Bad Times at Borders

continued

“Bookselling is an art,” says another former executive. He believes Borders gradually lost that art as it brought in managers from other retailers. The employee test was dropped in the late 1990s. And in 1999, DiRomualdo’s successor came from a Chicago supermarket chain.

When Greg Josefowicz took over in 1999, the art of bookselling was not his biggest problem. With the web bubble at its height, investors were dumping their shares in Borders and other traditional retailers. “The Internet was not just viewed as a competitive issue,” Josefowicz recalled in a 2004 Observer interview. “It was viewed as a potentially disabling issue.”

Borders spent millions developing its own elaborate website. But sales never really got going—and after the bubble burst, maintaining it looked like a costly mistake. So Borders decided to turn its web operations over to amazon.com, in a deal that lasted almost eight years.

On the face of it, the partnership made sense—Borders could focus its attention and cash on rolling out more superstores, and Amazon would manage the online business. In hindsight, though, Morris Rosenthal calls the decision a “fiasco.”