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EBook Industry and Latest Trends Coursework


Executive Summary

As of late eBooks have become a popular medium for publishers and readers alike due to their affordability, easy accessibility and portability since an eBook reader can carry literally hundreds of literary titles while barely weighing a kilo.

Due to the easy way by which new players can enter into the EBooks market this presents an opportunity for enterprising individuals to establish their own unique niche in this market so as to provide a much needed and popular service while at the same time garnering a significant profit.

One of the latest trends in the eBook industry has been the conversion of school textbooks into eBooks. The reasoning behind this lies with the fact that textbooks for high school and college students alike are ranked as one of the highest primary costs to achieving an education.

EBook textbooks are far cheaper than their printed counterparts and far more portable as well, it is due to this that this business venture sees a potential niche market that can be created within the Grand Junction Colorado area. While there are numerous eBook textbook providers the fact remains that few of them cater to a specific area.

Various high schools and colleges have their own unique textbook requirements which at times are not available even on the largest of EBook providers such as Amazon.com. This business venture will focus on the Grand Junction Colorado market and its neighboring areas in order to create a niche market for eBook textbooks that specifically cater to the lesson plans of the various high schools and colleges in the area.

By doing so the venture will not directly compete against the larger eBook providers while at the same time will be able to become the first player in this isolated market.

Company Description

The company will be called Junction Books and it will be based in Grand Junction Colorado, the main bulk of the business will primarily be E-commerce based with all sales and transactions being handled by an online E-commerce system with a third party vendor handling payment processing.

The website will have a function similar to that of iBooks or Amazon.com where customers can search for available titles, register for an account using an automated system and buy items using a sales transaction and processing system.

By relying on third party vendors for the company’s payment system this reduces the initial startup cost of having to design and incorporate an in-house developed system which might have initial problems in functionality. By using a system already available online for a small fee the company reduces costs which can better serve improving site functionality.

EBooks sold on the site are obtained via licensing agreements with publishers wherein a scanned copy of the book, textbook etc is provided in order for it to be converted into a compatible format for various eBook readers (Hadro, 2010). The contract for the sales of the eBooks will be done under a shared profitability agreement rather than a lump sum sales agreement.

The reasoning behind this is that some contracts in the eBook industry allow eBook resellers to pay a “lump sum” payment in order to sell a particular eBook on their website for a predetermined period of time however one potential risk for this type of contract is that the reseller may not be able to sell enough books within the given period in order to gain back the cost of the contract.

A shared profitability agreement where the reseller and publisher share in the profits per sale is a better option for a startup. While the profits per sale are lower as compared to lump sum payment contracts it does not incur as much financial risk resulting in an initially low profit margin but a far more stable business platform (At this year’s BEA, 2000).

As a result of the recent financial crisis flexibility is a key factor that should be taken into account when starting most business ventures and as such this will be the guiding strategy of this particular venture. In accordance with this, the legal structure of the company will be that of a limited liability company to ensure that options remain open and flexibility continues to remain an integral part of operations.

Since the company is an LLC, a specific organizational structure is not really needed and in fact in some states and countries state that an LLC can be established with just a single person being involved in the company.

For this particular venture I plan to operate it under a structure similar to that of a single proprietorship arrangement however will register the company as an LLC in order to gain the tax advantages that come with LLC registration.

Industry Analysis

The digitization of information has become a growing trend in the publishing industry as a result of new technological developments that have brought about a new era in the consumption and distribution of information. This development has opened previously monopolized markets and has created new avenues of sales by which enterprising entrepreneurs can reach a potentially global clientele base.

The development of EBooks has enabled publishing companies to digitize the content of novels, text books, journals etc, creating a means by which they can be distributed cheaply, instantly and most importantly repeatedly without having to continuously print new material on paper (Amazon, 2000).

Digital content has become a growing method of publication with the internet acting as the primary medium by which publishing companies reach out to consumers so as to effectively carry out mass distribution of various published works without having to incur the resulting cost normally associated with printed materials.

Methods of sale such as iBook, Amazon.com and eBook.net have become popular destinations for a population hungry for digital content as the normally prohibitive prices associated with various printed works have been greatly reduced as a result of the relatively cost effective means of content distribution that eBooks provide (Readers, 2010).

