"Borders' Woes Help E-Books"

[teadonkey]

Our only bookstore, a Waldenbooks, is closing. They've already made the announcement.

I really dislike the prices and huge lack of diversity at our Waldenbooks, but I'll miss the browsing. I'm a big time browser. I guess I can't complain, since I hardly ever buy anything there. Even before eReader, I ordered my pbacks on Amazon for the cheaper price.

But I will definitely miss the browsing.

[fjtorres]

Originally Posted by jbcohen

I have found that record stores have become a part of book shops rather than being stand alone stores. Tobaco shops are still around and quite prelevant where I am and speakeasys are still quite common its that you are not calling them the right thing, call them night clubs and they are still around in most larger towns.

The concepts evolved to adapt to the times.
Bookstores will either evolve or die.
It's *their* choice.

[tubemonkey]

Originally Posted by jbcohen

I have found that record stores have become a part of book shops rather than being stand alone stores. Tobaco shops are still around and quite prelevant where I am and speakeasys are still quite common its that you are not calling them the right thing, call them night clubs and they are still around in most larger towns.

And bookstores will evolve into .coms and encompassed by super stores like Target and Walmart.

Like records/CDs before them, physical books will suffer a similar fate.

[fjtorres]

Bookstores getting encompassed by general-purpose retailers?
Short-term, yes. That part of the business dedicated to the High Volume "Bestsellers", for sure.
Long-term? Maybe not.

If ebook mainstreaming reaches a large enough volume at its peak and print book volume drops enough, the minimum-margin/high-volume retailers might just drop out of the business.
Barnes and Noble has openly stated that they expect to outlast the general purpose retailers and be the last B&M book retailer standing. They may be fooling themselves or they may be looking at a vision of a "bookstore" markedly different from the current version. Either is just as likely.

What makes Bestseller books attractive to Target and Wal-Mart is the foot traffic they draw in and the ease of sale: set up a rack, refill as needed. Decent dollars per square foot result with minimal effort as the books sell themselves. No marketing, no customer questions. But if the volume drops because enough people start buying ebook versions it won't take much of a drop before the ratio drops to a point where either the discount goes or the books go.

We really don't know the overall size of ebook reading's natural market.
We don't know how many people will refuse to buy anything but print.
We don't know how much of a decline in print runs will take to make batch-printed "Bestsellers" stop being profitable at high discounts and we don't know how bestselling those hardcovers would be without the high discounts.
And we don't know at what point withering Bestseller discounts will start driving buyers to ebooks instead.

It is way too early to know exactly how the endgame will play out; all we know is the general trends point to a tipping point that could suck the profitability out of the commodity book business long before demand dies out and that at some point (soon?) print books will slide into a death-spiral of rising retail prices and declining sales.

The beginning could be as simple as the BPHs applying the Agency Model to print books.
That kind of price fixing would surely prop up bookstores (in the short-term) and might push away the discounters. It would also drive a lot more readers towards ebooks.

In that, I think the idea that the travails of B&M book retailing help speed ebook adoption is probably right even though ebooks are not the root cause of those problems to start with. (In evolutionary terms; mammals didn't cause the demise of the dinosaurs but they were merely the best positioned to take over once they did start to decline.) The same applies to books: as the giant chains decline, leaving entire regions bereft of large-catalog B&M print retailers, the volume handled by online retailers and ebookstores will inevitable go up.

And, given that readers tend to stick to ebook buying (for the most part) once they transition to ebooks a pbook death-spiral into niche-dom is pretty much inevitable.
It's all a matter of time.

[Alexander Turcic]

Today's news: Borders files for bankruptcy.

http://www.bloomberg.com/news/2011-0...lion-debt.html

[tubemonkey]

From the article:

Borders, whose market value shrunk by more than $3 billion since 1998, racked up losses by failing to adapt to shifts in how consumers shop. Its first e-commerce site debuted in 2008, more than a decade after Amazon.com revolutionized publishing with online sales. The world’s largest online retailer beat it again by moving into digital books with the Kindle e-reader in 2007, a market Borders entered in July.

That says it all.

[Kali Yuga]

Originally Posted by tubemonkey

That says it all.

Uh, no, it doesn't. Not by a long shot.

The article also cites:
• lack of innovation
• lack of capital, since 2008
• over-expansion

The article also fails to mention, or under-reports:
• $600 million in losses over the last 4 years
• crippling debt
• revolving door in the executive suite
• terrible real estate decisions
• handing over its online book sales to Amazon for years
• the worst economic climate since 1939
• that they didn't have the capital to roll their own ebook solution
• that their deal with Kobo, while expedient, also means less profit from ebooks
• that there is no way any ebook strategy could pull them out of this hole


It's not clear that B&N's ebook business will save them; their net income has dropped steadily over the past 3 years. They're still profitable, and will almost certainly feast on Borders' carcass for some time. But they also have a very expensive store infrastructure that is facing rapidly falling sales, and the costs and damage to their brand identity will be severe as they close store after store after store.

