Tasks:
Problem 1. If Peter Braithwaite could rewind the clock back to 1997 when the company's first Web site was established, what actions should he have taken differently?
Problem 2. Does the Good Book Guide have a future, in the face of competition from Amazon and other on-line booksellers?
Problem 3. If so, what should John Braithwaite's marketing strategy for the Good Book Guide be now?
Problem 4. How does the Good Book Guide Web site (www.gbgonline.com) compare to that of Amazon (www.amazon.co.uk) or other British-based on-line booksellers?
THE GOOD BOOK GUIDE:
E-commerce poses a huge challenge for established companies that have built traditional routes to their markets. They cannot beat the on-line groups, so they have to join them. But as the Good Book Guide has found, this can severely damage their profits. Like many firms hit by the explosion in on-line business, the Good Book Guide, a British mail-order bookseller, finds itself between a rock and a hard place. E-commerce rivals such as Amazon.com, which sells discounted books over the Web, have eroded the Good Book Guide's customer base, reduced sales volumes and pushed the direct marketing business into loss. The London company must find a way to compete with the on-line booksellers that threaten its future. But in common with legions of established firms trying to map out a strategy for the Internet. the Good Book Guide is finding out that the amorphous mass of e-commerce resists definition by conventional business models.
'The on-line marketplace changes by the week,' says John Braithwaite, son of the Good Book Guide's founder who recently was appointed to the new post of Internet Marketing Manager. 'It is clear that we've got to start using e-commerce quickly, but the costs and benefits remain a fog.'
What is certain is that urgent action is needed. The Good Book Guide has been aware of the threat from on-line booksellers since 1995. 'We spotted it early.' says Peter Braithwaite, John's father. 'But we didn't want to be pioneers in the field because we couldn't see where the profits would come from.' Even now, it is unclear what contribution on-line business will make to profits.
The company set up a Web site in 1997. John Braithwaite admits it was nothing more than an order-placing facility for existing subscribers to the Good Book Guide. 'It was only this year that we recognized we had to have a serious presence on the Web,' he says. But going online seriously has been costly. About £350,000 has been invested in new IT systems over the past three years. Two full-time programmers have been added to the 60 staff. This year, £230,000 is being spent to develop a Web site that permits orders to be fed straight through to the company's delivery systems. To begin with, the Good Book Guide plans to handle the dispatch of all orders rather than passing them onto distributors and wholesalers. 'We don't want any doubt as to whether they have sent an order,' says John Braithwaite. 'Later we will move on to feeding some orders directly to publishers.'
Key decisions must also be taken on how to make the Web site stand out from the others. Apart from global players such as Amazon, there is a growing number of other British on-line booksellers. 'Simply having an attractive Web site won't be enough,' says Vivienne Wordley, the company's business development director. 'We need to generate incremental business to recoup the investment.' She believes most of the Good Book Guide's sales will be online in three to five years.
Selling through a free medium is a big departure from the way the company's business has been run. The numbers subscribing to the Good Book Guide peaked four years ago, with 40,000 worldwide paying up to £33 a year for 12 issues of the 36-page catalogue. The subscription rate has now fallen to 35,000 and revenue from subscription sales has dropped from a peak of £900,000. Subscription income remains the Good Book Guide's second-biggest revenue stream, accounting for 14 per cent of sales this year. Sales of books, tapes and CD-ROMs to the company's subscribers generates 43 par cent of income. Perhaps the most significant secondary revenue stream, however, is book sales to special customers. Although fewer than 300 in number, they account for 7 per cent of the sales income. Each has a personal account manager through whom they receive help and advice on purchases. Special customers include educational establishments, businesses and reading groups. Each typically spends more than £1000 a year. They also depend on the account managers for research and recommendations. 'When they contact us, they know they are dealing with booklovers,' says Wordley. 'Our customers know we are not just flogging products.'
Subscriber loyalty has been high but the loss of sales to on-line traders has proved worrying. Not only have they eaten into the customer base they have also spurred a growing expectation of substantial discounts. Some, like Amazon, have attracted sufficient capital to be able to invest aggressively in building market share through discounting even though they have yet to make a profit. 'We lack the resources to run at a loss for an extended period.' says Wordley. 'Heavy discounting is a nasty game to get into and we simply cannot afford to compete on price alone. The change to on-line book sales brings many risks.' says Wordley. 'Our new Web site could undermine our Good Book Guide. Customers may use our reviews and then buy elsewhere. And take-up levels are completely unknown.'