Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

“Here lies a once great company that millions of consumers loved and adored which is now being laid to rest.” – Tombstone of a once great company found in the eCommerce Graveyard.

The brick and mortar “Retail Apocalypse” is upon us and shows no signs of slowing down.

To put this in perspective, the term “Retail Apocalypse” now even has its own Wikipedia page.

In particular, just think of the numerous tombstones populating the eCommerce Graveyard.

Additionally, the list of residents entering the eCommerce Graveyard keeps increasing at staggering numbers.

For example, it was recently reported that 75,000 retail stores could be facing their demise.

Unfortunately, many of these companies entered the cemetery due to their own self inflicted wounds.

Those companies that just never quite figured out how to establish a healthy eCommerce strategy for survival.

The Growing eCommerce Graveyard

eCommerce Graveyard, Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

Two more recent additions to the eCommerce graveyard that once seemed improbable include Toy “R” Us as well as a hundreds of Sears locations.

Both victims joined the list of companies who failed to adjust to customer buying habits.

How did this happen?

Especially with Sears. If you are a Baby Boomer or Gen X, think back to the excitement when a new Sears catalog arrived in the mail. (Of course anyone under 30 is probably asking, “what is a catalog?”)

That catalog served as an early comparison to online shopping.

The Sears catalog provided a selection of thousands of products at your finger tips. Right in the comfort of your home.

With pens or markers in hand, kids all over the country circled desirable gifts for birthdays and holidays.

How on earth did Sears miss the eCommerce wave?

Sears converting their catalog to an aggressive eCommerce strategy seems like a logical and easy decision. At least now it does anyway. Only twenty years too late though.

Well, all good things must come to an end.

Who Will Be Next in the eCommerce Graveyard?

eCommerce Graveyard, Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

Do you think any of us will live long enough to see Amazon, Apple or Netflix enter the eCommerce Graveyard?

What events or new technology could possibly take down these powerful companies?

It certainly seems remote at this point of time.

Yet, once again, all good things come to an end.

However, there was a time when Sears and Toys R Us were also powerful companies.

Years ago, their eminent failure seemed unfathomable as well.

It was sad and painful to watch the demise of Sears and Toys “R” Us. Didn’t both companies have ample time to adjust and change directions?

Sears and Toy “R” Us both had plenty of warning signs.

Yet, thousands of employees are now out of work. Shareholder investments have vanished. Remaining loyal customers are forced to shop elsewhere.

Why did they ignore embracing an aggressive eCommerce strategy?

So as an entrepreneur, how does your digital footprint look?

What is your eCommerce strategy?

Do you see warning signs at your business? In your industry?

History repeats itself. Learning from the past certainly offers tremendous benefits.

To avoid following the footsteps of failure from once great companies, it helps to understand what happened.

Let’s go back a few years and take a look at a few early arrivals to the eCommerce Graveyard.

Residents of the eCommerce Graveyard

eCommerce Graveyard, Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

Think back to the 1990’s when the retail industry experienced a revolution with “Big Box” stores.

Major “category killers” were completely dominating the retail landscape.

They created economies of scale with distribution, buying power, as well as marketing with mass appeal.

During the process, they wiped out every mom and pop retail store that stood in their way. Small retailers or even regional retailers barely stood a chance.

Yet, as these brick & mortar retailers raced to eliminate the competition, they were actually driving themselves right into extinction.

Plenty of articles exist explaining how management of these corporate giants just horribly misunderstood their customers changing buying patterns.

For example, Harvard Business School issued this outstanding 2011 article, “Retailing Revolution: Category Killer on the Brink”.

In the article, the author uses a fantastic line describing many of these mass retailers simply “didn’t see the bullet coming”.

Obituaries from the eCommerce Graveyard

eCommerce Graveyard, Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

A few early entrants in the eCommerce graveyard that we will discuss today includes Borders Bookstores, BlockBuster, and Circuit City.

By the time the Great Recession hit in 2008, many of these “category killers” were in deep trouble. Actually, their fate was already sealed.

Let’s take a step back in time to look at the obituaries of these once powerful retailers.

Border’s Bookstore (1971-2011)

Borders Bookstore, born in 1971 to brothers Tom and Louis Borders in Ann Arbor Michigan. Borders Bookstores entered the Ann Arbor community at a time when spirits ran high. Especially since the Michigan Wolverines completed the 1971 football season undefeated eventually taking their talents to the Rose Bowl that year.

The Borders Brothers proudly watched their baby grow from toddler to young adult gaining a competitive edge with a highly sophisticated software system allowing them to better track inventory and forecast sales.

As a young adult, Borders gained national attention under the leadership and guidance under CEO Robert DiRomualdo.

