Swinburne University: INF10009 - Competitive Analysis of a Bookstore

This report presents a competitive analysis of the bookstore 'BookLoversParadise,' examining its business performance, sales, and profit margins from 2018-2019 across its four Australian stores. The analysis reveals a decline in sales revenue, particularly in categories like 'Travel Escapes,' 'Gardening,' and 'Health and Fitness.' The report utilizes the Porter's Five Forces model to assess the competitive landscape, considering factors such as competitive rivalry, the threat of new entrants, substitutes, customer bargaining power, and supplier bargaining power. The analysis highlights the impact of online bookstores, e-books, and the need for BookLoversParadise to adapt to technological advancements and customer preferences. The report recommends that the bookstore reorganize its book collection, implement information systems, and focus on high-profit categories to improve its market position and revenue. The report also highlights the importance of the bookstore's ability to manage customer networks and to combat the bargaining of suppliers. The report concludes with an assessment of the bookstore's position in the market and the issues it must overcome to compete with online bookstores.

Running head: COMPETITIVE ANALYSIS OF A BOOKSTORE
COMPETITIVE ANALYSIS OF A BOOKSTORE
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1COMPETITIVE ANALYSIS OF A BOOKSTORE
Table of Contents
1. Introduction............................................................................................................................2
2. Business Performance Review...............................................................................................2
3. Competitive and Technological Analysis..............................................................................5
4. Conclusion..............................................................................................................................7
References..................................................................................................................................8
Appendix..................................................................................................................................10

2COMPETITIVE ANALYSIS OF A BOOKSTORE
1. Introduction
Application of Information Systems in any business sector contributes to the
enhancement of the processes and increment of sales and productivity in the organization
(Pearlson, Saunders and Galletta 2019). Information Systems allow the executives to capture
real-time data, generate reports using analytical tools on those data and take strategic
decisions that will help to make the necessary changes (Cassidy 2016). In this way, the
companies can improve their revenue and acquire a customer base to gain the market
competition.
The ‘BookLoversParadise’ is one such organization in the book industry that has been
suffering a decline in their sales revenue since 2013. In spite of launching a website to reach
out to their customers online in 2018, the bookstore has been failing to increase their sales
and is thinking of revamping their collection to increase customer interest. This paper will
provide an insight about their business performance. With the help of the Porter’s Five Forces
Model, it will analyse the current competitive landscape of the stores and suggest further
recommendations.
2. Business Performance Review
The ‘BookLoversParadise’ of Australia is a bookstore that incorporates four chain of
stores in Australia in regions of Melbourne, Sydney, Brisbane and Adelaide and specialises in
selling books apart from educational purpose. Although the bookstore sustained their
business since their foundation in 2007, the company noticed a severe failure in their business
since the year 2013. Their business started experiencing a random decline in their sales count
across all the four stores of the nation. The company decided to take advantage of the current
technologies and build a website in 2013 to start their business online and gain a wider
horizon of customers with the help of the Internet. In spite of providing ample facilities to

3COMPETITIVE ANALYSIS OF A BOOKSTORE
their customers such as online ordering of books, pick-up and delivery options, and the
management failed to match up to their previous sales count.
Travel Escapes
Autobiography
Home and Gardening
Cookbooks
Childrens Books
Health & Fitness
History
Fiction
$0.00 $50,000.00 $100,000.00 $150,000.00 $200,000.00
BookLoversParadise
Sales 2018-2019
Kristian Ortigas
2019 Sales
2018 Sales
Figure 1: Sales Report
(Source: Created by Author)
Digging deeper into the business performance it is clearly seen that the book store of
‘BookLoversParadise’ categorised their collection of books into 8 sections that are ‘Travel
Escapes’, ‘Autobiography’, ‘ Home and Gardening’, ‘Cookbooks’, ‘Children’s Books’,
‘Health and Fitness’, ‘History’ and ‘Fiction’. From the sales chart, it is revealed that the
books on ‘Travel Escapes’ experienced a rapid drop in their sales that is -58.90% in between
2018 and 2019 (Siegel 2016). Similarly, the books on ‘gardening’ and ‘health and fitness’
also were sold at a much lesser rate and the drop in sales were -57.98% and -53.35%
respectively. The other categories although sold at a better rate than the above-mentioned
categories, did not experience growth in the sales from 2018 to 2019 (Jaggia et al. 2016). The
only exception was the category of ‘Children Books’ that were sold at a positive rate in 2019
than the previous year and experienced increase in sales of 8.33%.