Due to the rising demand for cheap content from eBooks and the fact that publishers are attempting to connect with consumers in a way that is relatively new for them this sales environment presents numerous opportunities for a budding business to thrive in what could potentially be an industry that could replace bookstores such as Barnes & Noble, Borders, and PowerBooks (Kenneday, 2010).

Recent industry data has shown that various traditional bookstore chains in the U.S. are struggling as a result of direct competition against online sales from both Amazon.com and the EBook publishing industry so much so that major chains such as Borders have filed for bankruptcy as a result of their inability to adapt to this changing business environment.

As online eBook sales continue to grow companies that wish to take advantage of this potentially massive new industry have to consider that traditional sales and marketing strategies do not work as well through online mediums with the internet presenting itself as a challenging yet potentially profitable business environment (Walden, 2010).

It is in this particular environment that I plan to create the business venture “Junction Books” it will be an online eBook store dedicated to supplying customers with the latest novels and textbooks at low prices available for viewing on the latest portable gadgets or computer systems.

Chain bookstores such as Barnes & Noble, Borders, and PowerBooks etc have dominated the book market for several decades and it was only within the past seven years or so that any form of true competition came to break their near monopoly.

While small bookstores do exist, the fact remains that they often cannot directly compete against the branding, prices, and services offered by such retail outlets and as a result usually go out of business should a major bookstore chain appear within their immediate area.

As a result of new developments in E-commerce, online retail stores such as Amazon.com have broken this apparent monopoly resulting in a shift away from traditional retail purchases towards online buying habits.

The recent bankruptcy of Borders is evidence of this trend and the effect a new business environment has on stores that are ill equipped or negligent to changes that must incorporated into new lines of business.

Unfortunately within the past several years it can be seen that online sales of books have started to become dominated by a select group of companies such as Amazon.com due to a unique aspect of the internet where branding, name recognition and ease of access contributes to a higher level of site visits resulting in a greater amount of sales for sites that are able to draw a high number of visitors (Reid, 2004).

While other sites are able to compete to a certain extent the fact remains that added costs such as purchase fees, storage fees, delivery fees and taxes do cut into their profit margins which is not that much of a problem for large companies such as Amazon.com due to their larger financial infrastructure, diversified product portfolio and the fact that they can purchase specific products in bulk thus lowering the total average cost.

This state of affairs lasted for a few years till the use of EBooks grew in popularity resulting in another shift in consumer preference which created a rising demand for eBooks.

Today eBooks sales have begun to rival and even surpass book sales to the point that an entirely new set of industries and technologies have been created to take advantage of the popularity of eBooks. The Kindle, iPad, and various other similar readers have been touted for their ability to display eBook formats in startling clarity which is one of their biggest selling points.

The eBook industry, unlike traditional bookstore chains or purchasing normal books online, has greater avenues of entry and fewer chances for monopolies to entrench themselves preventing other players from establishing their own respective niches (Tenopir, 2008).

One of the reasons why the eBook industry has greater avenues of entry for potential resellers is the fact that the entire product is digitized and thus problems in relation to storage, delivery, and maintenance do not particularly matter (Microsoft, 2010). An average eBook can be as small as 1 MB or as large as 10mb; with most web servers having terabytes of capacity storing the documents online is a rather simple matter.

As such even the smallest of resellers can rival the largest of online companies in terms of sheer variety of content and since a single eBook can be reproduced over and over again with instantaneous delivery, costs can be kept to a minimum and thus add to a greater profit margin for the reseller.

While name recognition and branding are important aspects in selling, online services such as Google Ads helps to advertise fledgling businesses to potential customers and the sheer amount of controls, flexibility and affordability in using such advertising services helps to further subvert potential monopolies from taking hold.

Finally, social networking has proven itself to be a viable tool that large corporations are unable to fully match; networks of friends, acquaintances and merely people that a person adds to their friends list are potential customers that a person can advertise to and spread word of their business through word of mouth.

Numerous fledgling E-commerce businesses initially started their promotion campaigns through social networking sites due to the ability of such sites to reach a large amount of individuals within a relatively short period of time.

