Jeff Ignacio This is my life in a nutshell (or a blog if you will)

21Mar/110

Barnes & Noble and not Borders

One of my favorite bookstore chains is filing for Chapter 11 bankruptcy. It became my favorite bookstore chain because of its frequent 30-40% discount email coupons. I always enjoy discounts on quality products, especially books. I wondered what went wrong? Why is Borders filing for bankruptcy? I read an article a few weeks ago of a potential merger between Barnes & Noble and Borders. What ever happened of that? So I started doing a simple search to find out. I found a very strong response on Quora through a user named M. Evans. I am reposting his response because I feel it is very well composed and the closest thing to an insider's perspective.

Without further adieu, M. Evans please take it away:

This is a question that many of us at Borders asked ourselves frequently and I think the answer is not a simple one. As someone who has given this a tremendous amount of thought and was Director of Merchandise Planning & Analysis for many years, I've outlined my assessment below:

  • Failure to adequately address the internet sales channel and the subsequent ebook market. Specifically, the decision to outsource Borders.com to Amazon.com. To be fair, Borders.com was costing the company millions of dollars in losses each year ($20m I think when they decided to outsource) and one could argue that the outsourcing solution was a case of letting the most efficient etailing organization (Amazon.com) handle the job and turn a big negative into a profitable business. In the short-term, this saved a lot of money. In the long run, the internet is too important to outsource in this manner and Borders' branding, multi-channel strategy, and customer base suffered. They also dropped the ball on ebooks, but by the time this became an issue they were just trying to figure out how to keep the whole house from burning down around them, so I find it more understandable.
  • Poor real estate strategy - Borders leased space that was too large, the storefronts did not compare well to B&N, and they were complacent in picking and relocating existing stores to the best locations. Some of this is subjective as I don't have great data to back this up - just my own educated assessment based on observation.
  • Over-investment in music - while this was a big plus for Borders in the early to mid 90's, it was a disaster in the long run. This is why the stores were too big once the music business cratered - stores were sized and modeled to provide a large music CD business which largely disappeared. In addition, infrastructure was sized to support this business, including a dedicated warehouse distribution facility. This last part has been addressed over time, but soaked up money, time, and energy. Music was also part of what made Borders a destination for many customers, so when music sales tanked, other product categories' sales suffered as well.
  • Over-reliance on assortment size to compete as opposed to efficient operations - Borders was renowned for its wide and quality assortment of titles. The very large assortment size was an advantage early on before Amazon. However, by its very nature the internet was better at quickly and efficiently connecting customers with obscure titles and bringing the "long tail' to market. Thus, competing on assortment size was especially vulnerable to internet retailing and Borders suffered disproportionately as the "long tail" customers abandoned them.
  • Failure to build efficient systems and processes - While Borders legendary "expert system" was considered cutting edge and an advantage early on, the company failed to successfully build upon this foundation and create new, better assortment, replenishment, and supply chain systems and processes to keep pace with the changing state of technology and efficient retail operations. B&N invested considerable time/energy/money through the 90's in systems and processes. To provide one example, a lower ranked title that sells out in a B&N will be replenished from a central warehouse within 2-3 days. The same process could take up to 16 weeks for Borders. Borders sought to upgrade systems with two large efforts in the 00's: first one was a home grown effort called Common Systems. Second was a "buy and integrate" project to implement Retek and E3. Both failed spectacularly. The Retek effort dramatically hurt the Walden chain, the only business unit that was managed by the system. With both of these efforts, large sums of money and, perhaps more importantly, human resources and time were squandered.
  • Branding failure - In addition to the Borders.com problem, Borders never reached the mindshare that Barnes & Noble did for a variety of reasons. Also, Barnes & Noble secured the exclusive U.S. Starbucks partnership, a major branding and traffic-driving win for them.
  • Filed under: Business No Comments
    7Mar/110

    Two months in Asia

    When I first embarked onto my two month adventure in Singapore I was nervous. I wasn't sure what to expect in Singapore. Americans always joke you can't chew gum, spray graffiti, or spit on the streets. They say it's strict. But I don't really do any of those things. I don't chew gum unless someone ofthandedly offers me one. I don't spray graffiti because I don't really have a cool gangster name to spray on the wall, nor do I possess artistic talent to paint something worth marveling at. I don't even spit. So I guess I was cleared for a go-ahead. What I was excited about was ditching the snow and impending winter storms in Ann Arbor. Coming from Southern California, I was awed by the first snowfall during my first year at business school. It was cool! Scenes from winter films and Home Alone (1 and 2!) started popping into my head. A solid woven beanie, well fitted gloves, and a giant puffer coat was going to insulate me from the frigid sting of winter. Game on! But after escaping a 'mild' winter that year, I knew this year was going to be payback.

