

Why did Borders Tank and B&N not? - ThomPete
http://www.quora.com/Borders-Books/Why-is-Barnes-Noble-performing-well-as-a-business-while-Borders-is-near-or-has-even-reached-bankruptcy

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coffeemug
I think the common answers to this question are a good illustration of people
inventing logical reasons post factum for something they don't understand,
much like described in the Black Swan.

My experience is exactly the opposite to what most people are saying. I know
of plenty of Borders locations, and almost no Barnes & Noble location. Borders
stores are always excellent - well stocked, pleasant atmosphere, etc. The
checkout lines are always full, people browse for hours and buy a ton of
stuff.

I suspect the problems have much more to do with the economics of running
their operations which you can't see with a naked eye. Their customer
experience is top notch - they just couldn't do it in a scalable way long
term.

BTW, what exactly is Barnes & Noble's eBook strategy? How many people do you
know that bought a Nook?

~~~
xiongchiamiov
I own a Nook. I don't know anyone with a Kindle, and one person with an iPad.

I'm a 4th-year Software Engineering student at a pretty Linux-heavy
university.

~~~
xiongchiamiov
1\. How many people do you know that bought a Nook?

2\. [reply with numbers and context]

3\. [downvoted]

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mjfern
I don't think Barnes & Noble is out of the woods yet. While the company has
certainly fared better than Borders, the company is going to face a difficult
road going forward.

First, the company is still heavily dependent on its brick and mortar retail
operations, but the demand for physical media (including books) is declining
rapidly. Second, the company's future depends on its ability to transform
itself into a digital distributor of content. In digital distribution, B&N
must contend with Amazon, Apple, Google, and others (e.g., Sony). These
competitors have significant advantages in the areas of economies scale and
scope and technology.

Borders bankruptcy will give B&N some reprieve, allowing the company to direct
cash flow from its bricks & mortar operations to its developing digital
strategy (e.g., BN.com, Nook). Nevertheless, I think B&N will face a rocky
future. Investors seem to agree, with B&N trading at close to a 5-year low.

~~~
angstrom
Current trends are supposedly looking better. I saw an article last year that
claimed 1 million sold before Christmas and continuing to trend upward:

 _He is also forecasting that 2.4 million Nooks will be sold this year, and
more than 3 million in 2012._

[http://www.crainsnewyork.com/article/20110215/FREE/110219913...](http://www.crainsnewyork.com/article/20110215/FREE/110219913/0/REAL_ESTATE)

I think the key difference between B&N and Borders is that BN actually had a
digital strategy long before Borders ever did. According to this article they
were already dabbling with ebook delivery in 2001:

[http://pocketnow.com/software-1/the-bn-ereader-remembers-
my-...](http://pocketnow.com/software-1/the-bn-ereader-remembers-my-books-
from-10-years-ago)

Right now though, I think one of the best things is they have the cheapest
Honeycomb capable tablet in the Nook Color (with some hacking). The screen is
IPS and the processor is a 800Mhz A8 ARM, capable of overclocking to 1100Mhz.
It's effectively a scaled down IPad in terms of processing/screen. From a
hacking perspective it's more interesting than anything Amazon has shown.

[http://www.engadget.com/2010/10/28/nook-color-processor-
reve...](http://www.engadget.com/2010/10/28/nook-color-processor-revealed-arm-
cortex-a8-based-ti-omap3621/)

I think the real problem is that Borders is trying to pivot on a dime. They
saw the .com implosion and assumed the digital revolution was hot air leaving
their position unassailable.

------
bradly
I really think the impact of having a Starbucks in every Barnes and Noble is
huge.

~~~
marcc
I agree, and I'm assuming you actually mean that the impact of having a coffee
shop in each location is huge. Borders failed at this, they originally ran
their own coffee shops, then outsourced it to Seattle's Best. BN outsourced
coffee while Borders outsourced the web business.

I have never been able to understand the fascination with Starbucks in BN. At
my local BN, it's noisy, small tables, and no power outlets available. Can't
do that.

Also, Peet's is so much better than Starbucks.

~~~
derleth
> Also, Peet's is so much better than Starbucks.

This is only relevant if there's a Peet's anywhere near you. This is untrue at
the majority of places I've been to with a BN.

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chrisaycock
I asked this same question to a tech analyst at an investment bank I used to
work for. He said the Internet was a big one, of course, but he also pointed
to the music sales and said that Borders went heavy into that market at the
height, whereas BN had largely stayed out of it. He said the music commitment
was the big resource drain that put Borders at a huge disadvantage.

------
russell
Chairs. B&N has comfy chairs where I can peruse a pile of books. Borders
doesnt. But Amazon won for us. We live 40 miles from either so my GF gets
everything from Amazon or other Internet sites. Even though I work not far
from both, free 2 day delivery has won me over for anything other than the
occasional mass market paperback.

