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Over the past few weeks, Borders executives have been in NYC negotiating with publishers.\u00a0\u00a0 Many articles have been stated that this is the final chapter for this 40-year old bookseller.\u00a0\u00a0 They all focus on eBooks and the poor economy as the reasons.\u00a0 But I think it is much deeper than that and the problems started a decade ago.<\/p>\n
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1)\u00a0\u00a0\u00a0\u00a0\u00a0 Reliance on old systems<\/span><\/strong> \u2013 Borders Expert System was the top book inventory system when it was created.\u00a0 It was one of the main reasons Kmart purchased Borders.\u00a0\u00a0 The system worked when they had 20 stores, but it was never able to scale to 200 stores and definitely not 500 locations.\u00a0 It required too much manual input from the buyers.\u00a0\u00a0 Plus, every shipment from publishers had to go through a Borders warehouse and be stickered.\u00a0\u00a0 At one time this controlled inventory, but as the industry moved to JIT replenishment, this cumbersome system slowed everything down.\u00a0 It generally took Borders 7-10 days longer to get books back in stock.<\/p>\n <\/p>\n 2)\u00a0\u00a0\u00a0\u00a0\u00a0 Not understanding the Waldenbooks asset<\/span><\/strong> \u2013 Waldenbooks was folded into Borders once Kmart had purchased both.\u00a0\u00a0 At the time Waldenbooks had 1200 locations and was 10x larger than Borders.\u00a0\u00a0 But the future was in the 25,000 square foot \u2018superstore\u2019 concept and not the 3,000 square foot mall based Waldenbooks.\u00a0 All of the cash WB made was spun into Borders growth.\u00a0 I am not arguing with that decision.\u00a0 But they should never have tossed WB aside.\u00a0 Borders never understood the WB model.\u00a0 They tried to create \u201cBorders Lite\u201d mall stores.\u00a0 Basically taking a Borders inventory mix and shrinking it.\u00a0 Mistake.\u00a0\u00a0 WB thrived on Romance, Mystery, Sci-Fi and Children\u2019s.\u00a0\u00a0 They sold mass market books.\u00a0\u00a0 They had loyalty programs of readers in the millions.\u00a0\u00a0 All were disbanded.<\/p>\n <\/p>\n 3)\u00a0\u00a0\u00a0\u00a0\u00a0 Missed the Internet<\/span><\/strong> \u2013 Possibly Borders biggest error was to turn over their internet business to Amazon.\u00a0 At the time, Amazon was very small and Borders was challenging B&N for the largest bookseller in the country.\u00a0 But Borders partnered with Amazon and basically sent their best customers to the competition.\u00a0\u00a0 Borders had tremendous customer loyalty and from Waldens, the Preferred Reader Program of over 3-million frequent buyers.\u00a0\u00a0 Amazon took all of them and has destroyed any Borders on-line efforts.\u00a0\u00a0 By the time Borders pulled the on-line store back, it was too late.<\/p>\n <\/p>\n 4)\u00a0\u00a0\u00a0\u00a0\u00a0 Location, location, location<\/span><\/strong> \u2013 During the rapid growth days of the superstores, I would go on numerous road trips to visit bookstores.\u00a0 It always seemed that when a B&N and Borders were in the same area, the B&N had a better location.\u00a0\u00a0 I don\u2019t have statistics, but when there was a side by side comp, the B&N always seemed busier.<\/p>\n <\/p>\n 5)\u00a0\u00a0\u00a0\u00a0\u00a0 Music and Video<\/span><\/strong> \u2013 Borders jumped into music and video just as that industry was taking a hit from on-line and digital downloads.\u00a0 They may have had a few good years, but in the long run they ended up with massive amounts of old technology in physical cds and dvds \u2013 where the market had moved away.<\/p>\n <\/p>\n 6)\u00a0\u00a0\u00a0\u00a0\u00a0 Bunkering in Michigan<\/span><\/strong> \u2013 I like Ann Arbor.\u00a0 I always enjoyed visiting and impressed with the people.\u00a0 But they should have stayed in the NYC area.\u00a0 The talent pool is much larger for publishing and bookselling in the NYC-area.\u00a0 Plus I know of a few instances that very talented people wouldn\u2019t even consider Borders because they didn\u2019t want to leave NYC.\u00a0\u00a0 Borders also missed out on what was happening in the publishing industry.\u00a0 Would always see the B&N people at meetings and events because they were local.\u00a0\u00a0 It is less of an issue today but 15 years ago, it made a huge difference.<\/p>\n <\/p>\n 7)\u00a0\u00a0\u00a0\u00a0\u00a0 Hoard information<\/span><\/strong> \u2013 For many years Borders refused to share sales information with the publishers.\u00a0 B&N openly allowed publishers sales and started to coordinate re-orders etc with them.\u00a0 This allowed B&N to get a jump on Borders for re-orders of hot titles.\u00a0\u00a0 I can remember feeling good when I confined my contact at Borders to fax us the top 100 titles instead of 50.\u00a0\u00a0 No inventory numbers though.\u00a0 By keeping this information closed, Borders hurt their own case for getting re-orders and they also lost valuable days.\u00a0 B&N could make a decision and get books to market in 3 days, Borders would still be thinking about it.<\/p>\n <\/p>\n Having the revolving door in the corner office and not investing in eBooks are just the latest issues.\u00a0\u00a0 I want Borders to survive.\u00a0 I believe they can survive.\u00a0 But they must completely revamp.\u00a0 The brand is strong and there is definite value.\u00a0\u00a0 But the current \u201cbusiness as usual\u201d attitude will only drive them deeper into the hole.\u00a0\u00a0\u00a0 There are many steps Borders needs to take to survive.\u00a0\u00a0 Maybe in the next blog post?<\/p>\n","protected":false},"excerpt":{"rendered":"