Interestingly enough current trends in eBook purchases are not centered on novels or fiction books but rather are concentrated more on school textbooks ranging from high school all the way to collegiate level books (Fister, 2010)

The reasoning behind this is the fact that on average high school and especially college required readings are often the most expensive expenses in higher education with total costs reaching several thousand dollars over the course of a high school or bachelors degree (Gilfilan & O’Rourke, 2006).

It is due to this that students often try to seek alternative means of acquiring the needed text books. The advantage of eBooks is that they are relatively inexpensive and portable since hundreds could be stored in a single reader and pages that are needed for exercises could be printed using a printer. As such, sites that focus on eBook sales specializing in school books are actually on the rise.

The one advantage such sites have over the major companies such as Amazon.com is that eBook sites with offices located in certain areas usually contact the publishers of books that are required by students in their areas.

With each college having their own curriculum and unique set of textbook requirements major companies such as Amazon.com are unable to fully provide for all their specific needs since they specialize more on products that appeal more to a general rather than a specific population.

While in appearance major internet sites may have a diverse collection of eBooks in reality they usually do not have the specific kinds needed by students in certain areas, if they do it is usually a hard copy with a high price range.

It is due to this that new eBook sites have started a trend where they focus primarily on marketing eBook textbooks to students within a specific area located within either the state or province that they are in so as to be able to compete directly and surpass the larger online eBook stores.

Target Market

The target markets of this business venture are the various high school and college students both within the vicinity of Grand Junction and in other school systems and colleges close by. The reason for this is that direct competition against the vast majority of eBook providers out there would not be conducive to short term profit goals.

In order to attract potential customers the business would have to conduct a significant online advertising campaign that may or may not actually work. Not only that its own infrastructure might suffer as a result by trying to place as many popular eBooks on the site as need be. Instead of trying to be a general provider of eBooks a more viable option would be to focus on specific niche markets (Rogers, 2006).

As mentioned earlier an emerging trend in the eBook market has been to cater to high school or college students in order to provide them with an affordable alternative to purchasing expensive hard copy books.

Research into the general areas within or near Grand Junction (“near” being a rather generous term since several locations are more than just a few miles away) has shown that there are at least 67 colleges and just as many if not more high schools that this venture could service.

The advantage of having an office near the targeted markets for this particular venture lies with the fact that it would otherwise be very difficult to know what specific books the various schools and colleges require for certain courses.

By arranging an interview with the various departments this venture could inform them on how their students could save money by choosing to buy eBooks rather than regular books.

As such it would be a simple matter of obtaining their various course syllabi, asking them to inform their students of alternative means of obtaining books and finally talking to the various publishers in order to create the appropriate agreements to convert certain books into eBook format (Colorado, 2011).

Usually as is the case with most colleges and high schools, the initial freshmen orientation class could be a good way to inform students about the products of this venture.

It would be a simple case of contacting the school, informing them of the advantage eBooks have in terms of affordability and have them distribute a simple brochure during each freshmen orientation class which would contain various details about the site and how students could save money by purchasing eBooks rather than hard copies.

Competitive Analysis

The one advantage of a niche market business strategy is that it minimizes the likelihood at direct competition from multiple competitors. While there is still some competition it would not have been as bad should the venture have entered the general eBook market.

As it was mentioned earlier the one disadvantage most eBook reseller businesses have when selling online is that name recognition is more important there than in traditional methods of retail.

An example of this can be seen in any supermarket grocery section, while there are numerous name brands to choose from people still seem to choose relatively unknown brands because they can see them and they compare the affordability of the unknown brand with the higher prices associated with the branded one and choose to opt for the cheaper variety.

The same cannot be said of the internet where an unknown business cannot hope to attract customers since user searches are greatly influenced by URL name recognition. If a URL is unknown or is not recognized at all it would be difficult for that site to gain customers.

Not only that attempting to cater to a global audience with a relatively unknown name would be next to impossible since most people would not trust a site that is not well known.

As such while there are relatively few barriers to entry in establishing an online store however there are barriers to operations in light of the requirements needed to be entice people to visit a particular online store. In order to circumvent this result the best way would be to focus on a particular niche market that does not directly encompass the general market for eBooks.

