The Atlantic’s Peter Osnos has an interesting piece on what went wrong with Borders. Originally founded in the early 1970s by brothers Tom and Louis Borders, book lovers who were also university graduates, the stores were built on an advanced inventory tracking system, as well as a team of experts in its Ann Arbor headquarters who dealt with publishers to fill the stories.

In the ‘80s and into the early ‘90s, Borders was at the top of its game. But then the franchise was sold to Kmart, who didn’t seem to know quite what to do with it—it didn’t fit in very well with Waldenbooks, Kmart’s other bookstore brand, so it was spun off in an IPO in 1995.

About the same time, Jeff Bezos saw an opportunity on-line, and launched Amazon.com. But rather than go into the Internet itself (as Barnes & Noble was also doing), Borders expanded overseas, losing its focus on the book business in the USA. In fact, Borders wasn’t doing much on the Internet even twelve years later—its on-line book sales were through an Amazon affiliate program.

It seems to be the same old disruptive technology story: as with Kodak and digital cameras or Blockbuster and Netflix, Borders never bothered to keep up with other innovators in its field, and time just passed it by, Even its fling at e-books with Kobo seems to have been too little, too late.

Can Borders recover? The Bookseller reports that Borders execs claim to be close to securing a refinancing deal, but I’m skeptical whether Borders will last much longer even if it gets it. It seems doubtful that yet another band-aid will do anything to help if gangrene has already set in.

4 COMMENTS

  1. I know absolutely zero about Borders and it’s history. At the risk of being presumptuous what I would like to say is that it is such a shame that a reputable business with such a sound history and many employees has been allowed, by what appears to be sheer mismanagement, lack of vision and ability to adapt to a changing market.
    It goes to remind us of the well established truth, that 80% of businesses go out of business because of bad management and not market forces. We should all keep that in mind when we are so often brow beaten by supercilious and smug management people.

  2. Word is Borders is trying to secure US$500 million from GE Capital so it can stay in business for another “6 to 12 months” while it “rearranges its business” outside of bankruptcy.
    I’m thinking… good money after bad.
    At best Borders might hang on like Blockbusters, a zombie lumbering about as a sad reminder of a different age a generation past. And what happens when the world zigs and you zag…
    I’m also thinking Borders will not be alone in exiting stage left in 2011.

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