Consider these three takeaways from the demise of Borders and the future of book-retailing.
In February, the second largest bookstore in U.S., Borders went into liquidation. Borders was started by Tom and Louis Borders 40 years ago in Michigan. Their business model was to offer a rich assortment of books across the U.S. that rivals couldn't match. This business model stood the test of time for 25 years till Amazon.com entered the scene in 1995. Amazon.com disrupted the book-retailing model twice. Firstly, by making an unlimited inventory of books available at customer's doorsteps and secondly, introducing a new channel for selling books.
The Borders case is not unique. Similar disruptions have been seen in the field of photography, mobile communications, and music, to name a few. All these disruptions provide us with valuable lessons for our professional and personal lives. Some of them might seem quite intuitive, but in my humble opinion are still worth a mention:
1. Success is transient. The Borders case gives us enough evidence of the fact that what worked yesterday may not work tomorrow. It is easy to get complacent with the adage 'if it ain't broken, don't fix it' mentality, especially when an organisation has been very successful. The challenge lies in how quickly you can cannibalise your existing products to meet the customer's said and unsaid needs. Like many retailers, Borders may be hoping that e-commerce and e-books were a phenomenon that would just go away. Therefore, it launched its e-commerce website in 2008 and e-book reader in 2010, but by then it was too late.
2. Business models evolve. Borders invested in the business model that it thought would work best, i.e., physical retailing. Therefore, it expanded the offering in its stores by adding CDs and DVDs to its product offerings. At the same time, it outsourced its online operations to Amazon. These two bets were proven wrong and led to the ultimate demise of Borders. With the advent of iTunes, the music industry went digital and at the same time Amazon grew into the biggest online retailer on the planet. Borders was not able to match the range, convenience, and prices that Amazon offered. Many people including myself would go to Borders to find a book then buy it off Amazon, a trend that got accelerated with the launch of e-books. In just four years, Amazon has started selling more e-books than physical books, both hardcover and paperbacks combined.
3. Clear brand positioning is key. In my last column "What Does Your Brand Stand For?" I mentioned that it is important for a brand to have a clear positioning that consumers can relate to. In my mind, Borders never had that clearly defined positioning platform that customers could relate to. Borders came across as being all things to all people (books, music, movies, stationery shop, hang-out place, etc.). In sharp contrast, Barnes & Noble has created a clear positioning for itself as the cool store (online presence, e-books) and a great place to hang out (through its tie-up with Starbucks).
As an avid book reader, I am sad to see the demise of a bookstore that I loved. However, I am glad that Borders' case has reaffirmed my belief in evolution and the quote 'those who don't evolve will perish'.
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