Tuesday, May 27, 2008

Borders Books, Death By Amazon

Borders recently announced it has severed its relationship with Amazon. Dah!?!?! It's like a guy feeding a monster down in his basement until it grows large enough to demolish the house and eat his family in the process. So Borders has now taken borders.com back from Amazon. And what???? Business as usual won't cut it for Borders. The brick and mortar model isn't nimble enough in its current incarnation to survive long term in the world of the web.

Bloggers criticize or congratulate. Let's take a shot at constructive suggestions for the evolution of Borders. It has to be outside the box because this company is on life support. Here's a thought: get into the used book market. How? Give buyers store credit for 1/2 the selling price of a user book on Amazon when they return book after reading it. Then resell the book on Amazon for cash. Why? You build a deeper relationship with the Borders buyer. I have sold used books on Amazon but it is a pain. If Borders would do it for me and save the hassle, I'd be glad to give them 50% of the revenue for the trouble. You could do the same thing with CDs. Why would a person return a CD? Once a listener has copied the tracks onto their MP3 player, a fair percentage of the buyers have little use for the CD. It may help stimulate CD sales if buyers know they can get a return on the investment.

Next thought, become a book publisher and music recording label for unknown artists. How can Borders push up its profit margin? By cutting out the publishing companies and music labels. If a writer or artist takes off, then Borders is the only outlet for their work. How to discover new artists? Let the customers tell you. Start off placing samples of new artists online. The users vote online ala digg.com. The artists with the most diggs move up into more prominent placement within the web site. The cream of the crop go to test market in selected brick and mortar Borders stores as well as on borders.com. Those that show well in limited release get placement in all borders.com stores coast to coast. I'm thinking contests and press releases. This could be big.

Borders, are you listening? Or are you just going to fold up your tent and die? Feel free to add you own ideas for the survival of Borders.


Aaron said...

Your ideas seem like they are not well thought-out. The used book and CD markets would undercut their own business model, competing with themselves and angering the new book producers. The idea of them becoming independent publishers and music label is even sillier, because you are asking them to take on massive risk; the publishers/labels make money because they can find talent where others fail at finding it. If you commoditize it, then there is no money in it. Why don't you just suggest that Borders becomes a thrift store? That's about how much value is in your ideas.

Kristen said...

Becoming an independent publisher is absolutely NOT SILLY, it'd be the smartest thing they could do. There isn't much risk in publishing anymore, not with Print on Demand capabilities, and Borders could easily maximize their profits by promoting their own books more heavily. Amazon is already in the market - but it's the only place where having a physical store is an advantage. You can direct the way people browse in a physical location effectively, while online browsing is really hard to direct. It would actually be brilliant if they went into publishing.... which is how I know they won't do it.

Adam said...

I like the idea on becoming a publisher. Here's another (not terribly innovative but it comes from a personal experience).

A few weeks ago I was in NYC for a conference. As part of the conference I visited the Time Warner Center. I happened to pass a Borders and saw that there was going to be a performance that night by a French singer that I really wanted to hear. I went to the performance and really enjoyed it. She was signing CDs and ordinarily I would never pay Borders price when I could get it on iTunes. But I wanted to reward Borders for setting up the mini-concert so I bought the CD from them.

In short: there are (still) experiences that can only happen (or that can best happen) in stores. So create an experience for me. Find out what I like and let me know when there are lectures or events that are happening at stores near me. I will reward you for that.

jjray said...

aaron, still in the box ... but everyone is entitled to their opinion.

>>The used book and CD markets would undercut their own business model<<

What business model? You mean the one that isn't working? That model is dead or didn't you get the memo. The idea is to forge a stronger relationship with the customer. You give them a store credit (which internally worth less than cash) and turn the credit into cash by reselling the book / CD online.

>>The idea of them becoming independent publishers and music label is even sillier, because you are asking them to take on massive risk<<

Obviously someone has not investigated the metrics of on demand publishing. The old formula of printing 100,000 copies of new works and praying it sells are dead. You can print literally one book at a time for sale with each order for very little upfront cost. It would be an easy market for them to enter if it was integrated in a graduated fashion as suggested.

Auria said...

Joe, thank you for visiting my blog. I'm unable to post on your How to Write a Business Plan blog because I don't use blogger. Please consider opening up the comments to all users. Meanwhile, I posted my thoughts on my blog so come check it out.

jjray said...

Auria, thanks for pointing out to me that my comments on this site were restricted to persons with blogger accounts. Not my intention and must have overlooked same when setting up the blog.

Richard said...

It's very tough for a mom and pop type book store to survive in this internet economy , unless you have a good presence in web , you cannot do enough business, some Book Stores have found this and they combine their Brick and Mortar store with a website, in this too you need to provide some extra value or service , as there are lots of online book sites buying and selling books

for example check this site : Sell Books Online they got a free shipping buyback process + they pay premium prices for used books but the most imp thing is that they got Video Book reviews, ie book reviews on video Concise and fascinating insights into a wide variety of books, stuff like these attracts visitors and traffic which gets converted into customers :)

jjray said...

For those who thought going into the used book market was stupid, Amazon just make an acquisition today of an online used book seller. Apparently Amazon believes there is juice in that segment. Link