Stores in the Borders chain staged trivia contests and team debates about the life of the heroine Bella Swan. Associates passed around blood-colored black cherry soda shots and cookies labeled "blood clots." The book, "Breaking Dawn," has been a massive bestseller throughout August and is destined to rack up big sales for months to come.
Clearly, book lovers are passionate consumers. The challenge for Borders is to provide them with a retailing experience that matches their ardor. But until recently the challenge went unmet online.
The problem was that until late May of this year, Borders outsourced its Web site to Amazon. It struck a deal in 2001 that put Amazon in charge of handling inventory management, content development, back-end fulfillment and customer service. The front-end displayed Borders' logos, but behind the curtain it was all Amazon.
The relationship allowed Borders to get a cut of revenues and shutter a money-losing Web site launched in the 1990s. But the downside was not lost on anyone. The wealth of intellectual capital and hard-earned lessons gained over the years did not stay in Borders headquarters in Ann Arbor, Michigan. It traveled west to the Seattle headquarters of Amazon.
Need for Change
The year 2007 was a year of transition for Borders. It scaled back its Waldenbooks outlets and announced it would sell its businesses in Great Britain, Ireland and Asia-Pacific. More importantly, it also announced it would end its online partnership with Amazon.
This was a time of bold steps, and the goal was to focus more intently on the U.S. market and seize a bigger share of the fast-growing online channel. However, there were two daunting obstacles to overcome, namely Barnes & Noble and Amazon.
Barnes & Noble is the number one bookseller in the brick-and-mortar space, and it has been racking up strong financial numbers throughout this decade. Amazon, of course, is the titan of e-commerce, and it sells everything Borders sells multiplied by two or three.
Still, with its online future at stake, Borders decided to set lofty goals for the launch of its new site. Essentially, the strategy was to differentiate itself from Amazon in the book category. Considering Amazon's long winning streak this was a tall order for anyone. The lucky executive selected to head the team charged with delivering the goods was Kevin Ertell, senior vice president of e-business.
Ertell was given 18 months to complete the task. "This was a very aggressive timeline," says Ertell. "We were building everything from the ground up, putting together requirements and reviewing vendors, literally dealing with millions of variables. We felt like we were pushing the pedal to the metal the whole time."
At its peak, the project employed about 100 people, counting consultants, who put in full-time hours. According to Ertell, it involved every department in the company from IT to marketing, store operations, finance, merchandising, HR, training and communications.
"The fact that every department in the company was involved paid off in spades," Ertell says. "Everyone was extremely supportive. Since this is going to be critical to our future success it was important that we had the entire company involved. We did not want this perceived as some rogue operation. All 28,000 employees felt ownership and pride in the project."
Playing for High Stakes
The good news for Ertell was that Borders had two things going for it: few legacy systems, and the fact that book lovers are passionate consumers. But both are blessings and curses.
Thanks to the Amazon partnership, Ertell could leap into the Web 2.0 world without having to deal with the inherent problems created by long-in-the-tooth technology. This meant he had a blank slate to draw on, and didn't have to cope with problems associated with first-generation applications and systems.
But the blank slate had to be filled with a boatload of new technology. An abbreviated version of Ertell's IT to-do list includes: e-commerce platform, search, fulfillment, Web analytics, payment processing, loyalty program, personalization, in-store pickup/returns, affiliate marketing, guided navigation, merchandising, order management, search-engine marketing and, let's not forget, complete integration with store systems.
Although the project resembled a start up in certain aspects, a crucial difference was that Borders was already a fully established, tier-one brand. It was a $3.8-billiion national chain investing large amounts of capital on a project critical to its survival.
Another big consideration was that e-commerce had evolved since 2001. The competitive landscape was filled with mature players ranging from Amazon and Barnes & Noble to mass merchants like Wal-Mart and Target to dozens of pure-plays and niche players with long-term, loyal followings.
And finally, there was the passion. Yes, tweens line up for "Twilight" saga books and Harry Potter, and adults line up for famous authors and celebrity chefs. In fact, there are many different types of passionate fans across a wide range of categories.
To satisfy them, Ertell had one shot to get it right, one shot to satisfy their passion for books in a way that had never been done before.
