Beyond the Borders

Some people seemed genuinely surprised when retail bookstore Borders announced last week that they were filing for Chapter 11 bankruptcy protection and closing about 200 stores nationwide.

In an article on NewsBreaks today, there is much ado over how the company has not reacted fast enough in the past 10+ years as the book market changed to an online dominion and more recently in the move toward e-books available on portable electronic devices. I'm sure that didn't help, but it was a business sense that shouldn't have been unexpected.

All one really needs to look at is Borders' pricing. I was recently looking at The LOST Encyclopedia, and decided to check in the store. The book's jacket price was $45. Border's price was $45. Even in their online store, Borders has this title listed as $45. Using the simplest of online searching, other online outlets have this title listed for as low as $15 (granted, from a site with a disputable reputation) and average between $25-$29, with no tax and no shipping cost. Using this example, Borders' bankruptcy should come as no surprise. Gouging potential customers when other outlets offer as big a selection of titles at deep discounts is a fantastic way to put oneself out of business.

This is what happens to a company when there is too much management and not enough people who have an interest in the long-term viability of a company. If I knew better, I'd hazard to say that management didn't care that their prices were from 20 percent to 25 percent higher than their competition --- that the income from people paying a higher price (either out of ignorance or loyalty) would make up for the business lost by customers who chose to purchase elsewhere at a lower cost. Eventually, especially in times like these, that merry-go-round stops.

Borders announced that they will continue business at their remaining stores, and this is an opportunity to make over their corporate structure. The NewsBreaks article quotes an Axis white paper that "a crisis situation like this allows a company to ‘unfreeze’ the organization’s traditional slow process of change to implement decisions more quickly and make the company more agile and responsive." Unless that plan includes slashing prices to become competitive, any reorganization will be, to excuse the trite expression, "like shuffling deck chairs on the Titanic."

There is some speculation that the Barnes & Noble chain might be interested in some degree of takeover. They're no gems in the pricing arena either, at least in their 'brick and mortar' stores. As I found out when I went to get my nephew a fun pop-up book titled "Moon Landing: Apollo 11 40th Anniversary" two Christmases ago, there is a great disparity even within that company's entities --- it was full-price ($30) at the store and had a discount of about $8 at B&N.com. Amazon.com had it listed at about a $13 discount, again with no tax or shipping.

Care to guess where I ordered it?