Analysis Of Online Book Publishing Business Environment For The Book Emporium

Strengths of online book publishing environment

The main objective of the report is to help The Book Emporium. Its business is based on book publishing and it specialises in retail and publishing. This business has been struggling because of the economic downturn. They are trying out different arenas and are focusing on shifting their offline business into online business because of the reach that internet can provide (Bradley, Fulton, Helm and Pittner, 2011). In this current situation, the business is providing minimal online services such as online book publishing, book editing, bespoke cover design, retail sales and online marketing. They need to make lot of improvements because they are dealing with online environment very first time. To satisfy different customers they need to set up appropriate pricing strategy, business model and revenue method.    

As stated above, it is very important for the business to have clarity about the business environment concerning book publishing since the business does not have any pre conceived idea in that field. With the help of SWOT analysis, some key factors will be highlighted about how the business can thrive in online environment and ensuring efficiency and growth.

Firstly, several strengths of the online book publishing business environment are present. Cost saving is one of them. Companies are able to save expenses because of the absence of physical distribution centre (Triua, 2016). It can be concluded that they will be able to save space and this will result in the reduction of actual cost of production. Company can also save printing and delivery cost. Online bookstores require minimum cost when compared to the maintenance cost of physical book stores (Kerai, 2004). Significant amount time can be saved in terms of publishing and delivery speed. Geographical constraints would not be there. Customers can read the product right away after purchasing the product. Additionally, there would not be any need for physical printing and speed publish will be available for the customers. This online bookstore would also allow the customers to view range of book selection easily and clearly.

For the second case, the most crucial weakness of the online publishing environment could be the supply chain that is complex (Bide, 2011). It was a different case in the past where book publishers used to go through an intermediary that was minimal. Relationship was just between reader and the publisher (Raccah, 2010). However, since intermediaries that are different are getting involved with the business, which is online, they all require distinct royalty fees and they expect publisher to follow rules that they have set up (Sundries of Time, 2012). Thus, the business should keep this thing in the mind and then they must choose the efficient online platform for them. This decision-making would be explained in the final stages of the report.

Weaknesses of online book publishing environment

An opportunity that online publishing business offers to the Book emporium for them to grow is that the online business allows the business to join the bigger market and publish worldwide (Coker, 2015). The business had to face limitation related to expansion since they were an offline bookstore. One of the advantages is that they will able to gain authors and customers from all over the world. They can also collaborate with bigger companies. The scale of business can be smaller but still it can collaborate with bigger companies such as Amazon. Finally, the scope for expansion of the business in the future is very viable. Any bookstore can start as a small online business dealing in publishing but still it has the scope for expansion into other areas such as journal.

Finally, this portion will discuss about several threats that are present in the online business environment. First, one is the competitors and they are by far the biggest one. Publishers are increasingly moving towards electronic books (Nwagbara, 2011), thus it would not be easy for smaller business to compete with large business. There is higher price competition as authors are able to move between different platforms. Additionally, trust and security issues can cause damage to the business and this can happen when caution is not exercised. Detailed description about security issues will be mentioned in the later part of the report.           

It is critical for the business to find a suitable publishing platform because they have no experience with online publishing. They are rookies in this field and thus selling books on their own website will not solve the problem. They will have to find a way to collaborate with bigger businesses. Five platforms will be differentiated and contrasted and this is mentioned in the table above.

When the table above is compared, it is seen that distinct publishing platforms offer distinct prices and services. For this report, the best platform for the Book Emporium is Amazon kindle publishing platform. Consumers tend to buy mostly from a specific platform contrary to the fact that they buy from multiple platform and this makes the distribution for the business easy (eBook Architects, anon). Additionally, it can be stated that the business has just started online business and it would be easier for them to use one platform. Several reasons are there as to why Amazon is suggested for the new business.

Opportunities of online book publishing environment

Firstly, the market size of Amazon cannot be compared with other platforms because they are leaders in this segment. In the US alone, the market share of Amazon is around 70 per cent (Hoffelder, 2015). Thirty per cent of total book publishing business is present in the United States globally (International Publishers Association, 2013). Market share of Amazon in the United Kingdom is around eighty-five per cent. Additionally, Kindle store that is owned by Amazon also takes up 67 per cent market share in electronic book segment (Eckstein, anon). 

