Aug 4, 2011
commented on Books Without Borders
please don't underestimate the adverse impact on borders' finances of the "borders rewards" card and the concomitant coupons, and the "buy x get y free" trade paperback promotions. none of these were funded at all by vendors. so, borders essentially gave up from 25% to 50% in earned discount on all such sales. if these had been to strictly new customers, no problem, but borders started aggressively pushing the card/coupons/free offers to their existing customer base, without hope of margin recapture. CDs and DVDs were also being purchased from AEC, a distributor in florida for from 12% to 20% and offered for up to 30% discounts. conversely, purchasing more from ingram or baker & taylor for stock-turns rather than from the publishers for discount, would have freed up valuable dollars as well. ceo phil feffer tried that and was pilloried by the then-board of directors members diromauldo and mrconic, who resented being kicked "upstairs" to make room for the ex-ingram and ex-random house president. i honestly believe that borders could have survived the internet debacle if it hadn't been for such wanton surrender of gross margin. oh yeah, that and horrendous freight-in and freight-out costs and excessive inventory carrying costs. also, borders was very opposed to refusing any returned book almost in any condition whatsoever, thus turning the dominant bookseller in many towns into the area's largest lending library. claiming they could re-shelve or return the book masked the reality to non-book industry dimwits that they were effectively purchasing used books at no discount only to re-sell it at sale prices again and again. sic semper tyrannosaurus.