You went wrong from the very first step. Online booksellers compete on price only. It's a commodity world. Borders competes on environment, location, timeliness, and has IMO the most comprehensive selection of any bookstore, if not music store. They are profitable and growing, and will continue to do so. They are just now expanding internationally. Meanwhile Amazon loses more the more it sells because it cannot raise the bar on the online price war that it started. Borders is profitable and growing despite its higher prices.
really?
1) are you saying borders has a natural advantage in that it makes money and amazon is destined to always lose money -- an interesting supposition. Let me see if I have this right -- borders can incur the expense of building/leasing a store, obtaining and maintain inventory, hire local sales staff (all of which amazon does not incur) and still make money by selling each book for more; while amazon is losing money because they locked into a market strategy of buying market share by selling at a loss
2) That is an insight - then amazon loses more money the more books they sell. (Think of all those embarassed analysts and investors who overlooked that basic flaw and did not know they were dead from the start.)
How does that work. Amazon usually discounts perhaps 25% from publishers recommended price (stamped on book jacket) - are you saying this markdown minus operating costs (no buildings, no inventory, less employees) precludes them from making a profit.
3) let my suggest (made it up) that books are not a very elastic market (certainly not a growth market) and that amazon is eating into the total number of books sold through other outlets. (Do we know if the number of books per year sold is increasing or decreasing. Is book selling a growth market or a battle for market share) ...
if the former borders must generate sales because of its presence (increase total book sales) or if the latter steal share from a competitor .. both hard to do and very much harder to steal share.
4) and before we dismiss all arguments in favor of amazon as being wrong from the start - let's revisit the question of inventory turns. They are everything to retail businesses. Amazon does not even have to consider this -- they don't hold their own inventory* -- they merely compile the lists per day and ship to the publisher.
* on the other hand, all borders I know have have tables out front with deeply discounted (nearly free) books they have not been able to move - and racks (many) inside with books not so deeply discounted.
Further (sight unseen) I bet they get a volume discount -- which would be greater than borders if their volume orders are greater (do we know which enterprise sells more units.)
5) Finally even you must find it a little ironic. I mean your support for borders given that you yourself are an amazon outlet. All anyone needs to do is visit your site valuestocks.net refer to books you recommend (good choices) and then hit the imbedded link to amazon.com. While they give up the ambiance and the coffee, they gain convenience of your store front and your implicit recommendation -- again at no asset investment, no inventory and very little personnel costs - other than perhaps some small share to their cyber business partners. Or is it some nefarious plot to help with their demise by helping them lose more money by helping them sell more books.
but enough .. all I am suggesting is that borders is not a sure shot ... it is sailing into troubled waters .. no matter how sure the captain. There have to be better opportunities ... ones with a moat as opposed to ones with their walls already breached.
michael |