Web 2.0 Browsing
After conducting extensive customer behavior analysis and focus groups, Borders found that book lovers prefer browsing in a way that is far different than anything found on a typical Web site. They are looking for a unique sense of discovery, inspiration and warmth. They are looking to repeat the in-store experience of serendipitous routes that move along random pathways.
"We learned that a lot of people don't know what they want when they walk into a book store," explains Ertell. "We learned that they love going into a book store, but that the experience they love is not found online."
The problem is that everything online is highly structured through interconnected and targeted searches. Even worse, random browsing through millions of options can be incredibly frustrating. How can the best of the online experience be reconciled with the best of the book lover's in-store expectations?
The answer for Ertell was the Magic Shelf, a virtual book shelf designed by Allurent that uses Adobe Flash-based Flex technology to display books, movies and music in a way that emulates the in-store shopping experience. It also incorporates site search and guided navigation from Endeca that lets shoppers browse by selecting criteria. On the back-end it enables merchandise managers to set rules for displays to stimulate cross-selling, up-selling and promotions.
Unlike most online product displays, the Magic Shelf can be moved from side to side and up and down. It prominently displays book covers in a size large enough to convey the visual impact of the design, something Ertell says consumers want. "Products should be marketed to their strengths, and book publishers spend a lot of money making their covers appealing," explains Ertell. "We wanted to take maximum advantage of that."
Although the site allows you to scroll through two million books, more than 300,000 CDs and 100,000 DVDs, it also allows you to display books by category, upcoming releases, best sellers, staff picks and a personalized shelf that changes each week based on pre-selected categories.
Although book covers are visually stimulating, they often don't provide much information. To further emulate the in-store experience, the Magic Shelf launches a brief details window when the cursor hovers over a book cover, the equivalent of picking up a book and flipping it over.
The attention-grabbing Magic Shelf goes far beyond product displays of other e-commerce sites in terms of visual appeal, user friendliness, interactivity, advanced technology and meeting the high expectations of book lovers.
But there are other parts of the project that were equally important and equally challenging.
The success of the Borders Rewards loyalty program, which was launched in 2006 and has grown to include 28 million members, should have been one of the major weapons in the Borders merchandising arsenal. But the data stream was not effectively managed and customers had no way of interacting with the program online.
A key part of the new launch gives loyalty program members the ability to check the status of their accounts and redeem awards online. It is both a huge benefit to Borders' most valuable customers and a new tool for the merchandising team.
Underlying the Borders Rewards program and other components of the launch is a strategy to tightly integrate the new site's functionalities and systems with advanced in-store technologies.
For example, Borders already has in-store kiosks, but to make them fit the fully integrated paradigm they had to be connected to the Web. So, a version of Borders.com was created to work on kiosk browsers that allow shoppers to search for products beyond the store, access rewards' accounts, use rewards "bucks" for redemption, and arrange for shipping to home or to the store.
Other important aspects of the new Borders' site include exclusive half-hour video programs featuring best-selling authors in a Borders Media section, ability to reserve books for future in-store purchase, creation of online wish lists, customer reviews, a Marketplace section that features rare and used books, send-to-a-friend functionality, and gift-card purchasing.
More to Come
Developed in parallel with the new Web site is a retooled concept store that opened in Ann Arbor this past February. To date, the concept has expanded to 10 stores with plans to reach another four by year's end.
Of special importance is a new design component called the "digital center," where customers access computer stations to burn CDs, download to their MP3 players, upload to photo processing services, and explore the latest digital innovations with the help of tech-savvy personnel.
Customers who want to work on personal projects in the digital center are encouraged. And electronic devices are on hand for sale, including cameras, iPod accessories, digital book readers, MP3 players and starter kits for Shutterfly and Ancestry.com.
The most recent news from Ertell's team is a rollout of an audiobook download service on the Web site, which became operational in mid-July. At the time of the rollout more than 5,000 titles were available in MP3 format, and hundreds more are expected to become available each week.
To date, Ertell is pleased with the tracking numbers generated during the first few weeks after the launch, although he would not release exact figures. Three areas that are showing strong popularity are the ship-to-store option, Media center and used book offerings.
"We believe we have done something unique in the marketplace for people who are passionate about books," says Ertell. "We never saw the value of copying someone else. We felt there were gaps in the market for book lovers that were not being addressed. These gaps were recognizable, and by filling them we differentiated our site from everyone else."