Group -8

 West Coast approached to Alibris with a proposition.  Buy at cheap and selling rather high. Working to establish itself as a leading source of hard-to- find books. .  Will act as a staging place from dealer to customer.

.The Used Book Industry  Range from large operations to individual  Bob Kaplan says “ Undocumented Industry”  The business is supply constrained.  Dealers maintain close contract.  Dealer to dealer buy-sell at 20% discount from retail price.

 Could not be used to reserve or purchase books. 30Years experience as antiquarian book seller.Interloc  Launched 1994  Dick Weatherford.  Inventory listing service.  Dealers provide description of books. .

What types of strengths . Because that was about their benefit. Interlock and Alibris both needed to think over their decision.SWOT  The way of becoming interlock to Alibris was not an easy process.weakness. Before taking this decision. opportunities and threats were faced by the Alibris are discussed next: . they both should judge what strengths and weaknesses they had and what opportunities and threats they would face.

Investment of $1 million by private investors IT related spending of Alibris had been so much Heavy customer responsiveness Company had the order fulfillment center Taxis used by interlock was a fast search engine. • Fulfillment performance was • Delay in launching e commerce site • The company was facing serious cash flow problem it already had a long line of vendors demanding to be paid. • Commercial software purchased by Alibris was not working. • Alibris only acted as an intermediary between dealers and customers. Interloc had strong brand      recognition. • Interlock provided no ecommerce capabilities which was the reason of their lower profitability. .

It helped to earn huge profit. . •Geographically distant dealers •Smaller dealers in the industry created higher shipping costs as a percentage of sales that provide the industry the lower profit.  Inefficiency in fulfillment process of the industry. Fear of false info to pass . constraints rather than demand constraints.Opportunities and  The industry had supply Threats •Number of large used book dealers •Undocumented industry •Information based industry.  New revenue model of encouraging dealers to participate in listing without charge.  Large base of dealers and listing books .

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and very few firms replicated this success. Why is this?  Because dealers could help each other to find books for their customers  Overcome the shop disadvantage  Dealer to dealer transaction will make a sell. . Interloc built an active e-marketplace even before internet come along.

 Not to be used for purchase or reserve.Why it is hard to get desired users to participate in e market?  At the beginning dealers take time to enter and upload a database. .

 Make conference and tradeshows about the usefulness.  Third of a cent  Provide email services and monthly newsletter. .How did Interloc succeed while so many others have failed?  Sources of income record storage charge.

 Focus on- Customer order fulfillment Customize services Special Package Developing IT infrastructure .Can an e-Marketplace get big fast? If so How?  Yes it can get.

 Marty Manely and Weatherford brought together and Manely became CEO in 1998.  Interloc changed to Alibris in April. service and operations management and promoting workplace innovation. 1998 .Change in Leadership  Approach by a venture capital group to change Interloc into a e-commerce company. assistance secretary of Labor who had expertise in technology.Business Changes from Interloc to Alibris.S.  Marty Manely – former U.

 Two major elements were changed –  Modification of the way the dealers were charged and revenue was generated.  Initial task . travelled across country with weatherford to meet and talk dealers and customers. .  Becoming an active participant in order fulfillment process.Change in Business Model  Manely began to research used book industry.to transform Alibris into a e-commerce company.

Change in Business Model [cont’d]  Active involvement in transactions involving Amazon. .com by passing company’s request only to reliable dealers and communicating on the fulfillment date .

New revenue model  Forgoing listing fees in exchange for 20% discount for the books sold through Alibris.  Charging premium price for books. .  Increase in dealer offering price.

Reason for changing Interloc to Alibris  Interloc operated as a bulletin board service with a bank of modems for dealers to see database of listed books and update listings. no e-commerce capabilities and couldn’t be used to reserve or purchase book  To ensure e-commerce capabilities.to allow customers to find and purchase books. .

Elements that were to be changed as Interloc became Alibris  Two major elements were changed –  Modification of the way the dealers were charged and revenue was generated.  Becoming an active participant in order fulfillment process. .

Changing Revenue model  Forgoing listing fees in exchange for 20% discount for the books sold through Alibris.  Charging premium price for books. .