Borders entered the big leagues once Kmart acquired the company in 1992. Meanwhile the company continued an aggressive brick and mortar expansion.

Borders Bookstores eventually spun off from Kmart in 1995 (the same year that Amazon started selling books online).

The book store chain, renamed Borders Group Inc., spins off from Kmart and goes public on the New York Stock Exchange (Ticker: BGP) under CEO Robert DiRomualdo. At the time, Borders’ innovative inventory management system was considered “ the envy of the industry ,” as one publisher put it, and was a catalyst in the forthcoming boom in the company’s superstore footprint.

Beginning of the End

Borders stock price reached an all-time high in 1997 at $44.88. By 2007, the stock price fell to $12.28. Eventually, the company liquidates in 2011.

Unfortunately Borders sealed their fate with two fatal moves.

First, the over expansion of their brick and mortar retail stores.

For example, In 1998 Borders expanded its brick and mortar presence by over 25% with adding 52 superstores. Hindsight makes us either a genius or a fool, right?

While Amazon relentlessly pursued online dominance, Borders focused on wiping out every little mom & pop book stores completely oblivious to the fact they were digging their own grave.

Secondly, Borders failed to ever establish any type of viable eCommerce strategy. Ignoring an online presence guaranteed a plot in the eCommerce graveyard.

In 2001, Borders turned online sales over to Amazon. At that time, Borders officials thought online sales would always be small. It invested more and more money into opening more stores, signing long-term leases for them.

The Ann Arbor News lays out a fascinating timeline revealing the growth and eventual failure of this corporate giant: “Borders’ rise and fall: a timeline of the bookstore chain’s 40-year history“.

Blockbuster (1985 – 2010)

Blockbuster Video, born to computer programmer David Cook of Dallas, Texas in 1985.

As an infant, Blockbuster experienced explosive growth expanding to four stores.

Yet, growth came at a high cost. The young company lost $3.2 million during this aggressive growth stage in 1986.

David Cook sought foster parents (investors) for his money losing youth. In 1987, Wayne Huizenga, founder of Waste Management, adopted (purchased) Blockbuster Video from David Cook for $18 million.

Wayne Huizenga visualized big things for his adopted child. Blockbuster aggressively expanded to 3400 stores by 1993.

By the time young Blockbuster hit 9 years of age in 1994, Viacom purchased the youth for a “Blockbuster” deal of $8.4 billion. Yes, BILLION!!

Could Have Purchased Netflix for $50 Million

Meanwhile, Reed Hastings founded Netflix in 1998. Why? Well……

In 1997, Hastings returned a movie rental to Blockbuster 6 weeks late enduring a significant late fee of $40.

He was completely appalled by the $40 fee. How incredibly ironic! That $40 late fee contributed to the total collapse and failure of Blockbuster.

In 2000, Blockbuster passed on several opportunities to purchase Netflix for $50 million. Yes, MILLION!

Netflix went public in 2002 with a market value of $95 million. As of this post, Netflix market value exceeds $100 billion.

On Sept. 23, 2010, Blockbuster filed for bankruptcy, a few weeks shy of its 25th birthday.

How on earth could this corporate giant fail so miserably to a start up?

Blockbuster became another addition to the eCommerce graveyard.

Technically, the Blockbuster tombstone cannot be carved out just yet. Blockbuster made national news in 2018 with the last remaining store still standing in Bend Oregon:

There’s one Blockbuster left . . . and it’s the saddest place in America.

Forbes lays out an interesting timeline explaining the steps towards the Blockbuster failure. Particularly each disastrous misstep from 2003 until its bankruptcy in 2010: A Timeline: The Blockbuster Life Cycle

Fast company also posted a fascinating timeline laying out the Blockbuster demise: Blockbuster Bankruptcy: A Decade of Decline

Circuit City (1949 – 2009)

Circuit City was born to Samuel Wurtzel in Richmond, Virginia in 1949.

Actually, the founding of Circuit City epitomizes the zeal and courage of a relentless entrepreneur with a big vision.

While traveling from New York to North Carolina for a family vacation, Samuel Wurtzel made a stop in Richmond, Virginia.

During the stop, Wurtzel visits a barber for a haircut. While receiving a haircut, the barber mentions that the first television station in the South opened in Richmond. Immediately his entrepreneurial instincts kick in and Wurtzel smells opportunity.

Wurtzel takes the entrepreneurial leap of faith and moves his family to Richmond to open a television store. Incredible foresight!

Households with televisions grew from 1 million in 1949 to 20 million by 1953.

Wurtzel implemented a brilliant strategy. A salesman would drop off a television at a prospect’s home, free of charge for one night while offering to pick it up the next day. More times than not, the television stayed put and the sale was closed.

