Does Borders Bankruptcy Signify the End of Physical Bookstores?
The path to Borders' bankruptcy, however, may not have been solely littered with Kindles, Nooks and iPads. Michael Norris, senior trade analyst at Simba Information, points to several other factors, including Borders' partnership with Amazon, beginning in 2001, in which Borders.com was relaunched as an Amazon partner.
"That was the beginning of the end," he says. "By not being the ones to close the sale, Borders basically [created] multiple systems to close the sale instead of creating one system to satisfy the customer. And that's just where they went horribly wrong."
Norris also mentions Borders' mix of superstores as well as small-format Walden Books and Borders Express stores—"They really need to have one brand," he says—as well as its Borders Rewards Program.
"They never should have made Borders Rewards free. ... I've never viewed the Kindle as anything other than a very significant customer-service loyalty program, because people look at the $25 they spend on Barnes & Noble['s Membership Program] or the $79 on Amazon Prime or the $139 on the Kindle, and they think to themselves, 'I paid for this relationship, and I'm going to get as much out of it as I possibly can,'" says Norris. "Because Borders made it free, the customers did not have that hook. So they eventually realized that they were losing an opportunity and that it wasn't as strong as it could be by rolling out the [fee-based] Rewards Plus [program]."
Wahlstrom also mentions the migration to online purchasing. "The consumer, just over the last couple of years, has gained increasing transparency in pricing. Whether it's going to an Amazon.com or one of [Borders' or Barnes & Noble's] own websites, the incentive for a customer to go into a [physical] Barnes & Noble, a Borders, a Books-A-Million, even a Costco, Wal-mart or Target, to buy books has kinda changed over the last few years," he says. "Customers today are certainly looking for that added value, and it's very difficult and it's very expensive to be everything to everyone. So Borders and Barnes & Noble, as they stand in their superstores, are holding a lot of inventory for products that may or may not turnover very quickly."