4COMPETITIVE ANALYSIS OF A BOOKSTORE
Travel Escapes
Autobiography
Home and Gardening
Cookbooks
Childrens Books
Health & Fitness
History
Fiction
$0.00
$4,000.00
$8,000.00
$12,000.00
$16,000.00
$20,000.00
BookLoversParadise
Gross Profit 2018-2019
Kristian Ortigas
2018 Gross Profit 2019 Gross Profit
Figure 2: Gross Profit Report
(Source: Created by Author)
However, the gross profit chart reveals a separate scenario. According to the profit
margins, the ‘Travel and Escapes’ books made a profit of 23.29% while the autobiographies
contributed to the maximum profit incorporating 162.50% (Anderson et al. 2020). The home
gardening and cookbooks were priced extensively and were able to contribute positively to
the profit of the company. Although the other categories such as the children books, health
and fitness books, history and fiction could not produce effective profit for the bookstores of
Australia. The books on health and fitness contributed the most negative profit percentage
amongst all categories (Liu 2017). Thus, from the data acquired on sales and profit for the
two years it is seen that the increase in sales only contributed $10,000 whereas, the decrease
in sales incorporated a value of $-145470 making the net growth of sales run in negative.
Hence, it is recommended of the bookstore to re-organise its collection of books in
various categories to increase the sales revenue of the business. The bookstores can enhance
their collection in the autobiographical books because they are costly and increases business
profit, thereby satisfying the customers with their collection as well as increase the revenue.

5COMPETITIVE ANALYSIS OF A BOOKSTORE
They should consider revamping their book collection according to the sales count and
balance their profit margin based on the prices of the books rather than closing down the
three stores.
3. Competitive and Technological Analysis
Although the company of ‘BookLoversParadise’ added technological advantages to
their business, by developing an online bookstore for the customers to avail books according
to their choice and order them online, the organization failed to impress its customer with
their services. The Porters Five Forces model is used in this report to analyse the competitive
intelligence of the company in the market to assess where the business is going wrong and
how can it survive by detecting the issues at the earliest (Rothaermel 2016). Michael E Porter
in the year 1979 developed the model of Porter’s Five Forces to provide an insight to evaluate
the competitive strength for an organization (Huang 2019). The framework comprises of five
forces, which are the ‘Competitive Rivalry’, ‘Threat of New Entrant’, ‘Threat of Substitutes,
‘Bargaining of Customers’ and ‘Bargaining of Suppliers’.
While focusing on the ‘Competitive Rivalry’, the ‘BookLoversParadise’ bookstore are
affected not only by competition from online business, but also in their in-house stores. The
other aspects of competition faced by the bookstore are the availability of e-books, handling
the book renters effectively, and small retailers and so on. The other companies in the market
are providing e-book formats for various books with a minimal subscription rate that the
‘BookLoversParadise’ are failing to incorporate in their business strategy. The biggest
competitor of the bookstore is the online bookstore of Amazon that provides its customers
with the facility of reading books online without travelling to the bookstore and buying them.
The other bookstores of Australia are incorporating the technological advancements such as
implementing Information Systems to manage the inventories and update their stock of books

6COMPETITIVE ANALYSIS OF A BOOKSTORE
accordingly (Coleta, Lopes and Salum 2019). The bookstore of ‘BookLoversParadise’
although incorporates an online website, is yet to implement the advanced level IS to manage
their business effectively. This is leading to their decrease in the market share like the similar
organization of ‘Borders Bookstore’ in Australia.
The ‘Threat of New Entrants’ in the industry of bookstores is another competitive
factor experienced by the ‘BookLoversParadise’ bookstore. The customers who are aware of
the wholesale suppliers can acquire books from them at a cheaper rate and need not travel to
the in-house stores of ‘BookLoversParadise’ or order from their online site (Majed, Nuraddin
and Hama 2018). Thus, the new age suppliers are also one of the new entrants in the industry
that are competing with the bookstores in the market. The bookstore is failing to gain
competition in the book markets of the nation. Thus, it can never think of outsourcing its
books on an international basis due to their inability in handling their website effectively. The
online stores of books incorporates higher strength in managing the customer network and
thus distribute their online stock of books amongst a variety of customers unlike the
‘BookLoversParadise’ bookstore.
The biggest ‘Threat of Substitute’ for the mentioned bookstore is the online ‘e-book
rentals’, a facility provided by other competitors in the market to their customers and
‘BookLoversParadise’ is failing to implement it in their business (Gaumer 2016). Due to the
technological advancements, the millennial customers nowadays rent their books from online
stores at an affordable price range for a limited amount of time, thereby returning the book
after reading. The competitors of ‘BookLoversParadise’ are facilitating its customers with
such technological advantages and are gripping the market competition with digital products
leaving behind the mentioned bookstore in competition.

