Case Study of “Bookoff, Amazon Japan, and the Japanese Retail Bookselling Industry”
Case Study of “Bookoff, Amazon Japan, and the Japanese Retail Bookselling Industry”
1. The reasons for the profitability of large Japanese retail booksellers relatively poor and their scale relatively small.
One reason for this is that there is no significant industry consolidation has occurred, so there is no dominant bookseller, because there is a unique formal institution which is price-fixing system that makes it illegal for larger and potentially more efficient competitors to use price competition to drive out small competitors. Laws have allowed publishers to fix the price of new books, music, and newspapers in the bookselling industry, this means retailers are unable to compete on price. For a long time, sales has been in stagnation, even worse, the steady increase of costs over time has reduced the profitability of both large chains and small stores. Also because of the undifferentiated book in multiple book stores, the only way to compete is on price, but this is illegal, and also the entry to this industry is low, small entrants can enter this industry easily ,this lead to the scale relatively small.
2. The benefits for individual companies and the industry to participate in Saihan system and the costs.
Under Saihan system, for individual companies, they sell books, musics, magazines at fixed price, the competition is not fierce and they can almost earn average profit of this industry, because there is no need to compete on price, this can make them more cautious of their diversity of products, so they would provide as more product as they can, which could increase customer loyalty if customers could always find what they want. Another benefit is that Saihan system encourages new tittles to publish, this enables individual company to bring many new books in their stores to attract customer. While the costs of this system for individual companies are becoming bigger, they have to spend large amount of money to process the new titles while they are
1. The reasons for the profitability of large Japanese retail booksellers relatively poor and their scale relatively small.
One reason for this is that there is no significant industry consolidation has occurred, so there is no dominant bookseller, because there is a unique formal institution which is price-fixing system that makes it illegal for larger and potentially more efficient competitors to use price competition to drive out small competitors. Laws have allowed publishers to fix the price of new books, music, and newspapers in the bookselling industry, this means retailers are unable to compete on price. For a long time, sales has been in stagnation, even worse, the steady increase of costs over time has reduced the profitability of both large chains and small stores. Also because of the undifferentiated book in multiple book stores, the only way to compete is on price, but this is illegal, and also the entry to this industry is low, small entrants can enter this industry easily ,this lead to the scale relatively small.
2. The benefits for individual companies and the industry to participate in Saihan system and the costs.
Under Saihan system, for individual companies, they sell books, musics, magazines at fixed price, the competition is not fierce and they can almost earn average profit of this industry, because there is no need to compete on price, this can make them more cautious of their diversity of products, so they would provide as more product as they can, which could increase customer loyalty if customers could always find what they want. Another benefit is that Saihan system encourages new tittles to publish, this enables individual company to bring many new books in their stores to attract customer. While the costs of this system for individual companies are becoming bigger, they have to spend large amount of money to process the new titles while they are
References: 1. Peng, M (2009) Bookoff, Amazon, and the Japanese retail bookselling industy, Global Strategy, 2e, 387-395.