 27-year-old former journalists, Marten Blankesteijn and Alexander KlÃ¶pping. They were noticing that hardly any of their friends were paying for journalism anymore. But people were paying for Itunes and Spotify and this is how Blendle came up. You can describe Blendle as the iTunes of journalism. Readers are allowed to pick their own articles from different publishers and are not required to pay per issue or monthly subscription. They have developed a website and recently as well an app. Users should give their credit card number and they will pay for each article they want to read. If the article isnât what they expected, the user can get a refund.
Blendle was founded in 2013 and hasve 129.00 0 users since the launch on the 28th of April 2014. The majority of the Blendle users are under the age of 35, resulting in making this a youngernew audience than that of traditional papers have.
Traditionally people need to buy a paper per issue or through monthly subscription. In this way a reader pays for articles that he or she find interesting but also for the articles he or she will skip. Almost no one will buy a variety of different papers and magazines for a couple interesting articles. Blendle perfectly tackles this problem by developing a website and an app where readers can buy an article for â,¬0.10-â,¬0.30 per pop.
Readers start with a credit of â,¬2.50 after subscribing to Blendle. For each pop readers need to pay between â,¬0.10 and â,¬0.30 cent. Readers are allowed to cancel a purchase within a limited period of time, after which they will receive to cancel a purchase and get a refund. The revenue model is somewhat the same as Appleâs. When If users pay for an article, 70% of the payment will be delivered to the publishers and 30% to Blendle.
Blendle is not the only companyies that has developed a digital newsstand. However, But Blendle is successful right now, because there is a possibility to read articles of multiple authors. They have developed a platform with a lot of publishers together, this concept is unique. But not only do they have a lot of publishers, they also have a lot of categories. You can read the national or international newspaper here, but you can also buy an article of your favourite gossip magazine. With a special target group in mind, it is much easier to set up your marketing. Blendle, at first, had no idea who they did wanted to target reach at the launch of their business. It appears that their audience became people who are not reading a newspaper anymore, because they are not raised with paying for news from papers or magazines. Blendle saw this as an opportunity. Because Bendle did want to reach â” and still does â” young people, they have analysed their way of behaviour. Blendle targets their audience on habits they already have developed. Young people are already paying for films and music per use nowadays. Why should they not want to pay for journalism? Therefore it was easy for Blendle to incorporate this in their business model. An additional benefit is that when you have once reached them, they will keep using Blendle if they are satisfied happy with the platform.
Sustainability (how to maintain in the market?)
Blendle indicates that it is a really easy model to copy. Everyone Everyone can develop the same business as Blendle. Blendle is âjust âluckyâ they were there the first to implement with this type of model.
Blendle is already thinking about expansion. They would like to develop their business in Germany or France, but they will only enterplace it on the market when two-third of targeted companies is connected with them. Blendle thinks that the user is the same as in any other country. It depends on how willing they are to pay for your product, it doesnât depend on your product itself.
There have been a few investors, who are willing to invest in Blendle. Those investors are really important. Blendle needs to pay their employees. But they are also very pleased with a name as The New York Times. This is a huge name in the world, when they want to invest in Blendle this will also become worldwide news. Not only is that great publicity, it also rises the possibility of new investments because other firms will follow them.
There is no They donât have a marketing department, or even a marketeer at Blendle. Blendleâs target group is online and therefore so are they they are there as well. They use Ffacebook, Ttwitter and their blog to reach their audience. They havenât developed yet a complete vision of the future yet, as because all their marketing until now was about spreading the word. However, But they will ask their partners and relations to develop advertisements for themselves where they will name-drop Blendle.
Â· No monthly or annual subscriptions
Â· Able to get a refund
Â· Only credit card??
Â· ââIt may well be that Blendle has been so successful in the Netherlands because the publications that have signed up have been Dutch language, rather than English, in which articles are often replicated hundreds of times over. But KlÃ¶pping believes the Netherlands is no different than any other countryââ1
Â· Because they donât have a marketeer â” they want to do it all themselves â” this can go wrong?
