The conventional wisdom is that Borders failed because it could not contend with on-line outlets like Amazon. The popularity of e-readers was supposedly the last straw. Ben Austen provides an article in Businessweek that lets us know that the situation is more complicated than that: The End of Borders Is Not the End of Books.
According to Austen’s tale, Borders was not done in due to competition, but rather to its own incompetence.
Austen relates a sequence of unwise decisions made by Borders. Some of the blame could be attributed to the six CEOs it endured over the last twelve years.
"Borders managed to be on the wrong end of several upheavals. It invested heavily in CDs and DVDs just as music and movies were going digital; in 2006, nearly a fifth of all Borders revenue came from music sales. And though this would be the company’s last year of profitability, it continued to expand, building huge stores of 25,000 and 30,000 square feet right into the Internet boom. Sales per square foot in its superstores plummeted from an average of $261 in 1997 to $173 by 2009. Borders even purchased a stationery company, Paperchase, in 2004, as handwritten correspondence withered. And then there’s the company’s entry into digital books: If you didn’t know Borders had an e-reader called Kobo, you’re not alone."
Perhaps the biggest error that Borders made was in expanding precipitously starting in the late 1990s. Just at the time when Amazon was becoming a force it established too many big stores in too many marginal locations. The well-placed stores generally were profitable, the poorly located ones faired less well.
Where does the book selling business reside post-Borders?
Austen closes with some truly positive, and unexpected, insight.
Amazon is great for ordering a book you already know you want. It is not so good for browsing randomly. If you enjoy seeking out a few good titles out of a thousand options, rather than out of a hundred thousand, you may soon have more good browsing experiences. Those comfortable little bookstores may be coming back.