The company eventually grew to 700 locations with $12 billion in revenues reaching #151 on the Fortune 500 Top Companies in 2003.

However, Circuit City filed for bankruptcy just five years later in November 2008.

Good to Great to Gone

Circuit City is a colossal failure and a textbook example of the risks a company takes by ignoring consumer buying habits and technology.

Author Jim Collins featured Circuit City in his 2001 iconic business book, “Good to Great”. Collins describes how Circuit City thrived through massive growth during the 1980’s and 1990’s which separated itself from the competition. Thus, deemed a “Great” company.

Ironically, Alan L. Wurtzel, Circuit City former CEO and son of the company founder, also wrote a fascinating book in 2016 called “Good to Great to Gone: The 60 Year Rise and Fall of Circuit City”.

In this book, Wurtzel describes how there was an internal arrogance. Furthermore, the company was so successful in the brick and mortar space that they felt eCommerce could not possibly have a profound impact on the company.

Alan Wurtel served as Circuit City CEO from 1972 to 1986. He was also Chairman of the Board from 1984 until 1994.

“Don’t think you know all the answers, because once you get complacent, you’re in trouble,” said Alan Wurtzel during a 2012 Wall Street interview.

He also stated, “The world is always changing, and you can’t rely on your past accomplishments”.

Apparently in 2018, Circuit City left the tomb to resurrect itself from the deadCircuit City to Announce Official Company Relaunch at the 2018 Consumer Electronics Show on January 8th.

It will certainly be interesting to see how far this Circuit City can rise.

Can lightning strike twice?

Don’t Find Yourself Six Feet Under

eCommerce Graveyard, Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

As an entrepreneur, where do you stand?

Is this comparing apples to oranges for you?

Or is this hitting closer to home than you realize?

Are you about to fall off of the cliff and completely unaware of what is happening?

The economy seems extremely strong right now.

Unemployment continues at historically low levels.

During times of a strong business environment and healthy growth is a perfect time to self-reflect and evaluate your strategy.

How is your business doing?

Are you prepared for a downturn?

So sorry to come across as “Debbie Downer” or rain on the parade.

However, a strong economy tends to create complacency.

Alison Levine, author and leadership expert, declares that “complacency kills“.

Maintaining a healthy sense of urgency at your organization keeps the fire lit. Staying curious and hungry helps to drive your company toward new opportunities.

With the corporations mentioned above, the incentive to change just never existed.

Continuing to “do things the way we’ve always done it” exceeded the desire to adapt.

All of these companies dominated their sectors at one point in time.

Many were Wall Street darlings. Yet, they completely took their eye off the ball.


Arrogance? Fear?

A lack of understanding their customers changing needs?

Ignoring technology?

Maybe it is all of the above.

Could it possibly be that each company was so deeply ingrained and invested into their respected business process that a pivot was just unimaginable and unattainable?

Motivation for Change to Avoid the eCommerce Graveyard

eCommerce Graveyard, Dying to Enter the eCommerce Graveyard: Please Don’t Be Next

Fear plays the role as a wonderful motivator.

Are you thinking, well this will never hit my company?

What if it does?

Do you have more to gain or lose by embracing eCommerce?

Are you taking a big risk doing nothing?

If you don’t embrace eCommerce, could you be the next Sears or Toys “R” Us?

Obviously watching Blockbuster, Borders and Circuit City all fail so miserably was not enough motivation for the executives at Sears and Toys “R” Us to change.

Seems like they had enough information to avoid the same fate?

The products sold on the shelves at Sears and Toys “R” Us were all identical to the products on the shelves at Walmart. Also available on Amazon.

There was no distinct competitive advantage regarding the product itself.

Walmart just maintains a stronger and healthier retail brick and mortar operation. More importantly, Walmart adjusts to customers buying habits.

Focusing on change certainly serves Walmart’s sustainability as well. Even Walmart is now calling itself, Walmart.com.

Meanwhile, Amazon makes it amazingly easy to buy. Convenience and simplicity rules. Amazon relentlessly raises the bar on creating a satisfying customer experience.

Sears was well aware of that fact with the decades long dominance they enjoyed.

So, let’s get back to your business.

What if your widgets or processes are identical to your competition?

Yet, what if your competitors are making it easier to buy from them?

Furthermore, what if your competitors are more easily found on a Google search?

In addition, what if they post more frequently on social media and engage with potential customers? Your potential customers.

What if they consistently deliver content that provides valuable information to help make a quick and easy buying decision?

If you are looking to avoid the eCommerce Graveyard, there is no better time than the present to get started.

Trust me, dying to enter the eCommerce Graveyard is not fun.

Take the leap of faith & make the plunge. You will love the thrilling eCommerce ride.

Happy eCommercing

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