BookLoversRus is a bookstore situated in Australia and it has four shops in Victoria. This business has been operational since 2004. However, it has realized that its sales have been declining significantly in all of its stores since 2012. In order to increase the sales, BookLoversRus launched a website in 2015 to improve its performance by using the internet to reach more customers. The website captures a summary catalogue of their products, and purchasers can simply call the appropriate store to place their orders so that delivery can be made to them. BookLoversRus proposes that improving the collection of their books would help in generating high interest. The purpose of this analysis report is to analyze how well BookLoversRus is performing as well as its competitive landscape. Moreover, this report also provides additional information that would enable BookLoversRus to come up with better decisions concerning its performance.
2. Business Performance Review
Based on the sales analysis data, it is evident that BookLoversRus is realizing a decline in the sales and gross profit from 2016 to 2017. This declining trend indicates that the business is likely to record less revenue due to the reduction in the sales with time. The general trend of the sales and revenue is declining because based on the 2016 and 2017 sales record, all the description recorded a decrease in sales and revenue except Home " Gardening and Chickens books where the sales and revenue increased significantly. The overall sales growth declined by $597,003 from 2016 to 2017 while the gross profit growth increased by $52,065. Moreover, History recorded the highest decline in sales and revenue hence its performance is in a danger state. On the other hand, Cookbooks, Health and Fitness and Fiction also recorded a significant decline in sales and revenue, thus, their performance is in a risky state. Generally, the performance of BookLoversRus is declining drastically with time.
On the other hand, the additional important information which could help BookLoversRus to come up with better decisions is the customers’ taste and preference and purchasing power of the customers. The identification of the customer preference would help the business to know what the customers demand based on their likes, dislikes, needs etc. Having the information about the customers’ taste and preference would help the BookLoversRus to reduce stocking books that are not on high demand and stock those that are on high demand (Vincent and Kumar, n.d.). This would increase the sales and revenue of the books being sold. In addition, having the information about the purchasing power of the target customers is also very important since it assists in identifying the type of books that the customers can afford to purchase. This can help the business in identifying the purchasing capability of the customers. This would prevent the overstocking of the products (books) that are not affordable to many customers.
3. Competitive and Technological Analysis
Porter’s five forces model
· The threat of new entrants
The threat of new entrant might be one of the reason why BookLoversRus is recording a decline in the sales. The new entrants might have been attracted by high profits realized by BookLoversRus in 2016. This is because the entrance of new similar businesses into the industry will cause a reduction in the sales and gross profit because several businesses will be competing for the same number of customers. Hence, some of the customers who used to purchase the books from BookLoversRus might have shifted to other rival businesses (Grebenshchikova et al, 2017). This also means that in this industry, there are no strict entry barriers that prevent the new entrants to enter into the business.
· Threat of substitutes
In addition, there is a possibility that the sales of BookLoversRus are declining due to the threat of the substitutes that are provided by its competitors. This is possible because the other bookstores might have provided different brands of the books but with the same content as those offered by BookLoversRus such that the customers are able to substitute BookLoversRus’s products with the other brands. This leads to a reduction in the sales of BookLoversRus since the customers are not limited to specific product i.e. they have a variety to choose from. Thus, a reduction in the sales also leads to a reduction in the gross profit.
· Competitive Rivalry
The competition among the various bookstores could be the main cause of a decline in the sales of BookLoversRus. Based on the performance of BookLoversRus, it is evident that the number of competitors might have increased in 2017 as compared to 2016 and there is a possibility of the decline in sales to continue as long as the number of competitors keeps on increasing (Krishnamurthy, 2010). The sales decline because the competitors offer the same type of products being offered by BookLoversRus, hence, the customers have a variety of the places to purchase the products from.
· Power of customers
In addition, the customers’ power might have also contributed to the decline in the sales realized by BookLoversRus in 2017. This is because the customers might have compared the BookLoversRus’s price and the prices offered by the competitors. Therefore, some of them might have purchased the products from other bookstores that offer the same products but at a lower price.
· Power of suppliers
The suppliers’ ability to interfere with the price of the products offered by BookLoversRus might have also contributed to the decline in the sales. This is because BookLoversRus might have been relying on few suppliers who might have hiked the price of their products or even refused to work with it. The process of getting the new suppliers might have affected the operation of the business.
· How sustaining and disruptive technology can help decrease buyer power in the book industry
The adoption of the appropriate in the book industry would help in reducing the buyer power through the standardization of the prices, improvement in the quality of the products and better service delivery (Baldwin, 2015). The standardization of the prices across all the stores using a technology system would reduce the buyers’ demand for low prices. In addition, technology would also improve the efficiency of the services such that the placement and delivery of the orders. The customers would be satisfied with the services.
· BookLoversRus with Borders store
Despite the decline in the sales, BookLoversRus is still a stable business as compared to Borders store, which collapsed. This is because the business is still realizing a profit despite the decline in the sales. BookLoversRus identified the need for a website to promote its operations at an early stage compared to Border store, which was too late in incorporating technology into its operations. Furthermore, BookLoversRus has just four stores, which are easier to manage as compared to Border store, which had many stores.
4. Conclusion
In summary, despite the fact that BookLoversRus still realizing a slight profit, the rate at which its sales are declining is alarming. There is need to carry out an analysis to identify the cause of a reduction in the sales before the situation worsens. This would help to prevent the collapse of the business. The threats affecting the business should be identified and evaluated using Porter’s five forces model. Finally, an appropriate technology should be employed to improve service delivery and reduce the buyers’ power.
5. Appendix
References
Baldwin, C. (2015). The Impact of Web-based Technology on Small Businesses. Business and Management Studies, 1(1).
Grebenshchikova, L. and Yakushev, N. (2017). Definition of Competitiveness of the Enterprise Using the Five Forces of M. Porter. Bulletin of Kalashnikov ISTU, 20(3), p.51.
Krishnamurthy, B. (2010). Five Forces Model: Analysis from an Emerging Economy. SSRN Electronic Journal.
Vincent, C. and Kumar, M. (n.d.). Business performance measurement and management.
