He's almost on the right track with his idea to sell digital goods in a physical store, but he just misses it. When you compare a company like Borders to a company like Amazon, you see that each has something the other lacks. Amazon has an impressive e-commerce presence as well as logistical and fulfillment systems. Borders has numerous physical stores and the associated distribution system. In the long run it will be a lot easier for Borders to build up a web presence capable of rivaling Amazon than it will be for Amazon to build a network of physical stores capable of rivaling Borders.
Of course, the just building the infrastructure guarantees success to neither party. Trends in this and other industries make the web presence appear to be more valuable, even though it costs much less to establish. The point here is that the barrier for Borders compete on Amazon's turf is much lower than it is for Amazon to compete on Borders'.
If Borders can build an e-commerce engine to match Amazon that at the same time leverages their physical outlets in a way that Amazon will have a hard time matching, then Borders could be a good bet in the long run. I can immediately think of several ways to do that:
1) They could use their physical locations to provide a kind of distributed warehousing system that could yield faster shipping times for less money.
2) Items on the Borders site could be marked "Get it Today", with the idea that the customer can buy it online and go pick it up at a store the same day with it already paid for, wrapped up, and ready to go.
3) Borders can leverage their existing distribution network for getting books to stores to provide free or very low cost shipping for items if the customer can pick it up in the store. Many "big-box" stores already do this.
4) Tie in-store purchases to online discounts and vice/versa.
To defend against this, Amazon has done a few things that won't work well with the above strategy:
1) Used books- Borders will have a hard time keeping a good used book stock in physical locations.
2) Other products. Amazon has a lot more than just books, some of them things that would look very odd sitting in a bookstore.
But I don't see why Borders.com couldn't also have these products, just list them as web-only. It again comes down to the idea that Borders can build an Amazon much more easily than Amazon can build a Borders.
Of course, the just building the infrastructure guarantees success to neither party. Trends in this and other industries make the web presence appear to be more valuable, even though it costs much less to establish. The point here is that the barrier for Borders compete on Amazon's turf is much lower than it is for Amazon to compete on Borders'.
If Borders can build an e-commerce engine to match Amazon that at the same time leverages their physical outlets in a way that Amazon will have a hard time matching, then Borders could be a good bet in the long run. I can immediately think of several ways to do that:
1) They could use their physical locations to provide a kind of distributed warehousing system that could yield faster shipping times for less money.
2) Items on the Borders site could be marked "Get it Today", with the idea that the customer can buy it online and go pick it up at a store the same day with it already paid for, wrapped up, and ready to go.
3) Borders can leverage their existing distribution network for getting books to stores to provide free or very low cost shipping for items if the customer can pick it up in the store. Many "big-box" stores already do this.
4) Tie in-store purchases to online discounts and vice/versa.
To defend against this, Amazon has done a few things that won't work well with the above strategy:
1) Used books- Borders will have a hard time keeping a good used book stock in physical locations.
2) Other products. Amazon has a lot more than just books, some of them things that would look very odd sitting in a bookstore.
But I don't see why Borders.com couldn't also have these products, just list them as web-only. It again comes down to the idea that Borders can build an Amazon much more easily than Amazon can build a Borders.