Supply chain management has become more important over this time and in order to achieve efficiency and economies of scale in the tough conditions of competition, symbiotic relationships between companies are essential. E-commerce developments have helped in forming these relationships and have forced companies to completely rethink their supply chain management systems.
Brick and Mortar Environment.
Books are an interest that is shared by many individuals. The subjects are vast. The titles are endless. For a person interested in purchasing a book, the process can be as simple as visiting a Borders or perhaps a Barnes and Noble. But what about the process that the book has to be submitted to before it can arrive in the hands of the interested individual? Is this process as simple for the retailer of the brick and mortar establishment?
According to a study done by Professors Kotha and Dooley, it states that in the book selling industry, books are sold on a consignment basis.
Publishers must publish more than they ever expect to sell because of the lack of resourceful production and distribution. Therefore, the publishers must assume the risk for all books left unsold. This is good news for booksellers like, Ingram Book Group. Any book returned by wholesalers will require a 100% refund from the publisher (1997).
Wholesalers receive orders from retailers, for example Barnes and Noble, and consolidate them into lot-orders for the publishers. These books sold to general retailers, bookstore chains, and independent booksellers account for approximately 40% of the book industry. These various retail outlets could gather between 3% and 12% of its sales as profit.
To take advantage of economies of scale with distribution and pricing, brick and mortar retailers, like Borders or Barnes and Noble, order large lots. These large...