Borders potential demise and what it means for the publishing industry

If you weren’t aware that Borders has been having some issues, then you are seriously out of the loop. In an article on engadget (and in many others across the web), Borders is apparently in the process for filing bankruptcy and could do so as early as next week. And what does this mean?

If Borders files for bankruptcy, hundreds of stores will be closed and all those books will get shipped back to the publisher. And why is that a problem?

Mostly because small publishing houses can’t afford to have all those books shipped back. That’s a huge amount of money lost and may mean trouble for many of the independent presses; publishing giants like Random House or Scholastic can probably handle the set back.

And before you start panicking, this does not mean the end of publishing or the book industry, and certainly not the end of books (versus the ebook). It’s simply a company that probably struggled to survive against a store like Amazon with its free shipping (a feature that Borders recently started offering on their website) and super cheap books. Oddly enough, Borders used to work in conjunction with Amazon and then made the switch and had their own and seemingly much less successful store.

And while Borders may not have played their cards right, I have long been a fan of shopping there, prefering it over Barnes and Noble any day. But the advent of the online market seems to have been a serious blow to Borders. One thing I always noticed was that about 10 years ago the shelves behind the checkout would be filled with special order books that weren’t in stock. I remember ordering several books like this myself and never bothered to order them online. You also had to pay full price for the book and couldn’t use a coupon (I’ve never boughten a book at Borders without using one of their very generous 30% and sometimes 40% off coupons). If you look behind the checkout stand today, those same shelves are empty and filled with candy and items to be restocked. It’s an interesting shift and just shows how people have made the switch to purchasing cheaper books online instead.

Borders only recently started a membership service that you pay for, unlike Barnes and Noble who has only ever had that kind of service. Considering Borders still offers a similar rewards program for free (albeit with a few less benefits) and it was free when it first started, why would customers even consider paying for it now? Had Borders really wanted to make money, they should have charged for the service to begin with. Not to mention the fact that they changed the program itself many times over the past few years, possibly a result of losing money or finding that it wasn’t successful. I remember when I first got my rewards card, and a percentage of every purchase was matched by Borders and this amount was put away as an accruable gift card to be spent during a certain time of the year. I managed to rake in about 30 bucks, and I can only imagine how much money the company lost from this. It wasn’t long before they took that away and starting awarding $5 bonus bucks for every $150 spent instead. Maybe this is a trivial thing and has nothing to do with their impending failure, but it goes to show they may have made some mistakes on the way, and it seems that it’s going to cost them.

I am crossing my fingers for Borders and hoping they pull through it, but it seems very unlikely.