Amazon – Not done (work in progress)
Technology of the week â” AmazonKindle
Amazon.com was founded in 1994 as a small start-up providing an online bookstore. They quickly realized the potential in the market, and through innovative ideas in order to improve the website, Amazon grew to 15.,7 $ million dollars by 1997. Amazon realized the value of providing book reviews, allowing the site to attain a more community feel rather than just a vendor site. By 1998, the site expanded into offering items other than books, such as movies, electronics and video games, and the increase in revenue continued to increase. Hitting the Internet bubble at the turn of the millennium, Amazon got intro trouble. However, through attracting new companies to sell their products online, ultimately saved the company. This analysis will mainly focusing on AmazonÂ´s take on the book industry for the sake of the comparison.
An important part of AmazonÂ´s part in the book industry is their development of the Amazon Kindle â” an electronic book reader. This technical development was launched at the end of 2007. Through this development, they allow customers to instantly download hundreds of books, and bring them everywhere they go.
Ã something about how it revolutionized the book industry
Through the development of the Kindle e-reader, Amazon expanded their business into manufacturing and distributing the series of Kindle tablets. The e-reader was mainly developed as a supplement to online bookseller industry, but has also developed to become a fully functional tablet and media device. Through the Kindle, Amazon is working as a manufacturer and a traditional retailer, as well as a wholesaler by selling the Kindle through other retailers. In order to improve their situation in the book industry, there has been speculations whether Amazon uses the Kindle for a razor and blades business model, meaning that they sell the hardware device at loss, with a hope that customers will buy enough electronic goods to make up for the initial loss.
1. Mass market
Business model Ã focus more on the Kindle?
2. Value proposition
Amazon.com focuses on several factors in order to make customer choose them over other alternatives for online shopping. These factors also affect the e-book market. Firstly, Amazon.com emphasizes convenience. It should be simple for customers to go online, find the book they are interested in, or discover a new book they would like to read. Furthermore, simplicity in methods for paying is of importance, and customers can both pay online or throughâ¦. AmazonÂ´s vision is to be earthÂ´s most customer centric company led to further development in their technology. By the launch of Kindle, one of their main ideas was to make it easier for customers to get the books. Customers no longer needs to go to a brick and mortar bookstore to buy a physical book, and they no longer have to wait for a book to arrive when ordering online. In combination with increasing the customer experience of reading a book in a digital form, they made it easier for customers to enjoy unlimited amount of literature on one device.
A second important factor in the value proposition is customization. Through customer information and information technology, Amazon.com is able to give a more personalized approach. Each customer gets individually recommendationsreccomandations for books they might be interested in, based on previous search history and purchases.
A third key element in amazon.comÂ´s value proposition is the ability to give the customer freedom of choice. This concerns both the various selection of having the greatest set of titles available, but also tools provided the customer so that they can choose between titles based on reviews and free trials of the literature.
3. Revenue model
Seeing that Amazon.com offers a variety of products, they are also able to emphasize this in their revenue model. They have set up different ways to earn their revenue, where in the book industry they primarily use a model of pay-per use when buying a book. Advantage/disadvantage about doing this?
Recently, Amazon.com also started offering a âPrime monthly supscriptionâ, meaning that customers for 9.99$ a month can download and read unlimited titles. By doing this, Amazon were able to utilize their size, and giving customers a more flexible offer. By offering both pay-per-use and subscription options, customers who only want a few books can buy a single item, whereas people who normally buys several books a month can subscribe. This increases the above-mentioned level of convenience, adapting the organizational offers to the customerÂ´s needs.
