Borders did, in fact, have an early e-commerce site before it moved under Amazon's umbrella, but the costs of running it totaled more than the revenue it generated. "The relationship with Amazon.com allowed us at the time to focus on our brick and mortar stores while still having an online channel that was branded Borders," said Anne Roman, a spokeswoman for Borders, in a 2007 CIO article.

Before the new Borders' CEO, George Jones, arrived to transform the company in July 2006, Ertell says he had been working on a business plan for a new e-commerce site. "One week after he got here, we met and he said: 'We gotta to go with it. We gotta do it,'" Ertell recalls. "He came in already knowing we had to do it, and he was the catalyst that kicked it into full gear."

Borders CIO Susan Harwood

The scope of the project was massive, and the site had to be up in 18 months. "We had an aggressive timeline that we wanted to make," says CIO Susan Harwood, who joined Borders mid-project, in August 2007.

Ertell says that the prospect of creating a new, fully functional website from scratch that was expected to help transform and save the company was both exciting and daunting. "But absolutely exciting," he says.

Developing an E-Commerce Strategy

As for the overriding strategies for the site, Ertell says several key themes influenced the overall site and IT systems design. "We always saw the site as more than just the buy button," he says. "The goal has always been to help us have better relationships with our customers, to drive sales online and in store via the site...and to be a really great cross-channel hub for us."

One key piece of the plan was that the company reorganized itself around the e-commerce operations and made it core to the company's short-term and long-term strategies, Ertell says. "A lot of companies have their Web operations completely separate from the business because they started in the late '90s, and it was this little business that only a couple people cared about and was incubated on the side. And it grew, and it grew apart at a lot of companies," Ertell says. "So we made sure we were organized [around it], people were incented and all of those types of driving forces were in place before we built it. And it's already helping us."

The company also decided to allow the Borders Rewards loyalty program members—more than 27 million, currently—to redeem their rewards online. This allows all that customer data to be further mined to determine shopping patterns and how customers are using the website and in-store service offerings.

CIO Harwood points out that the new e-commerce data streams will better inform Borders' merchandising systems and provide merchandising decision-makers with more information on what products are hot (for example, what books are getting lots of advanced orders online or spikes in traffic on the site).

Testing What Customers Want Online

Unfortunately for Borders, the Web is already stacked high with online-only e-commerce players and retailers with economies of scale that are doing a very good job of selling a broad assortment of books, CDs, DVDs and other media products. Furthermore, sales of some of those media products that Borders is selling, such as CDs, have been heading south during the past several years.