Michigan-based book retailer, Borders is filing for Bankruptcy and closing its doors. Borders had been looking for a buyer for the company with no success, and it had been unable to keep up with its costs and its larger rivals, Amazon and Barnes and Noble. So what happened to Borders? How should marketers adapt to avoid similar problems?
Borders fell victim to the trapping of four key problems that ultimately caused the long and slow death of its business.
4 Marketing Lessons from Borders' Mistakes
1. Failure to Pivot During Technology Disruption - Technology, by its nature, is disruptive. It causes changes to markets that impact the business strategy for all companies in a given market. In the book-selling business, this disruptive technology was the shift from printed to electronic books. Amazon was the first in the industry to make the shift to ebooks, followed by Barnes and Noble. This left Borders lagging behind in a position where it was too late to shift to ebooks and own a viable ecosystem for distributing them. Earlier this year, Amazon announced that ebooks, once thought of as a fad only to be used by technology geeks, now outsold printed books. Industries change (just ask the music industry!). Ultimately, Borders failed to change its business strategy quickly enough to follow and succeed in an adapting market.
Marketing Takeaway: Social media, DVRs, search engines, caller ID, and many other technologies are fundamentally changing the way companies market. Don't continue to rely on cold-calling, TV advertisements, and the Yellow Pages; this is the equivalent of what Borders did. Instead, be like Amazon and use disruptive technology to your advantage by starting a business blog, becoming active in social media, and focusing on paid and organic search engine marketing.
2. Inability to Control Costs - Failing to control costs is a quick death nail for any business. For Borders, its inability to control costs stemmed from its failure to adapt its business strategy. Amazon and Barnes and Noble were able to reduce their costs with electronic books and more online sales. Borders stuck to its model of retail sales, and therefore failed.
Marketing Takeaway: Technology disruption like social media and search engine marketing often result in changes in cost. Not to say that these new marketing tactics are free. Instead, they offer a lower cost and more effective alternative to traditional marketing when executed correctly. As a marketer, it is your job to continue to test new marketing opportunities for your business in a constant quest to lower your cost-per-lead.
3. Not Being a Student of History - Borders wasn't the first company to fall victim to technology innovation. In fact, these types of shifts have existed since the dawn of modern civilization. However, where Borders failed was in paying attention to and examining how disruption affected other industries. Look at all the change that, even in recent years, happened in the music industry. Borders should have been a better student of history in an effort to better set its strategy.
Marketing Takeaway: Block off a couple of hours each day to really examine the disruption that is happening in other markets like music and publishing. What mistakes are being made? Why are the companies that are winning actually winning? Understanding the traits that make a successful business thrive during technology disruption will help to guide adjustments to your marketing strategy.
4. Not Leading the Disruption
- First mover advantage does exist during periods of technology disruption. As the smaller player in the industry, Borders had an even more compelling reason to lead the disruption and transition to ebooks before Amazon and Barnes and Noble could take hold of them. Once its competitors got ahead, the smaller Borders didn't have the resources needed to make a serious dent in the developing ebook market.
What other lessons would you add to this list? Were you surprised by the Borders news?
Photo Credit: Dave Dugdale