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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.

Patricio Robles

Published 17 February, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (7)

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Jenni

Borders closed its UK operation a long time ago. It was a pretty poor service to be honest; their barcode stickers placed over the manufacturers' hid the fact that they were selling books above the RRP. I know it's only a recommendation, but it's still pretty misleading to deliberately hide the suggested price.

over 5 years ago

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Louise

I miss Borders in Glasgow city centre. It was a great shop at the heart of the city and I miss a lot.

over 5 years ago

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Antonis

I have to agree with Louise,I don't know about other Borders' shops, but Glasgow's Borders was a great way to start your Saturday morning. No e-retailer can replace this feeling. Their marketing strategy had significant flaws (I had a post about that when the closed their UK operations last year) but still,the feeling of a real bookstore can't be replaced.

over 5 years ago

Ed Stivala

Ed Stivala, Managing Director at n3w media

I would whole heartedly agree with Antonis & Louise, whilst never having been to the Glasgow store I certainly miss the London one.

No online retailer (imo) even comes remotely close to the feeling of shopping in a real store. Whilst they might be cheap, price is just one (small) aspect of retail, and in pretty much every other way I find them wholly disappointing and a very poor consumer experience.

If all of the online retailers vanished tomorrow I don't think I would bat an eyelid or even remotely care. There are enough "cheap" options in the physical world for those rare occasions when it is all about price. However, as I see the slow demise of stores such as Borders - I do care. Very much as it happens.

over 5 years ago

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Seamus Carty

Not a surprise. I really did not see anything in borders that would differentiate it from Barnes & Noble. The B&N kindle appears to be a hit. When you are in second place in a market that is being changed by outside forces (online book stores), it is differentiate or die...

over 5 years ago

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Seamus Carty

Not a surprise. I really did not see anything in borders that would differentiate it from Barnes & Noble. The B&N kindle appears to be a hit. When you are in second place in a market that is being changed by outside forces (online book stores), it is differentiate or die...

over 5 years ago

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Gary

It has always been the case that the people who had a large foothold on the high street didn't see the need to go online because they already had the market.

By the time the high street got online, most of them were to late.

over 5 years ago

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