Goodbye Amazon, Hello Cambridge: Powered by Local Firms, Borders’ Online Store Is the New Face of E-Commerce

I love Borders. Independent bookshops aside, it’s my favorite place to kill an hour or two while browsing the latest books and enjoying a nice cup of coffee. (The original Borders chai was the best, but it’s hard to argue with a latte from Seattle’s Best—more on that coming soon).

So when I heard about the new Borders.com launch, announced last week, I had to check it out. First, the backstory. For seven years, Borders has farmed out its online store to its hated competitor Amazon—go figure. Borders’ online sales have been basically negligible. Even loyal Borders customers like me have bought more than our fair share of books and music online from Amazon, because it’s easy and convenient.

Well, now Borders has ended its Amazon partnership and developed its own online shopping site. Go to Borders.com, and you’re greeted with warm, earthy colors and what looks like a real bookshelf lined with real books. This “magic shelf,” as Borders calls it, displays new and upcoming releases, staff picks, DVDs, and music. You can scroll up and down, move right and left along the shelves, learn more about books or DVDs by clicking on them, and add them to your shopping cart with just a click. You can also do advanced searches for items and get personalized recommendations, which get updated every time you come back. It’s all meant to evoke the friendly feeling of browsing books in a real store—which arguably hasn’t been done to this degree before.

Interestingly, all of the technology behind the site was born right here in Cambridge, MA. Our first stop: enterprise search firm Endeca, based in Kendall Square. Matt Eichner, vice president of strategic development and marketing at Endeca, describes his company’s role in the Borders site this way. “When you look at a Ferrari, it’s a gorgeous piece of work—the body, the sheet metal, the styling. That’s not us.” As he explains, “There’s a second part to the visceral experience—we’re the engine. We’ve blended search with business intelligence to dynamically change the arrangement of products for each user. The store rearranges itself, summarizing an inventory of tens of millions of books on the fly.”

OK, comparing Borders.com to a Ferrari might be a stretch (maybe it’s because Endeca’s CTO is named Ferrari), but I take the point. All the machinery under the hood powering the search box, the site navigation (which is distinct from the user interface), and the “dynamic merchandising”—rearranging and stocking shelves to meet the user’s profile and specific clicks—all of that is Endeca software, and if all goes well, it should help the store become more competitive online. “We’re excited that Borders is going beyond where they can go with Amazon,” says Eichner.

So what about that gorgeous exterior—the user interface of the Borders site? That would be our second stop, and the domain of Allurent, the online-shopping software firm based in Harvard Square (but moving to Kendall Square soon). CEO and founder Joe Chung (an Xconomist) explains where his company entered the deal. “Borders has a really big business problem. They have stores, and customers who really love them. What they were failing to achieve was creating emotional attachment, that in-store experience in the online experience.”

Which is exactly what Allurent was hired to do. “We focused a lot on ‘how does it feel?'” says Chung. “We wanted a rich user interface that would reinforce the feeling of the store and create mental and emotional connections.” The technology itself was not a great leap—technically speaking, he says, the site could have been created years ago, but the software tools and platforms have become much more practical. The main challenge was making the shopping interface cost-effective and easy to use.

When I visit the site, I find myself wishing they did more with the interface to make it immersive, more like being in a real store. With the state of graphics these days, I’d like to do more than just scroll around a flat image. “That’s a big open question,” says Chung. “Our overall feeling is that you don’t want too literal a translation—you want to translate the emotional and business functions.” For instance, he says, a 3D experience on a screen is very different from walking around an actual store and, for now anyway, it would be difficult for consumers to use. And in this business, it’s all about whether consumers will use it (most of them aren’t geeks, after all).

Which leads to our third and final Cambridge stop: ChoiceStream in Kendall Square. A big part of making customers come back is the personalized aspect of their shopping experience. ChoiceStream, a member of Xconomy’s greater Boston Internet video cluster, develops software that analyzes users’ online interests and browsing behaviors and comes up with personalized recommendations. That determines whether Borders’ magic shelf will show you the latest mysteries, techno-thrillers, or political biographies, say—and which ones.

ChoiceStream, led by a team that includes CEO Steve Johnson, CTO Michael Strickman, and executive VP of sales and marketing Toffer Winslow, delivered recommendation software that Borders hopes will lead to more purchases per session, more repeat visits, and higher conversion rates. “Over time, we hope to expand our deployment at Borders so that we personalize all aspects of the online shopping experience, and even some of their direct marketing campaigns,” says Winslow. “ChoiceStream’s proven approach to creating a personalized store that automatically presents shoppers with the most relevant merchandise and promotions will enable Borders to build rich customer relationships across all of our touch points,” said Kevin Ertell, vice president of e-business at Borders Group, in a press release.

For Borders, the proof will be in the pudding—but what does all this say about the state of e-commerce? Winslow calls the Borders deal “a great testament to the strength and vibrancy of the local software ecosystem.” Eichner says, “There’s been a rebirth in Cambridge and Boston.” Chung concurs, adding that it never really went away. “While everyone was looking somewhere else—Friendster, MySpace—e-commerce became a real big business, one that actually mattered.” Chung points out that some big stores are now doing 20 percent of their revenue online. “That’s a big number,” he says. “It took four or five years, but e-commerce lived up to what people thought. Now companies are saying, ‘Holy crap, we’re doing a billion dollars online and we haven’t invested anything in our websites.'”

Which, of course, is great news for the local software ecosystem. Just a few weeks ago, Allurent and Endeca announced a formal partnership to develop interactive online shopping software. “We’re trying to create collaborations locally,” says Chung. “We don’t spend enough time in hot tubs together. We need to trust people enough to run off and take some risks. So far it’s worked out really well.”

OK, so during my last week in Boston (I’ve just moved to Seattle), I had to check out the local Borders store one last time. They’d changed the layout a bit—new releases were on shelves to the right instead of on tables in front (perhaps to match the magic shelf?)—but I enjoyed browsing through the store as usual, and had a great cup of coffee. It’s like Chung told me: the website is meant to reinforce the store experience, not replace it. So I plan to keep going in person. At least until they can make me that latte online.

Gregory T. Huang is Xconomy's Editor in chief. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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