Separation of Stores and Online Operations for Barnes and Nobles: Was this a good idea?? What was its intent and did it work??

The case study of Barnes and Noble would show that they split their operations into existing traditional and online bookstore, during Spring 1997. As the history states, the intent was two fold -

Avoid paying taxes on online sales:

As far as avoiding sales tax is concerned, I think it was a good idea and it worked to introduce “deep” discounts on online sales. This works in the way that if a retailer ships an item out of state, there will be no sales tax. Also by separating the customer interaction (on the web site that can accessed from any part of the world) from the actual retailer operation, sales tax can be reduced to almost negligible. Its a win-win situation for both the company and the customer.

Take bold move towards innovating the new idea of online sales and create unique identity:

Barnes and Noble had started testing their innovative online business during late 1980’s by joint venture between Sears and IBM (BarnesandNobleInc.com, 2007). Moving forward with the strategic planning to establish a full fledged web site, they started selling books online on CompuServe and later collaborated with AOL to open online bookstore.
(BarnesandNobleInc.com, 2007). Also, joining hands with Firefly, they implemented the user personalization system. Till now, they had the necessary technical and marketing skills to go ahead and go live with their own web site in mid of May 1997. These developments shows that the efforts enabled them to attract alliances and joint ventures. By creating unique identity, they were able to concentrate on continuously improving the online business model under the new COO and think about seamlessly integrating the already established back-end retail Information Management system to support high transaction intrinsic and global nature of the web site. This should also be considered as a strategic move towards extensive marketing of ‘Barnes and Noble’ brand name through the global outreach provided by the web site.

In effect, both the intents worked as expected to remain competitive and innovative in the midst of vibrant markets and technology changes.

References:
1. BarnesandNobleInc.com. History. Latest retrieved from http://www.barnesandnobleinc.com/our_company/history/bn_history.html

(c) Deepesh Joseph, 2006-2007
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