Borders: another victim of the internet?

Bricks and mortar may not be dead, but another high-profile offline retailer filed for bankruptcy yesterday.

Borders, one of the largest book retailers in the United States, simply didn't have enough money to survive in its current form. So it's going into Chapter 11 bankruptcy and will emerge a lot leaner, and perhaps a bit smarter.

Not surprisingly, many have added Borders, a company that has been operating since 1971, to the list of large, established companies allegedly put out of business by the internet.

That Borders was done in by the internet is not a difficult argument to make. To be sure, the Borders post mortem will probably find that the internet hurt the company more than it helped it.

That is due, in large part, to the company's inability to adapt fast enough as the internet and digital technologies such as e-books and e-book readers grew in popularity. Unlike competitors, such as Barnes & Noble, which has a strong internet presence of its own, Borders basically outsourced its online sales to Amazon.com until 2008.

Making matters worse was that, while the economy was heading into recession, Borders was busy doubling down on its costly brick-and-mortar model, expanding into new areas and signing long-term leases for properties, many of which now house underperforming stores that the company will close in bankruptcy.

In short, Borders didn't simply miscalculate on its technology strategy, it miscalculated on just about everything. All of those miscalculations made it a near impossibility to climb out of the depths of the Great Recession intact.

From this perspective, celebrating Borders' demise as yet another "internet kills off established business" victory is probably a waste of energy. That's because similar mistakes can and will cost online businesses dearly too.

In the online retail space, players both large and small face plenty of challenges of their own and could easily find themselves in a Borders-like position down the road if they don't make the right decisions.

For instance, the recent surge in commodity prices, if sustained, will almost certainly impact everything from shipping costs to the price of many products themselves. Retailers not well-positioned to adapt will be just as vulnerable as Borders.

On that note, it's worth pointing out that little more than 15 years ago, the New York Times quoted a publishing executive, who stated "The Borders inventory and reordering systems have been the envy of the industry".

This quote highlights the real lesson in Borders' demise: just because you're ahead of the curve today doesn't mean you'll be ahead of it tomorrow. That applies to all companies, online retailers included.

Photo credit: doortoriver via Flickr.