Borders-Waldenbooks Go Web 2.0

High overhead and falling revenues are causing many traditional businesses to refocus their targeted sales platforms. Another example, the Borders Group is discontinuing its arrangement with Amazon.com for the sale of their books. Borders plans to close half of its Waldenbooks stores and sell off most of its 73 overseas stores.

Borders reportedly lost $73.6 last year compared to a profit of $119.1 million the year before. Borders had developed a strategy of allowing Amazon to sell their wares while maintaining a considerable presence in the traditional physical retail sales realm. It looks like the smart move for Borders to establish their own online presence.

Competition with Barnes & Noble and other retailers has made it difficult for one of the nation's top book retailers, and has prompted this shift in their strategy. According to a news release via the New York Times, the goal of the company is to close an additional 250 under-performing stores by the end of 2008.

 "Clearly, our 2006 results were disappointing, as our company and the industry as a whole continued to face a challenging environment," George L. Jones, the chief executive of Borders, said in a statement. "This performance is not indicative of this company's many strengths, and it's not where Borders Group is headed in the long run."

The reorganization will include the opening of an online retail site in early 2008, and a focus on the roughly 500 retails stores in the U.S. All of these announcements are signaling further migration to Web centered retail as the wave of the future, as more and more companies are feeling the heat from increasing online sales and competition in the physical market.

I bet many of these companies wish they had been "clued" in by executives long before they lost millions in revenue and thousands of employees had to hit the bricks. Good news for Web 2.0, but I am worried about the people out of jobs because of companies' failure to focus on the obvious.