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The Borders Story

While in school at Ypsilanti it gave me great pleasure to know a retail giant had first started at our neighbor city. This retail phenomenon was Borders. But as I evolved in the multichannel space I wondered why Borders never considered selling online. Was it because their arrogance made them believe Amazon.com could never replace the community aspect of a store and is this way they brazenly chose to use Amazon.com as their virtual storefront? Could it be they realized they would never out price Amazon so they stuck their head in the ground and imagined Amazon didn’t exist?

Whatever their reason, to me it was clear like many retailers back then and today Borders looked at their online store as a simple self checkout lane. And when you think of it that way it makes perfect sense to outsource the job function. Maybe this explains why Borders has hired two banks to figure out way to sell their business.

So what is the lesson here?

I think Borders underestimated their own customers when they automatically assumed ecommerce was a simple lowest-price-wins game. Sure Amazon had the strength of a huge selection and sure they pioneered customer reviews but they did those things to play on the weakness of retail stores. Amazon knew book stores would take years to expand inventory and this provided a perfect opportunity for Amazon to grow without much resistance. For Borders to buy Amazon’s bluff and believe customer reviews was the secret sauce is foolish. When I buy a book I value the opinion of Jack207 but I place higher value on the opinion of a real expert, someone who professionally reviews books. Amazon had too wide a selection to hire experts so they never went that route but this was an advantage Borders owned. Their other advantage was strong publisher relationships and they should have used it for exclusive author interviews (similar to what they do now). Finally, they should have leveraged store presence and allowed customers to browse locally available books by zip code. The bottom line is Borders should have changed the balance of power by playing on their strengths because despite what Amazon told the world deep in their hearts they knew the ace lay with Borders.

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