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Company Case 17 (direct and online marketing)
A: Booking on the internet
Pondering The Internet
In the early 1990s, Jeff Bezos, like many other potential entrepreneurs, pondered how she might use the Internet for business purposes. Bezos, then a senior vice president at a Wall Street hedge fund, believed that an Internet company would have to offer a greatly superior product or service if it were going to get customers to jump through the technological hoops involved in Internet commerce.
Bezos drew up a list of 20 Internet business possibilities ranging from magazines to PC hardware or software. After analyzing the list, however, he settled on selling books. He had always loved books and bookstores, but he had never considered starting a bookstore of his own.
Bezos knew that the book printing and selling industry was very fragmented. Hundreds of publishers churn out about 50,000 books per year on every imaginable subject. They then distribute those books through hundreds of distribution companies, who in turn sell to hundreds of bookstores. This fragmentation had already resulted in industry consolidation. Giants such as Barnes Nobel, Borders, Books-A-Million, and Crown operated about 800 book superstores and controlled almost 50 percent of all bookstore sales. These chains had already driven many independent bookstores out of business.
Bezos realized, however, that even the biggest individual bookstore could offer only a fraction of the 50,000 books published each year, not to mention all the previous books in print. Theoretically, he saw that a “virtual” bookstore could offer every book in print – a mighty river of text – hence, the name Amazon.
At the Headwaters
Bezos understood that the giants like Barnes Nobel or Borders, with their strength in dealing with publishers and book distributors, would eventually turn to the Internet. He believed that in any product category customers could remember two or three brand names. “In shoes, there’s Nike, Reebok, maybe
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