Borders Bookstores and the Kindle Effect.

The Kindle is killing books – or, more precisely, the Kindle is making physical books less available. News out from the US, suggests that high street bookstores may, one day, be little more than a fond memory, because of the Kindle and Amazon. Borders bookstores is, today, on the verge of bankruptcy and may file for it, later this month. The venerable and respected owner of 500 bookstores is expected to close at least 150 of them, in a desperate effort to save itself.

An indicator of just how dire things have become is that, only last week, Borders secured a $550 million dollar credit facility from GE Capital, a subsidiary of General Electric. That works out at 1.1 million USD per store, to keep the show running.

Part of the reason that Borders is failing, now, is that it was slow to move on the advent of digital books. It entered the digital market with an online presence fully eight months after Barnes and Noble – and three years after Amazon. Borders' sales have fallen an astonishing 37.3 per cent in the last three years, pushing the company to the edge of ruin.

Now, to my mind, this development is far from welcome. The whole point of Amazon and the Kindle was, from my perspective and that of many consumers, no doubt, to give us all more choice. However, the success of Amazon, for paper books, and the Kindle for digital ones, is such that the end result might be a loss of choice for book readers everywhere. I read recently, that around 10 % of books sold were by Amazon. I can’t vouch for the accuracy of that figure – but let us look at what it means. 10 % might not sound like much – but it is, for what it means is that those books sold by Amazon were NOT sold by physical stores. Thus, the numbers of books sold in physical stores can only have dropped. Now, physical stores have a big, inherent problem: they have large fixed operating costs in terms of rental, utilities and staff. A modest drop in sales can mean a very significant drop in profitability, as overall profits can easily drop below operating costs, or too near them for comfort. The result is what we see with Borders: a great name reduced to having to borrow large sums just to survive, whilst closing one third of its stores to further cut costs.

Much of the blame for all this can be laid at the foot of the Kindle. You see the Kindle does something that might not, at first, be obvious: it stops people from visiting a bookstore. With a Kindle, you can order what you want, at home, without ever having to make a trip to a physical store. This means that the book you purchase via Kindle, will prevent not only the trip to the store – but all the other purchases of books at the store, you might have made, had you been there to accidentally stumble upon them. Thus, one Kindle sale, could cost a physical bookstore several sales.

The Kindle is growing in popularity month on month. Fewer people are actually taking the trouble to visit physical bookstores as a result. This can only mean one thing: the pressure on real bricks and mortar bookstores, can only increase in the coming months and years. More bookstores will have to close down, to further reduce costs. This will mean that the average distance to a bookstore will increase for all customers – which will act as a disincentive to get up and actually visit that physical store. That, of course, will mean that fewer customers would visit the fewer stores – which will lead to more of them closing down and so on. It seems likely that we are entering a vicious circle which could end the presence of physical bookstores on our high streets and in our malls. What is sure is that they are about to get a whole lot rarer.

All of this is a pity. Browsing in bookshops is one of life’s sublimer pleasures. It is also a pleasure not replaced by the Amazon experience. There is something supremely delightful about holding real books in one’s hands, and flicking through the pages for the first time, to see whether this book is The One. Amazon, whilst highly convenient, is only a partial replacement for that experience – though it does have the edge in terms of range of books available. (I should add, though, that my own views of Amazon are coloured by the fact that Amazon has never let me order a book, so far, from either Singapore or Malaysia…it doesn’t seem that they support these destinations).

One day, our grandchildren might have to ask: “What is a bookshop?”, if we ever mention them, to them. Now, wouldn’t that be sad? I have no doubt, however, that they will know what Amazon is, and they will probably all be using Kindle 20s (or whatever model they have got up to by then), in school and everyday life.

I don’t wish to be misunderstood. I think the Kindle is a great idea, and highly convenient. It is a step forward with many life enhancing benefits. However, to me, it seems sad if this innovation should be at the expense of the traditional bookstore. I am all for an expansion of choice, not a change of choice from one medium to another: I would like both media to survive. Let us hope that they find a means to co-exist, and not fall prey to the Kindle Effect. This would be better for everyone, except, perhaps Jeff Bezos.

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