Welcome to our presentation

Welcome to our presentationGroup -8GratitudeWe are

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

The Used Book IndustryRange from large operations to individualBob Kaplan says Undocumented IndustryThe business is supply constrained.Dealers maintain close contract.Dealer to dealer buy-sell at 20% discount from retail price.Interloc Launched 1994Dick Weatherford, 30Years experience as antiquarian book seller.Inventory listing service.Dealers provide description of books.Could not be used to reserve or purchase books.

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

Strengths and WeaknessesInterloc had strong brand recognition.Investment of $1 million by private investorsIT related spending of Alibris had been so muchHeavy customer responsivenessCompany had the order fulfillment centerTaxis used by interlock was a fast search engine.

Alibris only acted as an intermediary between dealers and customers.Commercial software purchased by Alibris was not working.Interlock provided no ecommerce capabilities which was the reason of their lower profitability.Fulfillment performance wasDelay 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.Opportunities and ThreatsThe industry had supply constraints rather than demand constraints. It helped to earn huge profit.Large base of dealers and listing books .New revenue model of encouraging dealers to participate in listing without charge.Inefficiency in fulfillment process of the industry.

Number of large used book dealers

Undocumented industry

Information based industry. Fear of false info to pass .

Geographically distant dealers

Smaller dealers in the industry created higher shipping costs as a percentage of sales that provide the industry the lower profit.

PresentingQuestions A Interloc built an active e-marketplace even before internet come along, and very few firms replicated this success. Why is this?

Because dealers could help each other to find books for their customersOvercome the shop disadvantageDealer to dealer transaction will make a sell.

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.Not to be used for purchase or reserve.

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

Can an e-Marketplace get big fast? If so How? Yes it can get.Focus on- Customer order fulfillment Customize services Special Package Developing IT infrastructure Business Changes from Interloc to Alibris- Change in Leadership Approach by a venture capital group to change Interloc into a e-commerce company.Marty Manely and Weatherford brought together and Manely became CEO in 1998.Marty Manely former U.S. assistance secretary of Labor who had expertise in technology, service and operations management and promoting workplace innovation.Interloc changed to Alibris in April, 1998

Change in Business ModelManely began to research used book industry, travelled across country with weatherford to meet and talk dealers and customers.Initial task - to transform Alibris into a e-commerce company.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.Change in Business Model [contd]Active involvement in transactions involving Amazon.com by passing companys request only to reliable dealers and communicating on the fulfillment date .

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

Reason for changing Interloc to AlibrisInterloc 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 couldnt be used to reserve or purchase bookTo ensure e-commerce capabilities- to allow customers to find and purchase books.

Elements that were to be changed as Interloc became AlibrisTwo 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 modelForgoing listing fees in exchange for 20% discount for the books sold through Alibris.Charging premium price for books.

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

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.Promising to do advertising and help grow in exchange for 20% discount for the books sold through Alibris.Incentives that Interloc had to sell booksInventory 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.

PresentingWhy Fulfillment?

Why did Manely & Alibris feel that they needed to set up the Sparks Facility? What happened to the dream of touch Less Profit?

Sparks Facilityto serve as a cross-docking facility that means receiving shipments from suppliers, Recombining their contents to satisfy customer orders, then re-packing and shipping orders

Why they feel that they needed to set up the Sparks FacilityFor becoming a viable e-commerce company & ensuring that customer orders to be fulfilled correctly & quickly, Manely & Alibris felt that they needed to set up the Sparks facility.

Using the Sparks facility, Alibris sold the books to its customers by taking the responsibility, guaranteeing its quality. As a Result its long cherished dream of touchless profit is fulfilled

Q-2: Can the Spark facility help keep Alibris from being disintermediated? If so, how? Yes the Spark facility can help keep Alibris from being disintermediated. Because it has arranged---Rent from ODC integrated logistics ware house apace in warehouseServe as a cross-docking facilityHiring logistics managerProviding floor space, equipment, laborPresenting

a30Holding and buying inventoryAlibris should use spark facility and hold inventory on behalf of dealers To become a viable eCommerce company.To build a standard retail storefront on the web.To satisfy the customer & dealer needs.To provide speedy service to the customers.

Should Alibris use the sparks facility to serve as cross-docking facility? Should the company hold inventory on behalf of dealers at Sparks?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 lowUn-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. ]

Holding and buying inventoryHaving a little money in bank.Their cash burn rate is high.Order fill rate is 50% to 60% through dealer network.

Where are the cash drains of Alibris? - In IT infrastructure to support ecommerce capabilities -rent expense for warehouse space. -to set up communication development system.

Whether or not spending its own money on books is a good idea, Alibris does not have a lot of money. Why not?

The Cash crunch

How bad is the situation?The overall situation would be bad if theycan't customize and upgrade the systemFail to expend all of their vendors.Cant operate communication network properly.Fail to provide money to private investors and other vendors

The Cash crunch

PresentingIT WOESwhy is alibris having so much trouble putting in place simple e-commerce 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 operationNeed to put everything on a development machine with redirection of everythingIt is very difficult to establish some basic elements of it infrastructure Do you think alibris would be having problems with the oracle product even if alibris has a small, simple database? Why or why not?No, I think alibris would have no problem if it has a small,simple database. becauseOracle & 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 books own description, condition information & price when there are 5 milllon skus.

Presenting

38Is it rare for a new software product from an established, 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 limitationIt exists in a development stageLack of prior experience regarding new softwareSometimes software have some lack of adaptabilityHave some lack of proper implementation knowledgePossible solutionShould Alibris continue to try to make the oracle product work, or would they switch to thunderstones offerings at this point?

Alibris should continue oracle product rather than switching to thunderstones offerings becauseSignificant amounts of time & money had already been spent for oracleAlibris are facing serious liquidity crisisThunderstone is a very small companyThunderstone was confused about alibris problem handlingAlibris should not place its all eggs in one basket like a small company thunderstoneThunderstones capability of providing service & support are not justified

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