For the second point, as observed for the above table, Amazon gives two different types of royalties and this is based on difference in the price of electronic book. Royalties up to 35 per cent are provided for 10.00 to 150.00 pound and 0.00 to 1.98 pound. It provides royalty up to 70 per cent for select territories (Amazon, anon). It will be better for the new business to look into the 70 per cent royalty segment. The book emporium specialises in fantasy and science fiction and this is the reason why individually the book prices would not be so high. Authors will be able to get maximum revenue at low cost since Amazon provides free conversion, editing and distribution (Carnoy, 2012).  The high royalty structure is available for select countries like Germany, US, UK, Japan, Spain, Italy, France, India and Brazil. This reflects that Amazon has built tremendous trust in those countries.

Finally, there are several benefits presented by Amazon and this helps in raising the awareness of authors. Customers can peek at the e-book because of ‘look inside’ feature of Amazon. Customers will be able to get a grasp of what the book will be like because of the feature provided by Amazon. It will surely grab eyeballs since the feature allows access to a particular book before actual purchase. There is another feature that allows an author to publish their books free.  The book will be sold online for five days because of kindle direct publishing feature. One thing that this feature does is that spikes the sales rate by raising awareness.  

Just as discussed above, Book emporium must collaborate with Kindle in order to start their online business. There will be multiple opportunities for the business if they choose kindle as their new partner and they will better their service when they provide Amazon Kindle as the guide since they are the most successful retail company (Diggingit, 2015).   

Threats of online book publishing environment

              

 Fig- Amazon Kindle Business Model Canvas

The table shown above is the canvas of business model generation of Amazon Kindle. By analyzing and identifying types of platform that are different and making a particular decision on which would work best for the company, Book emporium enhanced their work efficiency since they were able to make a step forward in achieving improvements in their online business. Several benefits are present if and only when the right platform is chosen (Economic Voice Staff, 2015).   

 

Fig- Business model canvas of Book emporium

From the business model canvas of the business, Book emporium, it can be stated that the online business system will help the business to enhance efficiency and profitability by making few improvements.

Firstly, the business will be profitable since high amount if cost is not required for e-commerce (Ashton, 2015). By not paying bills or rents, the company will not only save money but also generate more revenue as no physical storage space is required (Sasson, 2015). The main advantage of online shops is that they operate 24×7 and this is the reason why customers from different time zones will be able to buy whenever they feel free and thereby increasing the profitability of the business.  

For the second point, it can be argued that geographical limitations will be overcome since the business is now online (Economic Voice Staff, 2015). The online platform will give the business a chance to interact with a diverse population around the world. Additionally, the online platform will also enable the customers to enhance their shopping efficiency as it will save money and time. This in the long run will enable faster growth for the business.

The table above provides a list of several pricing strategies. The pricing strategy that book emporium uses is 30 per cent flat rate on the books that are available offline and this broadly covers publishing, standard cover design and marketing. Additionally, 5 per cent surcharge is levied on books sold for only editing services but this is optional. However, it might be apt for them to think that the strategy for pricing might not be suitable and this is the reason why new strategies need to be adopted.

Firstly, it will be much better for the Book emporium to separate the service fee and product instead of taking 35 per cent fee every time a book is sold since the separation will open up multiple choices for the customers. Therefore, with the help of three pricing options and combination, three different types of bundles can be created by the business. It will contain marketing, cover design and book editing. The company allows author to earn more revenue and to choose different option (Cohen, 2013).  Revenue is earned since the company does not have to pay a recurring fee in selling a book every time. For more in depth knowledge of different types of bundles, the website of Book emporium needs to be checked.

Recommendation of collaboration with Amazon Kindle Publishing Platform

The book emporium can also use psychological pricing strategy. It still works nowadays even though customers are aware of it (Quarton, 2015). Masses still believe that they are purchasing a better deal because of number figures. The online business market is already crowded and it is believed that this strategy will help the new business in drawing more attention (Maguire, 2015).

Finally, for the pricing of the products part, it is suggested that the new business should follow Kindle’s pricing strategy. Average cost will be between 1.99 to 9.99 pounds since the new business specialises in selling fantasy and science fiction books (Smith, anon). Authors will be able to gain more revenue by using this pricing strategy. New authors will be attracted because of this. Since the price will be the same between the business and Kindle, it should not worry about fixing the prices. 

The new business does not have the luxury of choosing between multiple revenue models, as they are new to the online business. Three fundamental revenue models will be discussed since these models can be implemented by the business.

First, the revenue model for the business should be sales revenue model, and this model will provide a walkthrough on how to generate revenue by selling (E-Commerce Wiki, anon).

The next one is Transaction Fee Revenue Model. The book emporium is composed of retailers and publishers. Thus, this model will allow the business to receive a nominal fee for executing different transactions (MaRS, 2009).   

