Both web sites have basically same features that customer can buy products through just clicking a few times and typing a few keystrokes to enter information such as address and credit card number. The fundamental difference can be found in products both companies offer respectively. Amazon.com offers book, music, video, toys & games, electronics, e-cards and auctions, while Barnesandnoble.com offers book, music, software, and magazine. Although, their main business is in book selling, Amazon.com offers more variety of items than Barnesandnoble.com. Another difference can be found in their ability of search engines, which is the most important feature that customers put their priorities when they look for books. Amazon.com’s search engine results are not as refined as Barnesandnoble.com’s, retrieving many items that are marginally related to the keywords. An example is that when I typed "Corporate Information Systems Management", which is the textbook for this class, Amazon.com retrieved 60 matches, while Barnesandnoble.com retrieved 6 matches. Overall, Barnesandnoble.com has more pinpoint search engine compared to that of Amazon.com. Finally, the difference can be found in prices that are generally lower at Barnesandnoble.com. On the above example, the textbook was priced at $96.60 at Amazon.com, which was priced at $90.75 at Barnesandnoble.com.

The biggest difference is the way of both companies�Ebusinesses even though both are in the same business. In spite of the fact that Amazon.com has some warehouses, it carries only small fraction of books it sells as inventory, fully appreciating the strength of the E-commerce through the Internet. In terms of inventory, since Barnes and Noble is the number 1 US bookstore chain, with about more than 1,000 stores in every state, it has huge inventories to supply each bookstore. As a result Amazon.com turns over its inventory approximately 26 times a year, which is 10 times as fast as Barnes and Noble (Mayer). The other two main differences are operating cycle and advertisement. Barnes and Noble must buy books before selling them that means cash goes out to suppliers before it can come in from customers. This operating cycle continuously implies there is financial gap between the payment to suppliers and actual sales from customers. Amazon.com charges its customers�Ecredit card soon after it ships books and it gets paid from that credit card company within a day. The payment to suppliers takes average of 46 days, which in tern means Amazon.com can use its customers�Emoney for a month and a half (Mayer). The last difference, advertisement, is derived from the first difference. Barnes and Noble has to carry the 1.5 billion of hard assets incurring lots of cost, however, Amazon.com has to keep spending on advertisement to attract customers. Last year Amazon.com spent $39 million on marketing and selling, including $21 million for advertising (Mayer).

With the dramatic evolution in the Internet technologies, combined with the amazing growth rate of Internet users all over the world, the industry business model has changed mainly led by Amazon.com. Amazon.com was the first to identify books as ideally suited to E-commerce as Dell Computer identified PCs as the same way, having been using the direct-marketing method with a price-competitive and quality items. Consumers don’t have to go to the physical bookstore suppliers, but can just connect to the Internet and find books they want to buy. This direct-marketing method undermines the existence of middlemen, which is further discussed in question 4. The other aspect of change is the order and payment system. The steps of order are first search the item, confirm the item, and decide how to pay it. These steps are exactly same as when customers are in the bookstore, but by clicking and typing through PCs. All payments are paid by credit card, not by cash. Finally, it is worth mentioning the new technology Amazon.com custom-built, which is called Eyes used as intelligent agents. This new technology allows Amazon.com to automatically send e-mail messages letting know customers the new books of interest that they have specified by author, title, or subject. Instead of sending direct mail to customers, this customer-oriented innovation gives customers incentives to keep visiting Amazon.com’s Web site and saves lots of cost (Wilder 62).

Due to the emerging trend of E-commerce with its high degree of capabilities to change the way of business, disintermediation will be accelerated further. E-commerce eliminates most of the overhead associated with operating a physical retail store such as the case of Amazon.com, and slowly squeezed the middleman out of retailing. Because of that process, E-commerce bypasses intermediaries such as shops, wholesalers and distributors, accelerating disintermediation. As positive effects, firms can lower costs of distribution and customers can get exactly what they want for less money and in less time (Banks 119). However, this doesn’t mean middlemen are going to disappear all in sudden. Customers still want to feel the products in their hands or ask pieces of advice to some salespersons directly. Furthermore, there are some fields that are relatively difficult to be applied by E-commerce such as home mortgage business. Mortgage brokers are a crucial piece of the home mortgage system due to the complexity of mortgage (Alsop 159). Therefore, the traditional mechanisms of business aren’t going to disappear, but they will evolve and adjust themselves to survive under harsh competitive environment, adding value to customers over E-commerce.