By focusing on a particular area (Grand Junction Colorado and its surrounding areas) and on a specific customer set (students) this venture would be able to focus on stocking the types of eBooks that would be immediately needed by this specific set of customers (textbooks) rather than having multiple eBooks on nearly every single category but would be useless for students.

An examination of various websites reveals that there is no other company online that specifically caters to supplying eBook textbooks to the population set chosen for this venture; as such this presents itself as a potential opportunity to be the first business of this type to establish a foothold in this area.

Direct competition comes in the form of the various bookstores and shops that are already well established as suppliers for the textbooks that the students need.

The initial problem lies with the fact that not everyone within the Grand Junction area actually possesses a portable eBook reader like an iPad or Kindle (Norris, 2010).

One method of overcoming this would be to ensure that the website offers an eBook reader program that students could install on either their laptop or personal home computer so that they could download the content and print what would be necessary for the next day. Putting this into practice would encourage more students to buy content from the site however this still depends on the amount of people willing to use eBooks.

The fact remains that when compared to books eBooks require a medium by which they can be read, books on the other hand can be read as is (Noriss, 2010).

While the strength of the business lies with the fact that it is able to supply a product at a far lower rate than any other competitor in the area the fact is its greatest weakness is that the environment itself is uncertain with no sure guarantee that the usage of eBook textbooks will catch on when the amount of people using portable readers is uncertain.

Marketing Plan and Sales Strategy

In order to reach the target market 3 specific goals must be met:

  1. Students in the indicated areas have to be made aware of the products of the company
  2. Partnerships must be developed between the various schools and the business
  3. Surveys must be done to compare student budgets with possible prices

The start of the marketing plan involves students actually being aware of the eBooks that the company is marketing. In order to do so an internet ad campaign must first be launched using Google Ad words with the criteria specifically targeting users from within the Colorado area. By doing so the company is able to develop a certain degree of online presence in order to draw in students who use the internet to the company website.

The second aspect of this strategy involves visiting the various campuses and setting up a small ad campaign via booths located during campus fairs and freshman orientations in order to properly present to the students the cost effectiveness of purchasing eBooks through the company rather than buying hardcopies (Hadro, 2008).

Finally social networking will play a key role in this strategy by using the FaceBook social networking advertisements to specifically target users who are near to Grand Junction or in areas that are nearby. Nearly all students utilize FaceBook in one form or another and as such FaceBook ads can be an effective way in order to reach the desired consumer population that the business is seeking to target.

Next on the agenda would be to develop effective partnerships with local schools and colleges in order to create a possible subscription program with the venture (Wicht, 2006).

Several colleges and businesses are doing so already by offering students access to various academic text books online through a specific service. What could be done in this particular case is to create an option that would allow students to visit the website and read specific books online through a special online system that would only grant access to people using the school’s library computers (Friedman, 2010).

Students would be allowed to view and print content but they will not be allowed to download the book and printing would be restricted to a minimum of 15 pages per access.

By establishing a relationship with the various schools and colleges the venture would be able to have a lasting business partnership enabling the creation of a reliable stream of income for years to come (Cavanaugh, 2005).

Finally in order to determine the proper pricing of eBooks what must be done is to conduct a survey in order to see what books are worth in most bookstores and online shops and compare it to what students are actually willing to pay. By setting prices in some form of middle ground the company would be able to create an effective price plan that would encourage students to purchase eBooks.


In the beginning of this report I mentioned that the business will operate similar in scale to that of a sole proprietorship but under the designation of an LLC for flexibility and the tax advantages that come with it. This is due to the fact that the initial budget for the business will not be large and as such moderation is needed.

The E-commerce website for the business will be developed by a web development company specializing in creating the type of websites that specifically deal with eBooks with the sales and transaction portion of the site outsourced to a third party developer.

Overall the business will initially be run by a single individual with temporary staff hired during periods when business starts to pick up such as the beginning of every school year or semester. The sales process will begin by first using the partnerships the business has developed with high schools and colleges in the area to obtain the curriculum list to find out which books the students will require for that particular year.

After that come negotiations with the publishers and establishing a joint profit sharing plan for each eBook purchased. Once the contract has been set the eBook will be uploaded onto the online E-commerce system where potential customers can download it immediately once they have paid using their debit/credit cards or PayPal account.

