• 07
  • February
    2011

Like bricks-and-mortar video stores, bricks-and-mortar bookstore chains have struggled financially as e-readers and online book retailers have grown. Barnes & Noble has struggled financially, but not as much as Borders, which is likely headed toward a filing for Chapter 11 protection.

According to a recent article in the Los Angeles Times by Stephen Ceasar, Borders has made a few major "blunders and missteps" along the way, which have left the company in need of financial restructuring. Borders has reported consecutive financial losses for the last three years. Recently, Borders was given a line of credit by GE Capital, granted the company agreed to certain conditions, such as converting its delayed payments into loans.

Borders was not proactive enough in moving their business onto the Internet and dragged their feet on developing their own online store and e-reader. Part of the problem, according to Ceasar, is that business decisions were being made by parent companies whose expertise was in women's clothing and supermarkets and the decisions were faulty and slow coming.

One major blunder by Borders, according to Ceasar, was handing over their online distribution to Amazon.com. Since Amazon sells books, this was a bad business decision. Amazon used what it learned about Borders' customers to lure them over to Amazon's online store. Borders did not start to build its own website until 2008, and customers have said it is less user-friendly than competitors' websites.

Source:

Is Borders heading for its final chapter? (Los Angeles Times)