~~~
thematt
_free 2 day delivery has won me over_

I like it too, but it's not really free. It's $79/year for an Amazon Prime
membership.

~~~
tzs
You could use John Dvorak's trick--buy all your Amazon items through an
affiliate link for an affiliate you own. If you purchase enough, your
affiliate rewards will cover your Amazon Prime membership.

~~~
ben1040
I tried this a long time ago -- maybe 10-12 years back, not long after they
first introduced the affiliate program -- and got a friendly but pointed
letter from Amazon to knock it off. Have they changed the rules?

~~~
jonknee
No. It has always been against the rules.

~~~
sk_0919
Any clues on how Amazon identifies this kind of behavior?

~~~
jonknee
It's the same Amazon account for Associates and purchases... It's quite simple
to match up. You may able to sneak around with different email and mailing
addresses, but you still have cookies to deal with.

------
thematt
This question is probably premature to ask. B&N hasn't tanked...yet. Their
future existence is far from guaranteed.

~~~
sabat
Well, Borders did just file Chapter 11. That's not really "tanking" in the
sense of going out of business, but it's tanking in the sense of appear to be
on its way down.

------
ahi
Their Ann Arbor store has been a dump for months at a time as they reorganized
and relocated books. Seems like a third of the store is just paper goods--
cards and wrapping paper crap. 5 miles from HQ and they still couldn't figure
it out.

~~~
jakewalker
And yet their new flagship store on Lohr Road by Best Buy is pretty gorgeous,
well staffed, and well laid out. Just gotta get in the car and drive,
unfortunately.

~~~
sachinag
Wow, we need an Ann Arbor HN meetup!

------
ctdonath
Censorship.

While not THE answer, it's why this longtime faithful Borders customer quit
cold turkey.

When the "mohammed cartoons" flap broke, Borders responded by refusing to
carry issues of magazines which printed the images. In a market where "banned
books" are celebrated as an exercise of rights, this act of censorship
alienated more than just this customer. The competition did not so violate
this basic principle, and with B&N and others just as easy to visit, we took
our business to where we could trust that discussion of controversial content
would not be suppressed.

Trust is hard to build and easy to lose.

------
ja27
Poor real estate location. This killed them in my area. They built two Borders
near me, each so close to an existing Barnes and Noble that I swear you could
stand at a spot across the street and see both competing stores. Meanwhile,
new malls and complexes of big box stores were built with no booksellers in
the area at all.

The broader selection than Barnes and Noble was one of the things I loved
about Borders - in 1995.

But the K-Mart acquisition and subsequent management team deserves a lot of
the credit for this disaster.

------
Vivtek
Fumbled early Internet strategy. Amazon and B&N both had affiliate programs -
Borders wanted to keep control.

~~~
sigstoat
i think rather more fundamental was the years they spent with borders.com
basically pointing to amazon.com.

~~~
Vivtek
Probably - but I think that was itself symptomatic of the fact that they
Didn't Get the Internet.

I wanted to affiliate with them, back when - I always preferred them to B&N
and Amazon was still nearly unknown - but _couldn't_. I didn't expect it to
bring down their bricks and mortar stores, but I'm not surprised.

------
davidmurphy
It's hard to quantify, but personally, I never found Borders stores that
pleasant, whereas B&N was overall much more appealing to go to.

~~~
sabat
My feeling is exactly the opposite. B&N feels generic to me, a larger version
of a crappy mall bookstore. Borders always felt more like a real bookstore.
Plus: you can search Borders store inventory before actually visiting the
store; you can apparently now do this with B&N but the B&N website keeps this
quite hidden -- I only know it's there because if you search for "barnes noble
store inventory search" it leads you to:

[http://search.barnesandnoble.com/booksearch/store.asp?EAN=97...](http://search.barnesandnoble.com/booksearch/store.asp?EAN=9780470100929&distance=&zipcode=10004&x=0&y=0&z=y)

which is the result page for a PHP book including store inventory search
option. I've then been able to manipulate this into a general store inventory
search with some success. Completely ridiculous that you cannot find this
easily. No, it's beyond ridiculous.

Edit: apparently most -- but not all -- book results pages do have a "pick me
up" slot where you can search a local store. Not exactly intuitive, but at
least it's there now.

