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Friday, August 05, 2011

What Happened to Borders: A Tech Warning to Businesses


The news came last week that Borders Books, unable to secure a buyer for the company, would be liquidating their merchandise and closing all their stores. 
I’m sad. 


Not just because Borders is my favorite bookstore, but because I’m a former employee. 


I worked at my favorite Borders for four years while I finished university. I was a manager and then did community coordination work. I loved working there; it’s one of the jobs I was sad to leave when I went to work in the corporate world. You can read about some of my bookstore adventures here and here.


Retail is a hard, complicated business and it’s hard, grueling work. So many of the stories discussing Borders demise noted how the company couldn’t compete with Amazon.com, or even Barnes and Noble. 

However, the story goes so much deeper and carries far more lessons for the business world than simply being “unable to compete.” Why? Because Borders was unwilling as a corporate entity to adopt new technologies at a fundamental level.



When I opened my Borders bookstore in 1998 I was the Human Resources Manager. The brand new computers installed were running Windows 3.1, hopelessly outdated in 1998. We didn’t even get Windows ‘95, already more than four years old in 1998. We finally upgraded to Windows 95 sometime after the year 2000. It was the hallmark of a company that didn’t understand how important technology was to their business market. There was no Internet access in the store. Some of you may not have been online in 1998, but I was an old hand, and so was Amazon.com. Not even the managers’ computers in the back of the store had Internet access. If a customer wanted to look something up, we couldn’t use the Internet, we were dependent on databases provided to us by the company--and who knows when they were updated last. Books-in-Print, BINC (Borders Inventory Control) all of those were either internal databases, accessible through an intranet, or a limited access proprietary database that we had the rights to use. It was frustrating and laughable.



Borders launched their website around 1998. Prior to that launch, you couldn’t purchase books through Borders.com. Barnes and Noble.com launched far before Borders.com. Keep in mind that Amazon.com had been online since 1995. Borders couldn’t come up with a website where you could purchase items until 3 years later. That’s an eternity in both the retail and technology worlds. After trying unsuccessfully to make a go of online sales well after online book retailing, and Barnes and Noble.com, Borders ceded their online presence to Amazon.com, funneling all their traffic directly to them. They gave up. I’m not saying they shouldn’t have given up, it’s clear that Borders.com wasn’t working, but it’s because they were so late to the game that it failed so abjectly.


Borders had another handicap that was an initial advantage. Soon after the company was founded, they came up with an internal inventory system called Book Inventory Systems. In an age before widespread computerization, BIS was a marvel of book inventories. Other companies licensed BIS. However, after the computerization of both the regular business world and, increasingly, retail, BIS was no longer an advantage. The system became an archaic and artificial way to manage inventory. The extra time to sticker each book with its own BINC number, imposing the BINC system over every aspect of inventory, managing the databases; it was unsustainable opportunity cost.



It’s also true that Borders diversified into CDs, DVDs, and scads of other items at the peak of saturation and popularity. The cost to maintain CD/DVD areas and selection is expensive; the infrastructure necessary to each bricks-and-mortar location is expensive; it all came at the tail end of market demand. I remember one music employee who, in 1999, scoffed at the customers buying music because she knew she could just go home and Napster the same inventory she hawked during the day. She accurately called the death of retail CDs/DVDs. No one at Borders Corporate saw that coming. Just one more example of both willful ignorance and hubris in the face technological change.



There are other traditional business reasons why Borders failed: over-expansion, saturation of the market, transient company ownership and poor strategic partnerships; it’s all relevant (read more about it here under Gale Directory-BGI.) However, from this person on the ground level, Borders never understood what the Internet and technology would mean to their business. They failed to make investments to their informational underpinnings. They failed to act quickly in the new Internet marketplace. They didn’t understand what could happen, they didn’t listen when employees brought up the technological gaps. They didn’t position themselves to either take advantage of e-readers (until it was too late) or accurately communicate why they were an alternative. They rested on strategies from a bygone era and prided themselves on internal technologies that were 30 years out of date. They ignored the signs, refused to change, and when they did change, it was too late.



And that’s a shame, because Borders was a great company.

9 comments:

sara said...

SO interesting. Makes me think back to working at my CD store in the late 90's which also never had internet access. When I was manager I loaded AOL software onto the computer (small enough store that there was only one computer) to do dial-up in case of emergency. One time when my boss (the owner) was in town and working at the store, he called me at home begging for my AOL password so he could get online to buy Bruce Springsteen tickets. Even after that we still had no internet at the store, all the way until I left in 2000.

My husband has faced this dilemma at work before (he's an IT guy) -- trying to convince the slightly-old-fashioned owner of the company that updated technology is a GOOD thing and will keep the company competitive.

Sweet Marie said...

I wish you could have been around in 2009. BGI spent millions on a renovation in Vegas that was going to be the new model and savior of the company. BGI flew all the store managers in the region out to take a tour of the new store plans, and to experience the awesome power of THE DOWNLOAD STATIONS. It was laughable. DL stations consisted of a cluster of computers throughout the store where customers were expected to bring their e-readers in and sign on to amazon.com to purchase and download an e-book...?

TopHat said...

Interesting. This reminds me of this post I came across last month: http://larrycorreia.wordpress.com/2011/07/21/on-borders-closing/
It sounds like they were dropping the ball all over.

I miss Borders because I like having options for book buying, but I'm still a full-on library patron. I'm a socialist like that. ;)

Anonymous said...

I was 44 years old in 1999, and I saw it coming. I also managed, in my dotage, to design webpages for a university and teach students and faculty how to digitize audio and video. You seem like a bright young woman. do not let ageism hamper you.

AzĂșcar said...

Anon, that's fair enough. Edited that statement.

Mrs. Organic said...

If only Borders' customer service/offers and B&N's tech could have a baby, it would be the perfect book store.

the emily said...

I'm devastated over the loss. I just moved from UT to Gallup, NM, and it's the only bookstore for 120 miles. I love Amazon, but there's nothing like walking through a bookstore.

Erin O. said...

I think a lot of industries failed to see how the internet would grow and change their foothold. In 2005 I worked for a radio station and I came across an article in Fast Company about a new website called Pandora. The article was fascinating and I brought it to a meeting specifically to discuss it with the "higher ups"...the VP of Programming couldn't believe how silly I was and blew me off saying, "Internet-based music will never impact us! You can't listen to internet radio in your car!" I walked out of that meeting and thought, "I have to get the hell out of here." I think it's a rare company that is willing to think beyond what made them initially successful.

Rynell said...

I completely get this. I buy almost all of my books (plus other stuff) from amazon, but I still loved Borders and was there buying something monthly. I will miss their customer service and having a bookstore so close to home.