Even if they do survive in some form, they will be a shadow of their former self. I don't think we can really say yet that "ebooks have saved B&N."

[tubemonkey]

Originally Posted by Kali Yuga

Uh, no, it doesn't. Not by a long shot.

The article also cites:
• lack of innovation
• lack of capital, since 2008
• over-expansion

Which I attribute to failing to adapt.

Poor leadership will sink you.

[queentess]

Interesting that it's chapter 11 and not chapter 7. I really don't see Borders recovering from this, especially not in the long term.

[speedlever]

I really hate to see Borders in trouble. Competition is a good thing. I also hope B&N survives and keeps Amazon on their toes.

But a case in point w/r/t Borders. I have a gift card which I've been making purchases against. I tried to place an order this morning but the system wouldn't let me because it thinks my remaining balance is too low. I check my order history and there is plenty of credit remaining.

So I called Borders CS. While the CSRs spoke English, it was heavily accented and difficult to understand.. going both ways. I spent nearly an hour on the phone with three different CSRs (one due to a dropped call on their end) and they say it will be fixed.. but it hasn't been yet. The CSR tells me they had a technical glitch and the system charged me for two orders on one day. My order history does not show this.

I can't believe it could possibly take 60 minutes (being continuously put on hold for minutes at a time) for the CSR to look into and correct this issue. I'm not convinced it's fixed yet.

I don't know if this is an anomaly or if it's representative of Border's approach to business. If the latter, they deserve to fail.

I am NOT impressed.

Edit: It took another call to Borders CS to fix the problem. But it is fixed now.
There's also an option for anyone calling about the Borders reorganization too. Interesting.

[rhadin]

Borders biggest problem has always been poor management and lack of vision. It was the first large chain in the U.S. to combine books, music, and cafe, and then, true to color, mismanaged the combination so badly that B&N imitated and quickly surpassed Borders.

When I worked for Borders more than a decade ago, it was obvious that it was dying. Management in Michigan would send weekly bulletins telling us in upstate New York what books to place where, which had to hit the customer in the face as the customer entered, which could be displayed face out, etc., and then sent secret staff to verify compliance. Failure to comply meant firing or no bonus.

The problem was that local tastes in upstate New York varied from taste in Ann Arbor, Michigan, yet we couldn't stock the store or create displays that catered to local reading habits. People would walk in and walk out without buying.

Is Borders salvageable? Yes, it is because the brand has value, but it needs a completely different type of management, something it won't get because the the "owners" think that what is good for Boeing management style is good for Borders management style; that is, there is no recognition of the management style differences required because the book market doesn't work like a normal market.

[rhadin]

Originally Posted by teadonkey

Our only bookstore, a Waldenbooks, is closing. They've already made the announcement.

I really dislike the prices and huge lack of diversity at our Waldenbooks, but I'll miss the browsing. I'm a big time browser. I guess I can't complain, since I hardly ever buy anything there. Even before eReader, I ordered my pbacks on Amazon for the cheaper price.

But I will definitely miss the browsing.

This is the problem that ALL local retailers are facing in the Internet age. Local citizens use local stores like shopping catalogs -- to check things out but not to buy. In fact, this was the topic of my blog this morning, The Demise of Borders, Blockbuster, and Choice. We consumers typically want it both ways -- the absolute cheapest price in a local brick-and-mortar store, which is a combination that can't be.

One of the things that amazes me, aside from the lamenting of the demise of local businesses, is how vociferously we Americans complain about our local tax burden and its constant rising, yet we make it a point to shop at places like Amazon that refuse to collect local taxes or to pay into the local community, which events would help lower the local tax burden.

And Amazon's power is such that Texas recently backed down in a tax dispute with Amazon, losing billions of tax dollars. The Republican governor's take on it is that it is better to close schools and cut public services than to have Amazon collect taxes.

[fjtorres]

Originally Posted by rhadin

Local citizens use local stores like shopping catalogs -- to check things out but not to buy.

It is no accident that one of the most popular apps on smartphones is the AMAZON app that lets you lookup Amazon pricing inside a B&M store.

People are only willing to pay so much for instant gratification.

As for local taxes, it isn't up to Amazon to collect them.
Legally speaking it is up to us, as citizens, to tally up our online purchases and pay the corresponding use tax with the annual income tax forms.
(At least how OHIO does it.)
And some of us do pay.

If citizens choose to withhold their use tax payments that is between them and their state government.

[Anthem]

Originally Posted by fjtorres

One of Amazon's strengths as an online retailer (besides their secret life as an Internet *technology* company) is their heavily automated warehouses where order filling is to a large extent carried out by robots.

Is that why my books frequently come in a condition that makes me think they got rolled for their Starter jackets?

Originally Posted by fjtorres

Welcome to the 21st century!

I'm actually from the 23rd Century but I have traveled back to your time and by necessity feign ignorance concerning the developments of the future.

[tubemonkey]

Originally Posted by Anthem

I'm actually from the 23rd Century but I have traveled back to your time and by necessity feign ignorance concerning the developments of the future.

Do you guys have Borders in the 23rd century?