We at Supply Chain Matters really enjoy commenting on situations where one supply chain squares off with another in an industry competition for customer fulfillment and revenue growth.
One of the pending battles shaping up and worth a watch in the upcoming 2011 holiday buying season features the e-readers of Amazon vs. Barnes and Noble (B&N). Computer tablets and e-readers are expected to be one of the hottest selling gift items for the upcoming holidays. A posting on Venture Beat calls attention to how the newly announced Kindle Fire will square-off with the nook color for customer mindshare and wallets in the coming weeks and how each company has timed its marketing and promotional thrusts.
High tech and consumer electronics industry observers have been noting that the Kindle Fire, which has scheduled availability for November 15th, and the nook color, which is accepting orders today, each have the best shot at turning the war of Apple iPad vs. all-other also-ran tablet devices. The Fire is List priced at $199 USD, while the nook color lists at $249 USD. Both can provide a compelling option for consumers who desire an e-reader with some, but not all features of an iPad, but at less than half the cost. In the current challenging economic environment, that may be compelling for some consumers who want the latest cool gadget, but need to stretch the family budget for the holidays.
The open question is whether consumer demand will swamp either Amazon or B&N, and each’s supply fulfillment chain capabilities to respond to this demand. Interesting enough however, each has chosen a different go-to-market fulfillment strategy.
In a very detailed Bloomberg Businessweek article reflecting on Amazon and the Kindle Fire, CEO Jeff Bezos readily acknowledges that $199 is an admitted price below production costs of the Fire, but the opportunity for leveraging further content revenues is much more compelling. As Businessweek notes: “The tablet (Fire) funnels users into Amazon’s meticulously constructed world of content, commerce, and cloud computing.” A shopping app is pre-installed and sits at the bottom of the Fire’s main screen, and Amazon has built customized shopping pages specifically for the tablet. Initially for the upcoming holiday season, consumers will only be able to acquire a Fire on Amazon, since that is where Amazon wants Fire customers to experience the complete buying experience. Amazon has also invested significant monies in expanding its distribution center capabilities but has taken some criticism around working conditions and salary levels of distribution center workers.
B&N on the other hand is planning for a far wider channel deployment plan for the nook color. Consumers will be able to purchase a nook from multiple retail outlets. At the recent technology conference, the audience got to view some of the details of that strategy. B&N plans are to have 13,000 point-of-sale outlets, along with the B&N site, this holiday season. The company is just going live with technology that will help monitor and respond to various POS demand patterns and will leverage a sales and operations planning (S&OP) process that will likewise respond to market changes that span inbound materials through individual POS. This initiative is bold in that not many organizations have the stomach for implementing new software technology just before the largest spike in customer fulfillment. B&N’s goals are the capability to route nook inventory to the channels experiencing the most customer volume, as well as the most up-sell.
Time will certainly tell the complete story as to which company planned for the right inventory and customer volume, and can overcome any shortages in component or finished good supply. We certainly hope that both are successful since Apple needs some healthy competition in this area.
In the meantime, join us in observing how both companies’ supply chain teams respond to upcoming holiday demand.
Readers are also encouraged to provide feedback in the Comments section on their individual buying and delivery fulfillment experience regarding either of these new e-readers.