    Payback is a bitch.

    Winter was going to take my soul if I stayed. It was going to make a man out of me by forcing me to hibernate in the confines of some divy bar with all my bschool classmates. Nothing wrong with that of course. I just don't believe I can survive off 8 weeks of PBR and Journey blasting on the radio each evening.

    So I packed by bags and moved to Singapore (for two months of course).

    Clarke Quay Singapore

    Clarke Quay from atop Helipad Bar, Singapore

    Singapore is hot. Not hot as in sexy, but hot as in you are going to sweat liters and liters of fluid. The humidity absolutely killed any idea of me wearing my high top nikes, blue jeans, and collared shirts. Conversion to running shoes, shorts, and thin cotton shirts was complete. Hallelujah! 85 degrees plus 80% humidity meant over 100 degrees fahrenheit on the heat index. Goodbye snow, hello sweat flow! The city was efficient. That's the first thing you notice. I exited the airport, hailed a cab, said where I was going, and was dropped off within 25 minutes. I was greeted by my roommate Anne Marie at 2 AM. God bless her for staying up and letting me in the door.

    Lion City roars. That's what I saw at least. I lived off the Somerset MRT (subway) stop, through Cuppage Plaza, across the expressway, and directly across the rear of the Istana (Presidential palace). It was an older abode, on the first floor. The area was alive with tourists and busy-bodies swarming Orchard Road. You could spot the locals from the visitors. The visitors were sweating, and the locals were wearing black long sleeves. I knew I wasn't going to look local for awhile. Orchard is a corridor of intense shopping. Intense as in 12 adjacent shopping malls, each towering 8 to 10 floors with promises of some double digit discount.

    The Merlion of Singapore

    The Merlion of Singapore in front of the Fullerton Hotel, Singapore

    I'm here to study, abroad. It is a study abroad program after all. The university was eons away from the city center. I had to transfer metro lines, exit the 3rd to last stop on the western (green) line, take a bus and wait a dozen stops or so before I reached Nanyang Technical University. NTU is a last place winner in an architectural beauty pageant. It is hideous. Some engineer decided to get high and design what he/she thought would be beautiful just using 90 degree angles. On top of that, he decided to screw with sensible direction. Even if you had a map you would still get lost. North campus had four major buildings labeled N1, N2, N3, and N4. South campus possessed the same naming conventions, sans the N replaced with an S. On top of that, each floor corresponded to some neutral altitude. Somewhere on campus, a floor was designated the first floor. From then on, any building with floors below that altitude were dubbed basement levels. Hence we had basement 3 (B3) to level 3. So when you walked into the first floor of South campus you were actually in B3! What the hell.

    NBS - Nanyang Business School


    Somerset to Jurong

    My 75 minute commute to campus from Somerset MRT

    The best part of studying abroad in Singapore was the central, Southeast Asian location. Within an hour or two I could reach anywhere. So I reached and I reached and I reached. A run down of the places I visited:

    -Pulau Bintan, Indonesia
    -Jakarta, Indonesia
    -Kuala Lumpur, Malaysia
    -Bangkok, Thailand
    -Pattaya, Thailand
    -Saigon, Vietnam
    -Siam Reap, Cambodia
    -Phnom Penh, Cambodia
    -Hong Kong S.A.R.
    -Macau S.A.R.
    -Layovers in Seoul, Korea and Shanghai, PRC

    Southeast Asia has so much to see and do. It's impossible to do it all in 2 months, let alone a lifetime. I have a deep connection with this area. My heritage is from here. My parents are Filipino. They speak Tagalog, sharing some words and roots with Bahasa spoken in Indonesia and Malaysia. My mother is 100% Chinese blood, and her father is from Amoy (Xiamen) in Fujian, Southern China. People call themselves Fukinese in the Philippines if you are from this region, in Singapore they say you are Hokkien. The Chinese in Singapore, Malaysia, and Indonesia came from the same regions my grandfather is from! My family just happened to end up in the Philippines. What if my family never left the region? Would I be born in one of these countries instead? Would I be the 'local' that some American is confused by because I don't speak English? I'm lucky. I live in a country where my currency can afford to travel around these parts of the world. Many people I met out here have never left the region. Talk about putting things into perspective. I'm lucky, but I've met some amazing people while out here.

    It feels weird look like a local everywhere I went. My travel buddy was never mistaken for a local. He was a prime target for high starting negotiation prices, scams, and unsavory women. People looked at me and asked if I was local. No, I'm not. I wish I could speak your language so things would be easier for me, but I'm in the same poor shape as my friend. Wo bu hui shuo putonghua, dui bu ci. I mistyped it, and most likely mispronounced it.