7COMPETITIVE ANALYSIS OF A BOOKSTORE
The other component of Porter’s Five Forces Model is the ‘Bargaining of the
Customers’ that is affecting the business of ‘BookLoversParadise’ at a significantly high rate.
The businesses in this generation are customer-centric and emerge successfully in the market
only if they can overpower their customers with optimum services (Hiltunen 2017). Different
types of readers in the market incorporates different tastes in books and the bookstore of
‘BookLoversParadise’ needs to determine the taste of their readers. They need to detect the
difference in the choices of the online shoppers, in-house shoppers, e-book shoppers and
other categories and accordingly revamp their book collection to strive successfully in the
market.
Moreover, the bookstore needs to combat the ‘Bargaining of the Suppliers’ such as
the author of the books, the publishers and the content providers and negotiate effectively on
the royalty fee such that both the parties can sustain in the market equally maintaining their
profit margins. The suppliers are choosing online seller of books over the in-house bookstores
because they are able to demand higher royalty fees from them unlike the in-house
bookstores. Thus, ‘BookLoversParadise’ are facing issues in convincing their suppliers on
their financial statements.
4. Conclusion
The bookstore of ‘BookLoversParadise’ in Australia are suffering from loss in
revenue as well as losing their customers from the markets to the online booksellers such as
Amazon and many similar sites. The paper highlights and critically analyses the business
performance of the bookstore across all its in-house stores based on their decline in sales and
profit margins. Recommendations are suggested for the company to implement Information
Systems and renew their book collection according to the choice of the customers. The
Porter’s Five Forces Model finally evaluates the position of the bookstore in the market and

8COMPETITIVE ANALYSIS OF A BOOKSTORE
highlights the issues that they need to overcome to gain competition against the online
bookstores.

9COMPETITIVE ANALYSIS OF A BOOKSTORE
References
Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J.,
2020. Modern business statistics with Microsoft Excel. Cengage Learning.
Cassidy, A., 2016. A practical guide to information systems strategic planning. CRC press.
Coleta, K.G., Lopes, H.E.G. and Salum, F., 2019. Business Models: Analysis of Its
Conceptual and Theoretical Development. In Handbook of Research on Business Models in
Modern Competitive Scenarios (pp. 63-82). IGI Global.
Gaumer, D.G., 2016. BMGT 486.04: Strategic Venture Management.
Hiltunen, M.M., 2017. Extreme Sports Competitive Analysis-Bastante Skateboards.
Huang, Y., 2019, December. Strategic Environment Analysis of Logistics Enterprise based
on SWOT-PEST-Michael Porter's Five Forces Model--Taking SF Express as an Example.
In 2nd International Symposium on Social Science and Management Innovation (SSMI 2019).
Atlantis Press.
Jaggia, S., Kelly, A., Salzman, S., Olaru, D., Sriananthakumar, S., Beg, R. and Leighton, C.,
2016. Essentials of Business Statistics: communicating with numbers. McGrawhill Education.
Liu, Z., 2017. Teaching reform of business statistics in college and university. EURASIA
Journal of Mathematics, Science and Technology Education, 13(10), pp.6901-6907.
Majed, S.Z., Nuraddin, S.H. and Hama, S.V.S., 2018. Analyzing the Amazon success
strategies. Journal of Process Management. New Technologies, 6(4), pp.65-69.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2019. Managing and using information
systems: A strategic approach. John Wiley & Sons.
Rothaermel, F.T., 2016. Strategic management: concepts (Vol. 2). McGraw-Hill Education.

10COMPETITIVE ANALYSIS OF A BOOKSTORE
Siegel, A., 2016. Practical business statistics. Academic Press.

11COMPETITIVE ANALYSIS OF A BOOKSTORE
Appendix
Travel Escapes
Autobiography
Home and Gardening
Cookbooks
Childrens Books
Health & Fitness
History
Fiction
$0.00 $50,000.00 $100,000.00 $150,000.00 $200,000.00
BookLoversParadise
Sales 2018-2019
Kristian Ortigas
2019 Sales
2018 Sales
Travel Escapes
Autobiography
Home and Gardening
Cookbooks
Childrens Books
Health & Fitness
History
Fiction
$0.00
$4,000.00
$8,000.00
$12,000.00
$16,000.00
$20,000.00
BookLoversParadise
Gross Profit 2018-2019
Kristian Ortigas
2018 Gross Profit 2019 Gross Profit