Casa del Libro

So far a bit different from Buenos Aires, the competition among booksellers is pretty concentrated in Madrid. In Buenos Aires, though the offer is becoming more concentrated, one can find some "independent" booksellers in Avenida Corrientes and in Avenida Santa Fe. However, I must recognize, I hardly go to those; I usually buy in libraries located in shopping malls that belong to large bookseller chains. And I think that is the trend...

The idea of this post is to discuss a new case for our Information Systems class. As the title refers, it is related to Casa del Libro. This bookseller chain competes against general stores such as El Corte Ingles (where you can buy food and clothes and bikes and books and...) and FNAC (mainly electronics). However, "nobleza obliga", Casa del Libro is owned by Grupo Planeta, the main editorial group in Spain and the seventh in the world; so that, it is not alone in this world.

The case refers to the launch of www.casadellbro.com in September 2001, just months before the "dot-com" crash and days before the 9/11 attacks. The goal behind the launching of the website was to increase Casa del Libro market share and become the leader in the Spanish book market. In 1999, the company had hired a consulting firm to develop the business plan and got an agreement with AOL, which was just launching its operations in the Spanish ISP market in 2001.

Casa del Libro had been selling books online since 1995 through an artisan website, and operations required a great deal of manual processing. The "big bosses" of Grupo Planeta decided to take the Internet wave, invest a lot of money in a state-of-the-art platform, go for an alliance with AOL and take over the online book market planet(a)!

However, in September 2001 they discovered that the UNIX platform could not be adapted due a mistake in the design phase, that AOL did not meet its target in the ISP market, that terrorist attacked the Twin Tower in NYC bringing the world to an economic recession, and, la "frutilla del postre", the "dot-com" bubble...burst!

THE DECISION

Grupo Planeta's management had to decide whether continue with the idea of launching the website and run it with the UNIX platform or switch to a cheaper Microsoft platform. The UNIX platform needed a re-design process but guaranteed high availability in case of high traffic and a large number of transactions; it implied also high maintenance costs (plus the expenses for the re-designing process). On the other hand, the Microsoft platform had lower maintenance and development costs but was not an state-of-the-art server nor as powerful as UNIX.

Considering the context, I would switch to the Microsoft platform. Though most analysts forecasted growth for business through online services, I think that at the time it was very difficult to predict how the e-economy would react to the "dot-com" crash in terms of reliability in business transactions, and, more important, when and how the "real" economy would react to the economic recession after the 9/11 attacks. In such a context, the best idea would be to retreat to a "wait and see" position. In any case, the evolution of online sales via the Microsoft platform would give an idea to managers about how to react and whether to switch back to the UNIX platform. In addition, it would be very difficult to raise the issue about investing lots of money in an Internet business while the holding company, characterized by its conservatism, was focused on reducing costs to face the crisis and the crash of the "dot-com" era had just occurred.

Let's see what our professor tell us tomorrow about this story...