Finally, the advertising revenue model will help the business to make a fine start of their online business. Social media marketing must be enabled, as this will help the company to earn more benefits. The will bring multiple people to the website (Mazereeuw, 2012). There are 1.65 billion active face book users monthly (Facebook, 2016) and roughly over 320 million for Twitter (Statista, 2016). Social media platforms will help the business in multiple ways and will help them in getting advertisers or sponsorship. More authors can be hired when the awareness of the business is increased to a certain level and this will result in more profit generation (DisTadio, 2012). Additionally, social media platforms allow direct interaction with customers and helps in getting faster feedbacks. This will eventually lead to the increase in work efficiency.

Additionally, when the business settles down it can add more revenue models to increase profit. Business models will also help the business in developing financial sustainability and competitive advantage (Masanell and Heilbron, 2015). When the company is facing financial uncertainties it should not spent a lot of money in non-essentials. Therefore, it can be concluded that implementation must be proper.   

There will be brief discussion about how key pages and websites were built. Strategies, revenue models and different pricing strategies constitute the business report. It is recommended that the business use ehost.com for web hosting. They also offer services that are essential for online business. This constitutes applications, money back guarantee, free domain name, website builder and free email address. Additionally, they are known to provide unlimited domains. All these can be availed at a nominal cost of 2.75 pound monthly. It is trustable since they were ranked as best website hosting agency.

The payment system employed in e-commerce transaction has made online transaction possible and this can be counted as a fundamental factor in online business.  

The table presented above lists some popular and fundamental payment system deployed for online transactions. Each of them possesses various risks and advantages and thus the ones mentioned might not be suitable for the business. A list is provided below.

Advantages and risks: 

The payment systems that are listed in the table are recommended for the business excluding Amazon payment system. High transaction fee is required for Amazon for products under ten dollars. Average price range of products for the business is lower than 10 pounds. Additionally, the company needs to save cost, as there is economic downturn. In addition, there can be limitation imposed by Amazon payment if the customer lives outside UK or the US.

Thus to sum it up, the business should use four fundamental payment system and must enhance them. 

Future payment system:

Digital currency, mobile commerce and payment applications will be the leading payment trend (Prickett, 2014). They are not the popular ones although they exist. They have issues within their system and that needs to be fixed (Kim, 2015). Data can be stolen and this is one of the major threats that a payment company can face (Kehoe, 2015).  Mobile commerce still has some security issues to be fixed and this is evident when theft of information still happens around the world (Blum and Dalenberg, 2012). Remote wipe out will be able to mitigate the risk. 

The business can gain several benefits when they shift their business from offline to online but there can be several risks. The table listed below will provide information about this.

Conclusion:

The online business publishing environment must be researched thoroughly for gaining further improvements. The publishing platform can be expanded with the help of collaboration. Continuous update and development in payment system, revenue model and pricing strategy is required. The business must keep a vigilant watch on the risks that the online world brings. 

References: 

diggingit, . (2015, March 3). Amazon Kindle will live a long life due to its effective value capture model [Web log post]. Retrieved from https://openforum.hbs.org/challenge/understand-digital-transformation-of-business/business-model/amazon-kindle-will-live-a-long-life-due-to-its-effective-value-capture-model.

Ashton, S. (2015, July 01). How Ecommerce Can Help Your Business Grow [Web log post]. Retrieved from https://www.mycommerce.com/blog/howcanecommercehelpyourbusinessgrow.html

Staff, E.V. (2015, October 20). How E-commerce Platforms Can Help Grow Your Business – See more at: https://www.economicvoice.com/how-e-commerce-platforms-can-help-grow-your-business/#sthash.ENMFpfsP.dpuf. Economic Voice.Retrieved from https://www.economicvoice.com/how-e-commerce-platforms-can-help-grow-your-business

Sasson, D. (2015, October 29). How E-Commerce Can Help Your Business Grow.Huffpost Business. Retrieved from https://www.huffingtonpost.com/dorit-sasson/how-ecommerce-can-help-yo_b_8413284.html

Cohen, J. (2013, May 21). An eBook pricing model that resulted in $100,000 in sales [Web log post]. Retrieved from https://blog.asmartbear.com/selling-ebook.html.

Smith, D.L. (Unknown). Ebook Pricing Strategies. Retrieved from https://bookmarketingmaven.typepad.com/ezine/ebook-pricing-strategies.html.

Young, M. (2015, July 6). 2p or Not 2p More The debate on personalised pricing [Web log post]. Retrieved from https://www.daykinandstorey.co.uk/blog/2p-or-not-2p-more/.

