The Case Study of “Bookoff, Amazon Japan, and the Japanese Retail Bookselling Industry”
1 Why is the profitability of large Japanese retail booksellers relatively poor and their scale relatively small?
According to the case, ‘stagnation in sales along with the steady increase of costs over time has reduced the profitability of both large chains and small stores’ (Peng 2009, p. 391). There are several reasons that results in the relatively poor profitability of large Japanese retail booksellers and their small scale.
Firstly, the Saihan system, i.e. Resale Price Maintenance, is the most important factor. The system’s price-fixing policy rules out the price competition (Peng 2009, p. 390), which would be a normal competitive …show more content…
Last but not least, the threat of substitutes is high as well, such as e-books, rental books, second-hand books, etc. Some of the substitutes have superior quality and function than traditional books, for particular, lower switching costs to use these substitutes (Peng 2009, p. 37). For example, the mobile phone books are more portable to carry and the price of these e-books is much lower compared with the traditional ones.
Overall, Bookoff and Amazon Japan effectively deal with the opportunities and challenges brought by the five forces. Their strategies enable themselves to be differentiated in the book retailing industry and to gain cost leadership (Peng 2009, p. 45).
From the resources-based view (Porter 2008), Bookoff