Risk in changing Revenue model  Estimation regarding revenue potential-  10% to 20% sales of listed books for dealers  Dealers would sale about a third of inventory each year. .  Company’s average selling price would be $30.  Participating dealers would list all of their books with Alibris.

 Promising to do advertising and help grow in exchange for 20% discount for the books sold through Alibris.How could Alibris encourage dealers to list more books?  Forgoing listing fees and allowing dealers to enter and maintain as many books as they liked. .

Incentives that Interloc had to sell books  Inventory listing service. .dealers could post descriptions including price and condition of the books as well as their contact information.  Checking inventory of all other participating dealers.  Dealers could help each other finding books for their own customers.

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to inspect each book and wanted t knows each transaction happened Another big reason for the fulfillment centre was order consideration Selling books to customers and taking responsibility. tittle & guarantee for the quality. .

Manely & Alibris felt that they needed to set up the Sparks facility. Recombining their contents to satisfy customer orders. then re-packing and shipping orders Using the Sparks facility. Alibris sold the books to its customers by taking the responsibility. guaranteeing its quality.For becoming a viable e-commerce company & ensuring that customer orders to be fulfilled correctly & quickly. As a Result it’s long cherished dream of touchless profit is fulfilled . to serve as a crossdocking facility that means receiving shipments from suppliers.

how? .Q-2: Can the Spark facility help keep Alibris from being disintermediated? If so.

Presenting a .

 To satisfy the customer & dealer needs.Holding and buying inventory Should Alibris use the sparks facility to serve as crossdocking facility? Should the company hold inventory on behalf of dealers at Sparks? Alibris should use spark facility and hold inventory on behalf of dealers  To become a viable eCommerce company. .  To provide ‘speedy’ service to the customers.  To build a standard retail storefront on the web.

Should Alibris go far as buying books and keeping them at Sparks? Why or why not? Are there any circumstances under which it might make sense? Alibris should not go as far as buying books and keeping them at sparks because they have already invested in e-Commerce web site development substantially larger amount of fund. ] .  Their fulfillment performance is low  Un-upgradeable operating system [Purchasing of books is desirable when they will be successful to raise more money & independent dealer is not able to fulfill the order.

 Order fill rate is 50% to 60% through dealer network.The Cash crunch Whether or not spending its own money on books is a good idea. -to set up communication development system. - . Where are the cash drains of Alibris? In IT infrastructure to support ecommerce capabilities -rent expense for warehouse space. Alibris does not have a lot of money.  Their cash burn rate is high. Why not?  Having a little money in bank.

 Fail to provide money to private investors and other vendors .The Cash crunch How bad is the situation? The overall situation would be bad if they  can't customize and upgrade the system  Fail to expend all of their vendors.  Can’t operate communication network properly.

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“why is alibris having so much trouble putting in place simple ecommerce capabilities? Why is the company finding this it task so hard?” Alibris needed to migrate the listing databases from interloc k facilities to a co-location facility Why hard:  Need to migrate the server out here-there with no code changes but without disrupting operation  Need to put everything on a development machine with redirection of everything  It is very difficult to establish some basic elements of it infrastructure .

because  Oracle & many it specialist have tried to install programme and they also rewrite & modify code of the software but they have failed because it is very difficult to provide input of each book’s own description. . condition information & price when there are 5 milllon sku’s.“ Do you think alibris would be having problems with the oracle product even if alibris has a small. I think alibris would have no problem if it has a small.simple database. simple database? Why or why not?  No.

Presenting .

reputable vendor to not work properly? Why do you suppose this is?” I think it is not rare because  When company launch a new software it have some limitation  It exists in a development stage  Lack of prior experience regarding new software  Sometimes software have some lack of adaptability  Have some lack of proper implementation knowledge .“Is it rare for a new software product from an established.

Possible solution “Should Alibris continue to try to make the oracle product work. or would they switch to thunderstone’s offerings at this point?”  Alibris should continue oracle product rather than switching to thunderstone’s offerings because  Significant amounts of time & money had already been spent for oracle  Alibris are facing serious liquidity crisis  Thunderstone is a very small company  Thunderstone was confused about alibris problem handling  Alibris should not place its all eggs in one basket like a small company thunderstone  Thunderstone’s capability of providing service & support are not justified .

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