Raise Your Hand if You're Not Surprised

After hinting and it announcing plans, Borders officially filed for Chapter 11 Bankruptcy yesterday. Even without the warnings, it's not really all that surprising. I'm not an economist or accountant, thank God, but I'm not exactly a dumbass and the signs have been there for awhile. There's something about people sitting at tables reading books and empty lines that doesn't exactly say "high profit margin."

Show Me The Money
When you walk into a Borders you can expect to pay the recommended publisher's or manufacturer's price on everything from books to DVDs. to stationary. Once in awhile they'll have BOGO tables and they send out their lovely little coupons, but for Joe Schmoe who stops in looking for something particular there aren't too many bargains. Last week I wrote about a recent order I bought through Amazon- it cost me $49.98 for five books (it actually cost me nothing since I had a gift card). If I would have walked into a Borders store and bought them there it would have cost be $86.79 before tax, or about $78 with my rewards card. That is assuming they had everything I wanted, which is seldom the case.

The Mighty Amazon
Now if I had purchased the five books on Border's website it would have been comparable (about $10 more) to Amazon. But honestly, who do most people turn to when they're buying books online? Amazon is reliable, has more options, and generally has things in stock. Amazon even offers their Prime program for $75ish a year for those people who need their products within two days. And Borders' prices on DVDs, CDs, and other products is way above Amazon's.

But They're Always Busy
There's a difference between people being in a store and people buying things from the store. People are always in Borders, but they're not purchasing merchandise- they're nursing the same latte for two hours so they can read People, Entertainment Weekly, and Good Housekeeping. I've heard of people going in several times a week to read whole books! Why buy the cow when they let you get the milk for free?

Stupid eBooks
Kindle has dominated the eBook market (there are some competitors, now, but it's similar to the iPod and other mP3 options)- fifty points to Amazon! Borders has its own version and also sells eBooks online, but still, this isn't enough to save them.

What Does it All Mean?
In the email I received yesterday it means that Borders is going to come back bigger and better than ever... after they close 30% of their stores (about 200, including those in Mira Loma and in Modesto, since I know people from Riverside and Modesto read this). Border's stock is down 74% this year, while Amazon is up 5% and Barnes and Noble has increased 34% (interesting how they're surviving...).

Good luck, Mike Edwards- you're going to need it.