    I'm American, yet I'm Asian. I'm Asian, yet I'm American. So fun, so weird. "Why don't you speak our language" the locals say. They probably think I'm retarded, the worst performing kid in the school. He can't even speak his own language. But as soon as start speaking 'Americano', then all of a sudden it makes sense to you! Oh, he's actually not dumb. He's just not from around here. But that assumes I understand the culture right!?!? I don't speak the language, but surely he knows the customs. Nope. Sorry again. I'm someone that is trying to "re-learn" what it means to be Asian. What is it? Filipinos and mostly Catholic. There aren't a lot of Buddhists or Confucian based teachings from when I grew up. Incense smelled good to me, I didn't know you light it up for offerings. There are two new years!? I didn't know that either. My Chinese friends received red envelopes with money in them when they were young! I never received these envelopes. Maybe my parents forgot or invested the money in some far away investment fund waiting for me to withdraw. Wishful thinking. In a time where many of my friends back home have either both roots or are trying hard to be as American as possible, I am deeply intrigued by my grandfather's homeland. I don't speak Chinese, but I'd like to! I write in English, but I'd like to understand the mass confusion that is the Chinese writing system. How can I learn? How can I bridge the gap of our understanding?

    2nd floor of Angkor Wat, Siem Reap, Cambodia

    2nd floor of Angkor Wat, Siem Reap, Cambodia

    With that said, Asia mystified me. From the grand temples of Angkor Wat to the destitute, poor, naked children running in the bumpy, dirt roads of the communities surrounding Angkor Wat - Asia had two faces. Rich and poor. One one side of the highway were modern, sterling Jakarta homes, and on the other side were poorly built slums. Slumdog Millionaire isn't Indian, he's also Indonesian! Holy shit. Script rewrite in the making. Vietnam was strange. Everyone said I looked Vietnamese. Back home, all my Vietnamese friends think I look Filipino. I agree with my friends from home. But who am I to disagree with a Vietnamese from Vietnam!?!?!? I just can't. In all the books and every Westerner I know calls the place Ho Chi Minh, but every local I met calls it Saigon. I'll just call it Saigon because it sounds way cooler. Saigon. Nice name. The beers were dirt cheap! A 1.5 liter of water cost me $0.50 USD. That's amazing! And the vendor probably cleared a nice minimum 30% margin on that sucker. Bangkok was what I thought it was. I always imagined a city with floating markets, cool bars, and lights that come on at night. But it was also the city of Western imagination: hookers, hookers, and ping pong shows. These aren't the type of events you see at the olympics, but the type of events where you get scammed and cornered by intimidating strongmen. Bangkok is both. It's duplicitous. It's a mindfuck. How can I spend $15 USD on a drink for a rooftop view, and then $1 on the street for the most delicous plate of pad thai gai. Again, it's just a total mindfuck. When I get charged $1 I want to ask... you're fucking with me right? Come on, it's like at least $5. When you charge me $15 for a drink I become indignant. You're FUCKING with me right? You should charge me $3. I'm a jerk. My US Dollar is supposed to roll out the red carpet for me right? I pay what I want to pay because I'm an American, blah blah blah. Oh, how arrogant we can be. Take the $15, and the $1, let's call it even. Pretty good beer I say. Damn good pad thai. Thank you. I should enjoy this while I'm here.

    Thipsamai - popular local Pad Thai restaurant

    Thipsamai - popular local Pad Thai restaurant - You won't see many 'farang' here

    One thing you'll notice in these countries is that the farang is a stock you can't help but invest in. Sixty year old, fat dudes who probably moved to Thailand with $30,000 USD to retire, are shacking it up with beautiful 20 year old locals. Wow. You won't see that back home, unless it's a movie star or Jerry Buss. So strange. I felt uncomfortable. I wondered if these women were so poor that this was an 'easy' way out of their life. Get paid and move on. You're only going to do this for a short while. This isn't your 'real' life. It's the meal ticket. I wonder what the poor kids in Cambodia are doing. Are they going to follow this same path? I hope not. Do these kids get to play with GI Joes or Teenage Mutant Ninja Turtles like I did? Probably not. It leads me to wonder, with all the economics education and MBA education I have, what would it really take to lift the economic prospects of these people? Will Cambodia just be a destination to see Angkor Wat, or will it become a destination to see the 'cities' of Cambodia in 20 years? I don't know. If I did know, I'd move there and make a bajillion dollars while helping folks. But I don't have the slightest clue. Asia has its people issues.