The entire process is fully automated with a small complaints section where users can send emails just in case something goes wrong with the system. Each order is tagged by a specific order number in order to easily trace orders in case something does go wrong.

The fact is a vast majority of online E-commerce websites are so automated that they barely require direct human manipulation in order to properly function as such it would be a great idea to adopt such a concept for this particular business venture so as to minimize the costs involved in hiring employees.

Management and Organization

Suffice it to say due to this venture being run almost entirely online with most of the processes being fully automated it would not make sense to hire an extensive management team. Not only that since this is merely a small startup involving a small location a large team would not be necessary at all.

In fact in order to minimize costs fixed term employees with contracts not exceeding six months will be used. This type of practice is actually gaining popularity in numerous U.S. states as a means to lower costs and prevent the costs of regular employee compensation such as health insurance and vacation time.

Long Term Development

As the popularity of eBooks continue to grow it can be realistically stated that eventually they will come to replace books as the preferred medium by which people choose to reach content from publishers. EBook readers continue to become cheaper and portable gadgets such as the iPad and HP slate usually come with software that enables them read eBooks that they’ve obtained online.

As this trend continues and mobile readers become cheaper more students will continue to buy them due to the influences of pop culture which greatly affects buying behavior. Within the next three years the customer base of this venture can be predicted to grow at least another 40% as the popularity of mobile readers reaches Grand Junction.

Within five years the company will have been able to expand its customer base to encompass nearly 50% of the Colorado school system encompassing both high school and colleges. Within 9 years all the students in school systems and college campuses within Colorado will have downloaded their eBook textbooks from either a Junction Book website or a local affiliate.

It can also be assumed that by this time at least 60% of schools and Universities will have subscribed to the partnership program of Junction books in order to allow their students to read various text books from their school’s library.

Overall this business plan does not take into account the possibility of the regression of popularity of eBooks but rather predicts they will become a standard by which students will be taught (Albanese, 2010). Various authors, publishers and teachers have stated that as technology continues to grow so will eBooks grow in popularity.

They are cheap, cost effective and above all easily accessed and stored as compared to other forms of printed material. Even the U.S. Library of Congress as well as several other libraries around the world are digitizing the content of their books to create a reliable and permanent method of storage that will not deteriorate or crumble.

As such it can be said that within the next five to eight years it can be predicted that more and more bookstores will follow the way of Borders as a result of the preponderance of eBook usage in modern society.


For this particular venture cash basis accounting would be better rather than an accrual account method. The reason behind this is that under the joint profit making scheme the publisher gets a certain percentage for every eBook sold, as such, since cash basis accounting is excellent at tracking the actual amount of cash available payments towards the publisher would go rather easily and would not pose a significant problem.

As for the initial financial projections, it can be assumed that for the first 5 months of operation it is doubtful that the company will break even with operational expenses associated with running this type of site however over the course of a year with the popularity of the site picking up there should be enough cash inflow to match expenses and eventually meet acceptable profit margins (Albanese, 2007).

Total Start up Cost: $21,613

Financial Statements Explained

For this particular business venture the startup cost needed would be $21,613, this is based off calculations done on the business proposal balance sheet. This startup cost is divided into two distinct asset types: total current assets and total net fixed assets which when combined total the startup cost needed.

The total current assets consist of an initial cash base of $10,000 for variable costs such as employee salaries, utilities, miscellaneous costs etc.

Following that is the $5000 set aside for inventory expenses namely the eBooks, while a shared sales profit contract is the basis for this particular venture certain licensing fees still have to paid for the eBooks themselves and this includes the cost of hosting them on external servers hence the fact $5000 has been set aside in order to deal with those subsequent costs.

Following this is the estimated cost of website url, using GoDaddy.com as a reference a unique web URL using the.com suffix costs $13 per year as such $13 has to be set aside for that particular cost.

The last aspect of the Total current assets section consists of the prepaid expenses for Google Ads, Google’s pay per click system functions exactly as it sounds, for every click on this ventures Google Ad a predetermined amount will be deducted from the prepaid expense. $500 dollars has been estimated as sufficient for an initial 2011 trial run within the Colorado area.

