Borders needs a new business model

Borders Group, the struggling bookseller, has a new chairman of the board, Bennett LeBow. LeBow’s a member of Vector Group Ltd., the investor group that recently acquired 15 percent of Borders (35 percent if warrants are exercised).

According to interim Borders chief executive officer Mike Edwards, LeBow “will play an extremely important role in helping us redefine the Borders brand.” Will a new brand image change the landscape?Perhaps on the margin, but Borders needs more than marginal change.

Borders needs a new business model, not just a new brand. Otherwise, change will consist solely of the smoke and mirrors of advertising rather than the real transformation required to win a profitable share of the market. As a Borders lover, I’d hate to see LeBow follow in the footsteps of other leaders who foolishly and tragically banked their hopes on a new brand alone.

Let’s face it. Amazon.com owns on-line book sales, a position so strong that it has broadened its scope into all kinds of other categories sold on line beyond books. Barnes and Noble Booksellers won the retail store war. Which leaves Borders with higher relative costs per book sold, lower profits and therefore a new controlling investor.

Borders is stuck with a high-cost position in what has become a commodity market – the selling of books. While a book itself may be differentiated, when it’s available in all kinds of physical and virtual places, the seller of that book is essentially selling a commodity. No wonder on-line book sales are growing so rapidly (they have a lower cost structure) and Kindle, IPad, etc., are disrupting the printed book industry (by offering a lower cost structure and more convenient experience than the printed book).

My advice to Borders leaders is to redefine the business Borders is in, broadening far beyond bookseller while still remaining focused on book lovers. (In most commodity situations, expanding the scope of the business is a key way to remain in a market of one.)

How might this broadening play out over the next five years? Imagine…

  • Borders librarians (vs. store clerks) help you locate the exact information you want, whether it’s a book that reads like those of another author you love, or takes you to the perfect hidden places in a faraway country because the author of the articles shares your tastes in travel. Media not available in the store arrives in your home on line or via express mail.
  • To meet the needs of businesses, Borders acquires 800-CEO-Read, a service organization that selects and offers the best selection of books and videos to advance a business customer’s learning and development goals. Business coaches, corporate VPs of learning, professionals, entrepreneurs, sole proprietors, non-profits and business educators turn to this Borders’ subsidiary for advice and resources.
  • Book lovers travel together on trips designed around a shared interest, be it an author, a period in time or a place. The synergy between pre-travel reading and discussions while traveling creates a winning combination that retirees love and come back to buy again and again.
  • Borders stores are redesigned (with loads of customer input) to become the place where readers and authors convene or work in isolation. “I’m Bordering” today becomes codeword for a common shared experience that readers and writers highly value.
  • Borders solves parents’ dilemma of raising children who love to read.
  • Borders creates a tailored offering of books, courses and peer groups for educated immigrants who want to advance their mastery of English through reading and discussing US authors.
  • Membership and event fees are growing shares of Borders’ revenue.
  • Authors line up to be part of the Borders’ Tours (virtual and real), connecting authors to current and potential fans.

In essence, Borders’ purpose becomes infusing books and reading deeper into our lives, not just selling us books. In the process, Borders becomes a trusted and highly valued resource for individuals overwhelmed with information. Borders new value promise becomes better lives (better businesses) which would make for a great re-branding. Border’s new scope is far broader than a retail box store or an on-line marketer, yet still highly synergistic with books.

Creating these changes will require far more challenging work than developing communications for a new brand concept. Which path would you pursue as a leader – a new brand alone or a new business model that truly differentiates Borders from Amazon.com and Barnes and Noble?

Kay Plantes is a Madison-based consultant and author of “Beyond Price: Differentiate Your Company In Ways That Really Matter.” She is an expert in business model innovation and was the keynote speaker at the BizTimes CEO Strategies Breakfast in April.

Borders Group, the struggling bookseller, has a new chairman of the board, Bennett LeBow. LeBow’s a member of Vector Group Ltd., the investor group that recently acquired 15 percent of Borders (35 percent if warrants are exercised).

According to interim Borders chief executive officer Mike Edwards, LeBow “will play an extremely important role in helping us redefine the Borders brand.” Will a new brand image change the landscape?Perhaps on the margin, but Borders needs more than marginal change.

Borders needs a new business model, not just a new brand. Otherwise, change will consist solely of the smoke and mirrors of advertising rather than the real transformation required to win a profitable share of the market. As a Borders lover, I’d hate to see LeBow follow in the footsteps of other leaders who foolishly and tragically banked their hopes on a new brand alone.

Let’s face it. Amazon.com owns on-line book sales, a position so strong that it has broadened its scope into all kinds of other categories sold on line beyond books. Barnes and Noble Booksellers won the retail store war. Which leaves Borders with higher relative costs per book sold, lower profits and therefore a new controlling investor.

Borders is stuck with a high-cost position in what has become a commodity market – the selling of books. While a book itself may be differentiated, when it’s available in all kinds of physical and virtual places, the seller of that book is essentially selling a commodity. No wonder on-line book sales are growing so rapidly (they have a lower cost structure) and Kindle, IPad, etc., are disrupting the printed book industry (by offering a lower cost structure and more convenient experience than the printed book).

My advice to Borders leaders is to redefine the business Borders is in, broadening far beyond bookseller while still remaining focused on book lovers. (In most commodity situations, expanding the scope of the business is a key way to remain in a market of one.)

How might this broadening play out over the next five years? Imagine…

  • Borders librarians (vs. store clerks) help you locate the exact information you want, whether it’s a book that reads like those of another author you love, or takes you to the perfect hidden places in a faraway country because the author of the articles shares your tastes in travel. Media not available in the store arrives in your home on line or via express mail.
  • To meet the needs of businesses, Borders acquires 800-CEO-Read, a service organization that selects and offers the best selection of books and videos to advance a business customer’s learning and development goals. Business coaches, corporate VPs of learning, professionals, entrepreneurs, sole proprietors, non-profits and business educators turn to this Borders’ subsidiary for advice and resources.
  • Book lovers travel together on trips designed around a shared interest, be it an author, a period in time or a place. The synergy between pre-travel reading and discussions while traveling creates a winning combination that retirees love and come back to buy again and again.
  • Borders stores are redesigned (with loads of customer input) to become the place where readers and authors convene or work in isolation. “I’m Bordering” today becomes codeword for a common shared experience that readers and writers highly value.
  • Borders solves parents’ dilemma of raising children who love to read.
  • Borders creates a tailored offering of books, courses and peer groups for educated immigrants who want to advance their mastery of English through reading and discussing US authors.
  • Membership and event fees are growing shares of Borders’ revenue.
  • Authors line up to be part of the Borders’ Tours (virtual and real), connecting authors to current and potential fans.

In essence, Borders’ purpose becomes infusing books and reading deeper into our lives, not just selling us books. In the process, Borders becomes a trusted and highly valued resource for individuals overwhelmed with information. Borders new value promise becomes better lives (better businesses) which would make for a great re-branding. Border’s new scope is far broader than a retail box store or an on-line marketer, yet still highly synergistic with books.

Creating these changes will require far more challenging work than developing communications for a new brand concept. Which path would you pursue as a leader – a new brand alone or a new business model that truly differentiates Borders from Amazon.com and Barnes and Noble?

Kay Plantes is a Madison-based consultant and author of “Beyond Price: Differentiate Your Company In Ways That Really Matter.” She is an expert in business model innovation and was the keynote speaker at the BizTimes CEO Strategies Breakfast in April.

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