Why didn’t Amazon buy Borders.com?

On September 26, 2011 the federal bankruptcy court approved the sale of  Borders’ brand trademarks, domain names, and customer lists to Barnes & Noble for approximately $14 million. The true value of the sale was just shy of $16 million but a bookseller — in Malaysia! — bought the remaining assets totaling approximately $2 million.  As a result, Barnes & Noble received customer information, mailing lists, and all the traffic resulting from www.borders.com – it now forwards directly to barnesandnoble.com.

These assets were offered in an auction. So one has to ask, why didn’t Amazon buy them?   Here are some thoughts:  Amazon probably already has all the customer information Borders.com was offering.  But wouldn’t the domain names redirecting to Amazon.com be something Jeff Bezos & Co. would value?  Perhaps. Perhaps not.  Here’s a comparison of the website traffic for borders.com, barnesandnoble.com, and amazon.com, courtesy of our friends at Alexa:

Perhaps Amazon felt the Borders.com domain name was not very valuable. And this chart below can demonstrate perhaps why Barnes & Noble did … their traffic is at least in the same ball park, once you remove Amazon from the scale:

What do you think? Should Amazon have bought Borders’ assests rather than allowing Barnes & Noble to take ownership of them? I’ll open up a public poll tomorrow…

Small Press Department Changes at Barnes & Noble

Toward the end of January, Barnes & Noble reorganized its departments and staff. In the process, it laid off approximately 50 employees, including the Director of Small Press & Vendor Relations, Marcella Smith.  Many small presses and independent publishers viewed Smith as a champion of independent book publishing.  Those holding that view are now left wondering just how seriously Barnes & Noble will view small press publications in the future, in light of this reorganization.   Personally, I question how seriously Barnes & Noble ever viewed small press publications, but that’s a topic for another day.

I met Marcella several times during Colorado Independent Publishers Association conferences.   At Outskirts Press, we also communicated with her and others in the Small Press Department from time to time on behalf of our authors.   In spite of these efforts, our authors more often found success being stocked in local Barnes & Noble stores through specific personal contact with local store managers rather than direct contact with the national small press department in New York. 

Marcella always had interesting stories to share about her experiences, including a now-well known author (who shall remain nameless), who boldly placed copies of his self-published book on the shelves of random Barnes & Noble stores himself since they refused to stock it.  The result?  When people started bringing the mysterious inventory up to the register in droves, they were forced to enter it into their system and start ordering it.  Talk about reverse engineering a process!  Naturally, Ms. Smith advised AGAINST this tactic, as it caused them great havoc.

While it’s always sad to see someone lose a job they’ve held for so long, I have a suspicion Marcella Smith is going to be just fine. With the self-publishing industry growing so fast, and Marcella possessing the experience she does, it wouldn’t surprise me to see her land squarely on her feet in the warm embracing arms of a self-publishing firm…

Borders Bankruptcy?

The industry has been ablaze this month with “will they or won’t they” guesses concerning the future of Borders Bookstores.  Are they declaring bankruptcy? 

Borders is the second-largest chain of bookstores behind Barnes & Noble, which is having its own share of financial difficulties in the current economy. I’ll discuss more about Barnes & Noble next time.

But the future looks even less bright for Borders, which may have to file for Chapter 11 if it is unable to successfully renegotiate terms with its vendors and lenders. 

What led Borders to this position? Some could say it over-extended itself with the opening of gigantic “superstores” while statistics seemed to strongly indicate that more and more people were buying books online.  It’s true. Perhaps 95% of our authors’ books at Outskirts Press (and most other self-publishing firms) sell online via Amazon and Barnes & Noble’s website.  

Others have hypothesized that Borders was “too late” joining the e-book game, following in the wake years after Amazon and months after Barnes & Noble. Personally, I’m more inclined to believe the first reason than the second.   A physical store typically makes just over $5 selling a $10 paperback  novel.  You know how many books each store must sell every month to pay for 50,000 square feet of retail space?  And that’s before heating and lighting it. Plus there are the employee costs and other expenses typical of running any business.   

 Of course, to supplement that income, it’s a little known fact that most large retail chains like Borders and Barnes & Noble make a large portion of their revenue selling advertising and “premium” space in the store to traditional New York publishers (many of whom are having their own set of financial difficulties, which may be contributing to a decrease in those advertising dollars at the store level).

Here’s hoping Borders pulls through.