Coker, M. (2011). Pricing Strategies for Ebooks. Retrieved from https://bookmarketingmaven.typepad.com/ebook_publishing/2011/09/pricing-strategies-for-ebooks.html.

Eckstein, K. (2012). Kindle Pricing Strategies: How to Price Your eBook for Maximum Success Read the rest of this article on The Future of Ink: https://thefutureofink.com/kindle-pricing-strategies/. Retrieved from https://thefutureofink.com/kindle-pricing-strategies/.

Maguire, A. (2015, September 28). 6 Different Pricing Strategies: Which Is Right for Your Business? [Web log post]. Retrieved from https://quickbooks.intuit.com/r/pricing-strategy/6-different-pricing-strategies-which-is-right-for-your-business/.

Mehra, G. (2013, September 23). 5 Unusual and Effective Ecommerce Pricing Strategies. Practical Ecommerce. Retrieved from https://www.practicalecommerce.com/articles/58852-5-Unusual-and-Effective-Ecommerce-Pricing-Strategies

Parehk, S. (Unknown, – -). 5 Effective Online Pricing Strategies for Your E-Commerce Site [Web log post]. Retrieved from https://apttus.com/blog/5-effective-online-pricing-strategies-for-your-e-commerce-site/.

Quarton, S. (2015, September 14). Six Effective Pricing Strategies for Online Businesses [Web log post]. Retrieved from https://www.elegantthemes.com/blog/tips-tricks/six-effective-pricing-strategies-for-online-businesses.

Sasson, D. (2015, October 29). How E-Commerce Can Help Your Business Grow.Huffpost Business. Retrieved from https://www.huffingtonpost.com/dorit-sasson/how-ecommerce-can-help-yo_b_8413284.html

Evans, M. (2014, January 16). 12 E-Commerce Strategies To Grow Your Business This Year. Forbes . Retrieved from https://www.forbes.com/sites/allbusiness/2014/01/16/12-e-commerce-strategies-to-grow-your-business-this-year/#30769bae6ec9

E-Commerce Wiki. (2014). fundamentals:revenue_models. Retrieved from https://en.ecommercewiki.info/fundamentals/revenue_models.

MaRS. (2009). Revenue models, product pricing and commercializing new technology. Retrieved from https://www.marsdd.com/mars-library/revenue-models-product-pricing-and-commercializing-new-technology/.

Schofield, T. (Unknown). E-Commerce Revenue Models. [Report/Video]. Retrieved from https://study.com/academy/lesson/e-commerce-revenue-models.html.

DiStadio, C. (2012). How To Make Social Media A Revenue. Retrieved from https://www.tvnewscheck.com/article/59714/how-to-make-social-media-a-revenue-stream.

Statista. (2016). Leading social networks worldwide as of April 2016, ranked by number of active users (in millions). Retrieved from https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/.

Zephoria Digital Marketing . (2016). The Top 20 Valuable Facebook Statistics – Updated April 2016. Retrieved from https://zephoria.com/top-15-valuable-facebook-statistics/.

Mazereeuw, R. (2010, – -). Social Networks: Choosing a Winning Business Model.Graphics.com. Retrieved from https://www.graphics.com/article-old/social-networks-choosing-winning-business-mode

Casadesus-Masanell, R. & Heilbron, J. (2015). Heilbron. Heilbron, Working Paper 15-089 (-), 1-26. Retrieved from https://www.hbs.edu/faculty/Publication%20Files/15-089_afa7e1c9-40d2-486d-9bd4-b8ea71de9058.pdf.

Tutorials Point . (2016). E-Commerce – Payment Systems. Retrieved from https://www.tutorialspoint.com/e_commerce/e_commerce_payment_systems.htm.

Costill, A. & Libo-on, A. (2016, January -). The 10 Most Popular Online Payment Solutions [Web log post]. Retrieved from https://www.searchenginejournal.com/the-10-most-popular-online-payment-solutions/.

360 Degrees of Financial Literacy . (2016). Advantages and Disadvantages of Credit Cards. Retrieved from https://www.360financialliteracy.org/Topics/Credit-and-Debt/Credit-Cards/Advantages-and-Disadvantages-of-Credit-Cards.

eBay. (2010). The advantages and disadvantages of using paypal. Retrieved from https://www.ebay.com/gds/The-advantages-and-disadvantages-of-using-paypal-/10000000015232997/g.html.

Thomas, B. (2014, November 14). Mobile payments: Pros and cons of mobile wallet systems. CBS News. Retrieved from https://www.cbsnews.com/news/mobile-payments-pros-and-cons-of-mobile-wallet-systems/

Kehoe, P. (2015). Mobile Payment: Protecting Applications and Data From Emerging Risks. Retrieved from https://securityintelligence.com/mobile-payment-protecting-applications-and-data-from-emerging-risks/.