    Poverty in Cambodia - near the Floating Village of Tonle Sap

    Poverty in Cambodia - near the Floating Village of Tonle Sap

    It also has traffic issues! Bangkok is insane. I thought LA was bad. Bangkok is the devil when it comes to traffic. You have mopeds, tuk tuks, vans, cars, trucks, buses, and bicyclists all vying for attention on the road. Their varying speeds wreak havoc on traffic congestion. They do have this informal way of taking over one of the opposite lanes to expand your direction of traffic if need be. I found that ingenius! But how do you know when to overtake the oncoming traffic lane for your own without getting hit head on????? Saigon handles this situation differently. They separated the lanes with a concrete divider. On one side you have all moped traffic, and the other lane non-moped traffic. Tuk tuks are nowhere in sight. The traffic moves. Or if you were Singapore you charge everyone $30K just to own a car, and then charge them to enter the city center during peak hours. People become economically incentivized to take public transportation. Not only did I not drive the entire two months, I WALKED! Tell me where that happens in Los Angeles. I stayed fit just by going to where I needed to go, with my ChevroLEGS.

    Sprawling traffic in Bangkok

    Sprawling traffic in Bangkok

    Taiwan and Hong Kong are fantastic. Great food. Great nightlife. Great people. My favorite area in Taiwan was Ximending. I loved the flair for creativity and the revelry of hip fashion outlets. The crowd was young, but the energy never died. And who can deny good milk tea? You can't, you just can't. I know that it won't be the last time I go to Taipei.

    Taipei 101 at night

    Taipei 101 at night

    This note has already become too long. I can go on and on about my adventures, stories of how we hit a moped cyclists, how I got hit on by a Saigon waiter, or how I was served a glass of straight rum by a 16 year girl in a french maid outfit... but I will save those stories for you when I see you. Let's meet up and hang out soon.

    Cheers,
    Jeff

    Filed under: Travel No Comments
    20Jun/090

    Hong Kong


    Hong Kong is a City of Convergence where modern meets ancient, and East meets West. It's a city of dim sum, sweets, tea of all varieties, bright lights, drunk ex pats, 7-11s everywhere, and high humidity. I'm loving it. My Cantonese is nonexistent so I rely on Linh to get us through. Here's a breakdown of what's happened so far on our trip.

    Day 1 - June 17th/18th

    Lots of traveling. First Linh and I flew from Los Angeles to Narita, Japan. 10+ hour flight to Narita (Tokyo), a 2 hour layover, and a 4 hour flight to HKG (Hong Kong). The best thing about flying is lots of orange juice and a few bags of peanuts.

    IMG_1331

    When we arrived we straight to 7-11 to get microwaveable dumplings. Thirty seconds and you have mini shumai dumplings. fast food Asian style. Delicious.

    Day 2 - Hong Kong

    First, we went to Wan Chai to enjoy a lunch. We were turned away from the Che's at the Broadway Hotel because we didn't make a reservation. The funny thing was that when I looked inside there was nobody in there! What the hell. Instead of eating, we went to an internet cafe to hang out for 30 minutes. To satiate ourselves we finally sat down to have lunch at the Hoi Tin restaurant.

    IMG_5178

    IMG_5181

    Before heading to TST, chilling at the Grand Hyatt to enjoy the air conditioning was too good to pass up. The hotel lobby was impressive. Large open atrium with the 2nd floor restaurant overhanging the registration table. Live piano graces an elegant presence to top your cooling off.

    The ferry from Wan Chai to Tsim Sha Tsui (TST) took about 30 minutes. I will post pictures later. To get an idea of TST, imagine Beverly Hills... but in Hong Kong instead. Chanel, Gucci, Cartier, all the places I couldn't afford. Oddly enough they had an H&M for the every day person. At the mall, we found a life sized Yao Ming statue, as evidenced below.

    Yao and I become friends.

    Yao and I become friends.

    Upon my return to the Central Harbor, I attempted to navigate my way back to Lan Kwai Fong (where the hotel is) through the large ITC Mall and its air conditioned walkways. Result: failure. I got us lost naturally, but somehow we managed to make our way back.

    Night activities. Enter my friend Stuys. We meet up with Stuys and a bunch of her HK friends. The funny thing is that everyone here seems to have some sort of Southern California connection, sans one friend who just came back from London. Stuys' God Brother Jay took us to Beijing Club at the M88 building on Wellington. Fun times. I'll post more photos towards the end of the trip. HK people don't dance as crazy as LA people do... but still the partying had a touch of what you see in HK films.

    Jeff and Stuys

    Jeff and Stuys


    Stuys and Linh

    Stuys and Linh


    The Girls

    The Girls

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