Borders Group, Inc.

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Borders Group, Inc.
Logistic Management

OUTLINE


The book industry



Borders Group, Inc.



Phantom Stockout



Borders.com & Future Step



Q&A

The Book industry


In book industry, the product variety was enormous
with more than 50,000 titles, the variety of formats
in which books were available had also increased.
(Audio, leather, hardcover, paperback, and e-book)



The sales market of book industry in U.S.A
1.68 billion in 1960s
 The industry had grown quite steadily
from 1960.
 The sale market were roughly 23 billion
in 1997 and had grown at 6.9% annually since 1994.


The book industry (con.)



A simple view of publishing supply chain shows
Exhibit1.
Table below presents the cost break-down of a typical
book from publisher’s point of view.

Cost

% of Retail Price

Manufacturing (material, printing, binding)

10

Marketing

7.5

Distribution

8

Author royalties

10

Overhead

8

Retail or wholesale discount

40-50

Return

0-50

(depending on volume)

(increased to 15% after first copies)

(could vary by category, title and retailer)

The book industry in Transition


The book publishing industry faced
transformation entering the mid-1990s.


There are two practice made the book business
challenging.
Return policies—publisher took back nearly 40% of all the
hardcover book printed in 1996.
Authors’ advances — increase the amounts of money advances, and revenue often did not cover excessive advance and the
publishing house ended up losing money.

The book industry in Transition (con.)
The book retailing had change significantly.




Independent store
Mall-based chain store
Superstore
%



80

72

70
60

53

50

43

40

33

37

30
15

20
10
0

25

19

4
1960

1970

1980

1990

Independent

72

53

33

19

Mall-based chain store

4

15

37

43

Superstore

0

0

0

25

Internet retailing




The emergence of online bookstore in the late 1990s had
significant impact on book retailing. Each on-line bookstore offering millions titles at discounted prices together with valueadded content and personalized services. Internet retailers have some advantage about







Centralize Inventory Management
Low occupancy cost
High sales per employee

Internet retailers invest heavily in developing brand awareness and infrastructure.



Amazon.com invested 22% of its total revenue in sales and marketing. Exhibit 7&8.
Barnesandnoble.con’s SG&A (Selling, General, and Administrative) expanses of 70.4 million exceeded its sales revenue. Exhibit 9

Technological Advance


Print on Demand (POD)







A digital printing technology used by publishers in which new copies of a book can be printed even one order.
Makes authors accommodate low demand
Publisher can cut down return rates
Out of print titles for customers.

Electronic book





Many titles
Multimedia for learning
Convenient to download
Computer device & High price

Borders Group, Inc.
1971

Tom and Louis Borders open an 800-square-foot used bookstore in the academic community of Ann Arbor, Michigan, and call it Borders Book Shop.

1988

The Border company grew to 4 superstore.

1992

The Border company grew to 19 superstores. Kmart acquires Borders and forms the Borders-Walden Group.

1995

The Borders-Walden Group is renamed Borders Group, Inc. spun off from Kmart.

1997-8 Borders' first store outside of the U.S. opens in Singapore and next one in Australia.

Borders’ stock market valuation began to fall sharply in the latter half of 1998 showed as Exhibit 2.

1999

The company has become the second largest book and music retailer, operating 260 superstore under the Border name, 902 mall -based store under the Waldenbooks name, and 600 “seasonal kiosks” under Day by Day calendar...
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