Blum, J. & Dalenberg, A. (2012). The Pros and Cons of Mobile Payment Services. Retrieved from https://www.entrepreneur.com/article/224181. 

PayPal. (2016). Accept Credit Cards + PayPal on your website.. Retrieved from https://www.paypal.com/us/webapps/mpp/merchant-fees.

Kim, H. (2015). 5 predictions for the future of payments. Retrieved from https://www.weforum.org/agenda/2015/08/5-predictions-for-the-future-of-payme

Prickett, K. (2014, July 24). THE FUTURE OF GLOBAL PAYMENTS AND ECOMMERCE [Web log post]. Retrieved from https://prospress.com/future-global-payments-ecommerce/

Kerai , D. (2004, May 20). The business Environment for E-Commerce [Web log post]. Retrieved from https://www.theukwebdesigncompany.com/articles/article.php?article=452.

Personal Finance and Business Advisor, . (2016, January 22). 5 Advantages and Disadvantages of E-Commerce [Web log post]. Retrieved from https://www.triua.com/100/5-advantages-and-disadvantages-of-e-commerce.html

Nwagbara , U. (2011). Waterstone’s and the Changing Bookselling Environment in the UK: the Journey so far and Prospects . Economic Sciences Series , LXIII (3), 14-26. Retrieved from https://www.upg-bulletin-se.ro/archive/2011-3/2.%20Nwagbara.pdf.

Coker, M. (2015, December 23). 2016 Book Publishing Industry Predictions: Myriad Opportunities amid a Slow Growth Environment [Web log post]. Retrieved from https://blog.smashwords.com/2015/12/2016-book-publishing-predictions.html.

Sundries of Time, . (2012). ??????????? . [The role of intermediaries in retailing industry ]. South Korea: Sundries of Time.

Bide, M. (2011). The Challenge for Standards in the E-book Supply Chain.Information Standards Quarterly, 23 (2), 2-7. doi: doi: 10.3789/isqv23n2.2011.06.

Raccah, D. (2010, December 14). On ebooks: A Publisher’s View of the Digital Transformation – See more at: https://www.sourcebooks.com/blog/on-ebooks-a-publishers-view-of-the-digital-transformation.html#sthash.UvLetGDl.dpuf [Web log post]. Retrieved from https://www.sourcebooks.com/blog/on-ebooks-a-publishers-view-of-the-digital-transformation.html.

eBook Architects. (2016). Selling eBooks on Your Own Website. Retrieved from https://ebookarchitects.com/learn-about-ebooks/selling-on-your-website/.

Hoffelder , N. (2015, October 9). Amazon Has an Even Bigger Share of the eBook Market Than We Thought – Author Earnings Report [Web log post]. Retrieved from https://the-digital-reader.com/2015/10/09/amazon-has-an-even-bigger-share-of-the-ebook-market-than-we-thought-author-earnings-report/

International Publishers. (2013). THE TRANSFORMATION OF THE E-BOOK MARKET. Retrieved from https://www.internationalpublishers.org/market-insights/trends-and-innovation/164-the-transformation-of-the-e-book-market.

Eckstein, K. (Unknown, – -). Which eBook Publishing Platform is Best? [Web log post]. Retrieved from https://www.magnoliamedianetwork.com/ebook-publishing-platforms/.

Amazon . (2014). List Price Requirements. Retrieved from https://kdp.amazon.com/help?topicId=A301WJ6XCJ8KW0.

CNet. (2012). How to self-publish an ebook. Retrieved from https://www.cnet.com/how-to/how-to-self-publish-an-ebook/

Amazon. (2014). Royalty Options. Retrieved from https://kdp.amazon.com/help?topicId=A30F3VI2TH1FR8

Author Earnings . (2015). November 2015 – the UK report: Author Earnings on Amazon.co.uk. Retrieved from https://authorearnings.com/report/november-2015-the-uk-report-author-earnings-on-amazon-co-uk/

Amazon. (2016). Look Inside the Book Program. Retrieved from https://www.amazon.com/gp/feature.html?docId=1001119971

Packer, R. (2016, April 29). Amazon owns UK ebook market but sketchy in Europe [Web log post]. Retrieved from https://rogerpacker.com/blog/amazon-owns-uk-ebook-market/.

Bos, J.V.D. (2015, – -). Global eBook Survey 2013 by Bookboon [Web log post]. Retrieved from https://bookboon.com/blog/bookboon-coms-global-ebook-survey/.