~~~
burgerbrain
I used to find the similar thing, but then all the borders near me removed all
of their seating (this was probably 6 or 7 years ago). That was pretty much
the only reason I ever went to borders instead of buying stuff off Amazon.

(well, that and their air-conditioning on hot summer days when I didn't have
any. Of course, with the amount of money I always spent there during those
days I could have bought a window-unit AC in two visits, but I like books...)

------
jonhendry
Borders was my first big bookstore. The Chestnut Street store in Philadelphia
near Rittenhouse Square, when I went to college. It was practically a
religious experience. Growing up in Connecticut I only ever had the crappy
mall stores like B Dalton and Waldenbooks, and a rare visit to the Yale Co-Op.
Borders was multiple stories, a huge computer section with lots of academic
books, it was awesome.

There I saw Douglas Adams read from 'Last Chance To See', and saw Ally Sheedy
read from her crap poetry book, which I bought and had autographed.

The Rittenhouse Square store closed at some point and moved, I think to a
location on Broad Street.

------
mcargian
Well this is timely. For anyone near San Jose, the Borders at Santana Row has
"store closing" signs out today. Most things 20 to 40% off.

~~~
lotusleaf1987
The problem is 20-40% off is still basically the same as ordering from Amazon.

~~~
mechanical_fish
I picked up a couple of travel books at my local 20%-off going-out-of-business
Borders today. Hefted them in my hand. Then looked them up on my iPhone and
found that their Kindle/iBooks price was 50% lower than the Borders retail
price.

So I left the store with no books, but with a pretty good idea of why Borders
is bankrupt.

A wistful day to be sure. I remember twenty years ago, when the arrival of
Borders in my midwestern city was akin to a religious experience.

------
teyc
In the long run they are all dead. Look at the financial ratios
[http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratio...](http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=BKS)

EBIT -0.2%.

------
xiongchiamiov
Borders dying makes me a bit sad. These four years I've been in university,
I've watched our B&N's tech book section shrink and convert to "iPads for
Dummies" books, and the manga section go down to a quarter of the previous
size. Our Borders does tremendously better on both these sections.

Amazon's cheaper, sure, but I only tend to buy things there when I'm looking
for them, while physical stores get me to browse (and allow me to read
samples!). Since I got a Nook for Christmas, though, I'm starting to use its
samples to browse books from the comfort of my home, which is certainly
leading to more money going to B&N.

------
starpilot
I wish they pivoted into being a small purveyor of eclectic, non-bestseller
books, almost like a Trader Joe's of bookstores. But no one seeks little-known
books like they do with music or even food.

~~~
quanticle
That's not the problem. The problem is that there's _no way_ they can compete
with Amazon in the eclectic book market.

As I see it, Borders lost its volume business to Barnes and Noble, and then
lost its eclectic book business to Amazon. Between those two companies, there
just wasn't a niche for a semi-specialty bookstore.

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unov
Bill Ackman, uber hedge fund manager, lost $125 million on Borders. Sounds
like his plan was to fund a Borders + B&N merger.

So I suspect Borders tanked because Bill Ackman or some other hedge fund
wanted it to tank to get out, cut loses, or some other behind the scences
financing deal they had in mind such as sell off the commercial real estate
"closed borders stores"

Wonder how many of the Borders stores now become B&N stores? You never know.

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msluyter
I'm curious if there is any model at all under which bookstores will survive.
Presumably, used bookstores can hang on for a while. Perhaps the future is
some sort of mix of new and used books, along with a coffee shop and
diversified inventory (games, for instance).

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brianbreslin
There was an interesting post when news hit of borders woes stating their real
estate was valued at something like 5 figures per store. Can't remember where
it was though

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jcurbo
Was Borders as widespread as B&N? I've lived in Arkansas, Ohio and DC and I've
only seen a Borders in DC, while I've seen and shopped at a lot of B&Ns.

~~~
jonhendry
When I lived in Cincinnati, 95-97, there was a Borders near where 75 meets
275, in the Tri-County mall area. Looks like it's still there and is staying
open.

Quite a few Borders stores in Illinois.

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NY_USA_Hacker
Amazing content:

It's 'business news' and a 'business case study' and for business better
information than on Bloomberg, Forbes, Fortune, etc.

So, generalize and formulate the implications for the future of media?

