The Many Reasons Why Borders Bookstores Failed – Courtesy of Management Gurus

None of the gurus named or implied actually said anything about Borders, just taking their stated recommendations and applying it to Borders. You can see the futility of adopting that single magic, one-size-fits-all and Guru’s pedigree based recipes for running a business.

  1. Marketing is about telling stories. Borders failed to tell a compelling story that customers want to believe.
  2. Borders did not have a Level 5 leader. That would have moved them from Good to Great.
  3. They should have focused on their existing customers and retained them. Because increasing loyalty by 5% will increase profits by 80%. Not only that, the loyal customers will continue to pay higher prices.
  4. Borders stores were not managed and run by designers, they lacked Design Thinking.
  5. They did not follow the Toyota Way of lean manufacturing and lean inventories.
  6. Borders should have been a Long Tail retailer. (while this may sound as plausible, I would point you to the fact that Amazon makes bulk of its revenue not from the so called Long Tail products).
  7. Borders failed to Enchant their customers, the should have influenced people to keep coming back and pay the full price even though Amazon was selling it at 40% off.
  8. Borders failed in the area of customer service. They should have under-promised and over-delivered.
  9. Borders should have increased their prices by 1% because that would have resulted in 12-15% profit they could have used to grow the business.
  10. Borders lacked good copy-writing in their Ads. If the copy is fun and engages the customer they would come and pay full price for the books.
  11. Borders failed to recognize that marketing is about customer conversations. Your customers are having conversations about you whether you are part of it or not. Borders was left out of the conversation.
  12. Borders should have adopted co-creation, working with the customers to design the books they want to read.
  13. They should not have been running the business based on Airport business books instead they should have run this like a Silicon Valley startup. They should have gotten out of the building and talked to customers and pivoted.
  14. They should not have been running the traditional media Ads. They should have been blogging and done inbound marketing.
  15. Their website should have been ridiculously easy to use. It is all about the user experience.
  16. Borders employees were not in the “flow“, when employees are really engaged in what they are doing the business results take care of themselves.
  17. Discovering books should be fun, a game. Customers must be surprised, not knowing what is going to come next week. They failed to recognize this.
  18. A street vendor selling vegetables in India is still in business. Borders is not. They should have learned from that vendor.
  19. Borders stores and their eBook were not remarkable. When you are remarkable, people will remark on it.
  20. Borders should have given free lessons on each subject. Like Lulu Lemon did they should have asked local speakers and tutors to come teach free classes on various subjects at their stores.
  21. The should have adopted , The Sony Way, The Motorola Way, The GE Way, The Apple Way, …
  22. They should have followed in the footsteps Justin Bieber, Lady Gaga, Bruce Lee, Michael Jordan, …

Do you have one?


The Most Discussed Free Experiment

Update: An article in The Economist (11/27/2009) adds some evidence to the hypothesis stated in this article.

There is one behavioral economics experiment that has been in blogs and mainstream media more than any other, it is the Hersheys and Lindt experiment done by Dan Ariely, Professor at Duke and author of Predictably Irrational. The news presence comes thanks to Mr. Chris Anderson who used it in his latest book, Free, to make his case about the attractiveness of the $0.00 price.

We already know that from Prof. Ariely’s book and we also know that Mr Anderson leaves out the part of the book (and research) in which Prof Ariely warns about the anchoring effects of initial low price. Now let us take the discussion one step further. The Hershey’s experiment found that when offered free, more people preferred Hershey’s than they did when offered at 1 cent. (You can read Predictably Irrational for the details).

Suppose if there had been a third stage to this experiment, this time in addition to offering Lindt  at a small price and Hershey’s at $0.00, there were also other candies (comparable to Hershey’s kisses) offered at $0.00 as well. Then what do you think will be the share of the different free offerings?  For sure, the market will be fragmented. In addition, I hypothesize that(which needs experimentation to verify)

  1. more people will switch back to Lindt
  2. of the free versions, the name brand versions will end up garnering a larger share
  3. most of the free versions will find very few to no takers

The problem is when you give it away for free and there are many free offerings from your competitors, customers will start worrying about their opportunity cost and go back to priced versions.  The fact that some offerings are not free  signal value to customers and reduces their risk of trying.

Now where does that leave the “long tail” free offerings?