Albris Final

7/29/2019 Albris Final

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Case Summary

Alibris is an online store that sells new books, used books, out-of-print books, rare books, and other mediathrough an online network of independent booksellers. Alibris was founded in 1997 by Martin

Manley and incorporated in 1998. It grew out of Interloc; an online company founded by

antiquarian bookseller Richard Weatherford in 1994.Interloc was one of the earliest successfulefforts to centralize used book data online. But the transformation of Interlocks business toAlibris is business was not an easy task. Alibris faced many IT problems and fell in a fund crisis

while implementing the business model. Alibris turned to Oracle for setting up its ecommerce

facilities but Oracle failed to setting up the ecommerce facilities. It seemed Alibris was near tofailure. But at last Alibriss all IT problems was solved by Thunderstone, a relatively small

software company. Alibriss fund crisis was also solved by the arrangement of an additional

bridge loan. Alibris accepted the book dealers proposition of using its storage facilities and

setting up its own storage facilities At last Alibris became able to stand on its feet and now itruns its business successfully. This case shows that a start-up cant be run by consultants.

Consultants had the right idea; they just didnt execute their plans smoothly.

Relevant problems Of Alibris during 1998

On December 28, 1998, Barbara Farnsworth, an established bookseller and member

in good standing of the Antiquarian Booksellers Association of America, sent an

email to Wired Magazine's "newsfeedback" department. It responded to Wired's

December 24th, 1998 article entitled "The Amazon of Antiquaries" and stated that

by comparison shopping multiple book selling databases like ABE, online shoppers

could save commissions tacked on by sites like Alibris, Amazon, and Barnes and

Noble. At that time, Farnsworth was listing her books for sale with both Alibris and

ABE. By January 10, 1999, her business relationship with Alibris had been terminated

and her entire stock deleted from the Alibris database.

Alibris went in the exact opposite direction on both of the counts of internet: getting

people together and lowering price. Their service was designed to stifle

communication rather than foster it. Their commission structure inflated prices

rather than lowered them.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT

analysis may be incorporated into the strategic planning model. Strategic Planning has been thesubject of much research.

Strengths: characteristics of the business or team that give it an advantage over others in the

industry.Weaknesses: are characteristics that place the firm at a disadvantage relative to others.

Opportunities: external chances to make greater sales or profits in the environment.Threats: external elements in the environment that could cause trouble for the business.

Identification of SWOTs is essential because subsequent steps in the process of planning or


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achievement of the selected objective may be derived from the SWOTs. Whatever the swot

analysis for Alibris is as follows

Strength:1. First mover advantage

1. Insufficiency of Potential IT software2. Scarcity of skilled human resource3. Slower Search Engine

1. Business is not Demand but supply constrained

1. Extending Vendors

2. Amazon.com

C. Why fulfillment?

1. Why did Manley and Alibris feel they needed to set up the Sparks facility? What happened to thedream of touch less profit?

Answer:

Alibris felt the necessity to set up the Sparks facility and thus arranged to rent from ODC Integrated

Logistics warehouse space to serve as a cross-docking facility. The reasons behind this decision are-

Firstly, Alibris wanted to inspect each book and wanted to know each transaction happened. Previously,

a customer could order a book from the dealer and if it didnt come and nobody in the process

anywhere knew that it never came.

Secondly, it needed to consolidate orders. If a library wants 20 books that originate with 20 dealers, they

do not want to receive 20 boxes with 20 invoices and 20 shipping charges; they want one box, one

invoice, and one shipping charge.

Touch less profit refers to the process of gaining profit without physical involvement. Without providing

fulfillment center and being only virtual intermediary, Alibris could gain touch less profit. But then it

would not be able to provide desired service to the customers. And to gain market share they need to

be responsible, take title, guarantee quality, and look at the service. Thus the necessity of fulfillment

center was much needed which surpassed the dream of touch less profit.


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2. Can the Spark facility help keep Alibris from being disintermediated? If so, how?Answer:

Disintermediation refers to the removal of intermediary or middleman from the supply chain. Manley

decided not only to provide information of used a d out of print book but also to take part in the order

fulfillment process. To do so Alibris arranged to rent from ODC Integrated Logistics warehouse space in

Sparks, Nevada to serve as a cross-docking facility. A cross-dock is a facility that receives shipment from

suppliers, recombines their contents to satisfy customer orders, then repacks and ships those orders.

Yes, Spark facility can keep Alibris disintermediated. This facility can make Alibris capable of-

Supplying books from its warehouse to the customers without depending on the dealers Taking title, guaranteeing quality, looking at the service to the customers

Charging premium price to the customers and increasing profitability Enjoying the whole markup

Questions

1. So if Interloc is so successful, why does Manely want to change it as it becomes Alibris?Interloc operated as a bulletin board service (BBS) and maintained a bank of modems for dealers

to dial into to query the database of all listed books or update their own listings. The company

provided no e-commerce capabilities and could not be used to reserve or purchase a book. It was

simply a listing service showing the inventory that a far-flung group of dealers had taken the time

to enter and upload into a database. The reasons to change are

Keep pace with the technology

Provide e-commerce facilities

Provide facilities to purchase or reserve books

Adopting new revenue models

Increasing order fulfillment performance

Increasing operational excellence

2. What exactly is going to change as Interloc becomes Alibris?Change in technology

Changes in service management

Changes in operation management

Change in workplace innovation

Changes in business model


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(e-commerce and reserve/storage facilities)

3. How risky is the revenue model change?Scrap listing fees

Allow dealers to enter market & maintain books with no cost

Increase competition among dealersCreating frictionless economy

Assumption of listing of all books of the participating dealers

Projecting 10%-20% of sales of listed books for the dealers

4. How could Alibris encourage dealers to list more books?Creating frictionless economy at no cost

Becoming an active participant in order fulfillment process

Increasing order fulfill rate

Encourage dealers listing more books to reduce inbound shipping cost

Taking responsibility , title, guarantee of quality

5. What incentive did Interloc have to sell books?Interloc was intended to address poor information flows in the industry. It was an inventory

listing service where dealers could use their computers to post

Product description

Condition and price of available books Contact information Checklist of inventory system

Incentives

Allow mom and pop dealers to upload titles

Help dealers to find their respective customers

Provide customized products to customers

Record storage charges

Provide email service

Publish monthly newsletter

G. Possible solutions

1. Should Alibris continue to try to make the Oracle product work? Or would they switch to

Thunderstones offering at this point?


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Answer:

Alibris purchased Oracles ecommerce software, called Internet Commerce Server, which would process

purchase transactions and provide the web front-end for the database. Alibris invested large amount of

time, effort, and money after the product. But Alibris experienced two consecutive failures on the

Oracle installation.

At such a situation, if Alibris continues trying to make the Oracle product work, it would only increase

cost and thus increasing loss as there is little possibility that the software would work for five million

SKUs. So, Alibris should try to cut off its losses with Oracle product and switch to other software

company.

Alibris should switch to Thunderstones offering at this point for the following reasons -

Thunderstone had the experience of designing software for eBay. They had a workaround for record locking problem. They were moving towards a standard scripting language for their database management

software Texis.

Texis developed by Thunderstorm was earlier used by Interloc

Albris Final

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