A different way Amazon.com create revenue of the book industry is by commissions on reseller sales. By demanding commissions for selling other publishers books, Amazon are able to create a large discount for themselves. Part of this discount derives from what Amazon.com refers to as âmarketing development fundsâ, which Amazon requires publishers to pay if they want promotion on the site. Large publishers typically have to pay between 5 % and 7 % of previous yearÂ´s gross sales, while smaller houses are paying proportionally more.
4. Market strategy
5. Competitive environment
It is important to include a section analyzing the competitive environment, as it includes external factors that may compete with the business. This includes direct competitors, but also regulatory ressources, indirect competitors and social and technological changes (http://smallbusiness.chron.com/examples-competitive-environment-31598.html).
Amazon.com operates in a demanding environment. In the Annual report (2011), Amazon defines its business environment as âintensely competitiveâ. The company hasve several direct threats, among others publishers, brick and mortar stores and other online e-commerce sites. They also have indirect competitors such as media companies, comparison shopping websites, and web search engines. They can both be a threat in themselves, or be collaborating with competitors. Furthermore, Amazon defines companies that provide e-commerce services, including website development and customer service, to be a threat. Lastly, Amazon believes companies that provide infrastructure web services and other information storage or computing services or products to be of threat.
1. Competitive advantages and Sustainability (how to maintain in the market?)
Maintaining and improving operational efficiencies is the key to the sustainable competitive advantage of Amazon.com. The company has superior logistics skills, allowing customers the ability to enjoy shopping convenience, ease of purchase, speed, decision-enabling information (such as recommendations based on previous purchases), discounted prices and reliability of order fulfillment.
Furthermore, Amazon.com strives to create value-added differentiation through customer-focused information services. They have developed mechanisms for retaining customer preferences and they are able to give automated customization for users. According to the CEO, Jeff Bezos, this form for personalization is like going back to the old days, when a small town had only one local shop where the merchants knew everyone, and could help them get the right products. He also argues before the era of the mass merchandizing it used to be that most things were personalized. The purpose of customization is that you get the economies of mass merchandizing and the individuality of â100-years-ago merchandizingâ.
Amazon.comÂ´s sustainability depends on their ability to maintain and grow its customer base by knowing and serving the customer what they want. This needs to be done in a better way than what their competitors are able to, and providing a higher level of value-added differentiation in customer service. Based on repeat customers (60 %), one can argue a high degree of customer satisfaction.
Amazon.com are able to offer books and other products at a very low rate compared to their competitors. Their cost structure is an important part of the explanation; hence we chose to include it in the business model. In addition to great advantages of scale and scope economies, a main contributor to the low cost structure is the world-class, high-tech supply chain. Among others, they are able to keep less inventory due to their advanced demand estimation center, and due to their market power as an important retailer of books, they can make arrangements to not pay the book publisher until after the item is sold. To further build upon the book industry, Amazon.com in the middle of 2015 announced they would begin to only pay par side of a book that was read. Hence they are using the digital industry of e-readers to further cut their costs.
Â· Cost leadership strategy â” they are the biggest
Â· Superior quality services and products
Â· Development of the Kindle â” ties customers to Amazon?
Â· Strategic acquisitions
Â· Efficient distribution chain and logistics
Â· Economies of scope
Â· Only online presence
Â· Selling at zero margins
Â· Negative publicity
Â· Online payment system
Â· Release more its own brand products and services
Â· Increase services and product portifolio through acquisitions
Â· Physical presence
Â· Online security
Â· Strategic alliances
Â· Legislation against tax avoidance
Â· Regional low cost online retailer
53%: The effective discount Amazon receives from Random House on its books. Part of that discount comes in the form of âmarketing development funds,â which Amazon requires publishers to pay if they want to receive promotion on the site. Big publishers typically pay 5% to 7% of the previous yearâs gross sales, while smaller houses have to pay proportionately more, with the result that they can end up being forced to give their books to Amazon at a 60%-plus discount.
14: The number of workers Amazon employs for every $10 million in revenue it generates. For brick-and-mortar retailers, the average is 47 employees per $10 million of revenue.