The reason why such a small amount is being is used is due to the fact that sufficient research still has to be done as to which particular key word combination would bring the most customers to the site who will actually purchase an eBook and how much should the pay per click rate be set. Under Fixed Assets the first section is the long term investments section which consists of $2000 being placed for website development.

After doing some initial research regarding web site creation costs it was discovered that E-commerce websites require greater degrees of securities and certifications as compared to ordinary sites such as SSL certificates and preventive measures against hacking. As such the combined costs of services, SSL certificates and various other amenities comes to roughly $2000 for the entire year.

After that comes an estimate for the rent for an initially tiny office, due to the recent financial crisis the price of renting small offices has actually gone down and as such $3000 has been set aside as an initial cost to be applied for one years rent of a very small office.

As for costs associated with computers, printers, faxes, photocopies and various other gadgets $900 is enough to purchase 2nd hand or even 3rd hand office equipment which should fill the necessary requirements needed. Finally $200 has been set aside in order to purchase a used desk and various other used furnishings.

The reason why this venture is picking used items is due to the fact that they are far more economical as compared to purchasing items that are brand new. When combining all necessary assets the combined amount is $21,613 which is the estimated start up cost.

Liabilities Cost

The initial liabilities cost of the business is the necessary webhosting for the site. After checking GoDaddy.com a total cost of $600 dollars per year has been seen as more than adequate for the hosting needs of the business due to the vast amount of bandwidth and memory given for the price.

An estimated cost of $1,000 per year has been determined for the price of electricity, water, and a DSL internet connection, this is of course subject to change since the cost of electricity may go up.

The next liability for the business is the estimated taxation per year, this has been taken from the income statement balance sheet as a result of the perceived profits from the initial year of operation, this is also subject to change since various tax deductibles have not been included in this calculation.

Finally $500 has been added as potential miscellaneous cost (flyers, posters etc.) just in case the company might require various materials in the future. Another section under liabilities is the long term liabilities section which consists of paying for contract workers which has been estimated at $2000 per year and $443 for miscellaneous long term expenses (prepaid cell phone bills etc).

On average the total liabilities equity consists comes to $8,543 which is well within the $10,000 variable cost for operations fund, of course this is subject to potential change in the future as unknown variables may occur.

Income statement

This income statement shows the possible income of the company over the next four year period. The initial gross sales of $40,000 in one year come from estimates involving the initial $5,000 inventory cost from the balance sheet.

This income statement estimates that for the initial cost of $5,000 for the licensing fees it is possible to get enough eBooks to fulfill the curriculum requirements of at least a quarter of the 675 learning institutions near Grand Junction. For those 168 institutions if the company is able to get at least 300 students to purchase EBook textbooks within the year it will have been able to meet the gross sales goal of $40,000.

This is estimating that at least two or three students per school will buy one eBook. Since each school has hundreds of students the possibility of getting the required number of purchases is quite high.

For the succeeding years of 2012, 2013, and 2014 this takes into account and increasing number of students purchasing eBook text books which of course results in higher gross sales. In the report it was mentioned that the book publisher will get at the very least 40% of the total sales profit per eBook sold. As such 10,000 has been set aside for the profit sharing cost. This results in a net sales profit of $30,000.

The cost of sales must be taken into account, in the balance sheet it was indicated that $5,000 was set aside for the licensing fee for the eBooks; this is taken as the cost of sale and deducted from the $30,000 made resulting in a gross profit of $25,000. After this comes the operating expenses for the year which consists of employee salaries, commissions from other websites and Google ads advertising costs.

The remaining expenses consist of the remaining salary for the next six month period (all employees are contracted for only 6 months), pay roll taxes, the rent, utilities expense and equipment cost. This results in a grand total of $10,180 for all operational expenses. This amount is deducted from the $25,000 gross profit earned resulting in a net income of $14,820.

Understanding the increases in profits and expenses for the succeeding years is rather simple, this report mentioned that it estimates that operations will continue to expand 30 to 40 percent by each year as such the amount of gross sales and various operational costs also increase by 30 to 40 percent.


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"EBook Industry and Latest Trends." IvyPanda, 26 Aug. 2019, ivypanda.com/essays/grand-junction-coursework/.

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