August 21, 2000

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Borders Wants To Read Its Customers Like a Book

Bookseller to consolidate information to get a better picture of its customers

By Rick Whiting

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orders Group Inc. is assembling a 1-terabyte data warehouse to give managers and marketing analysts a consolidated view of its customers, including those from Borders Books and Borders Music superstores, Waldenbooks stores, and the Borders.com Web site.

Borders faces the same situation as many companies with multiple sales channels, business units, and product lines: Getting a handle on who is buying what and where they're doing it is nearly impossible with customer data scattered across multiple databases. Now, for example, Borders can't tell whether customers who buy books in its retail stores are the same ones who buy books from its Web site, says Craig Lee, Borders senior manager of IT and customer-relationship management.

"We want to know our customers and understand what they want," Lee says. The data warehouse will pull customer information from multiple databases operating throughout the Ann Arbor, Mich., company, Lee says. Borders will use Informatica Corp.'s PowerMart data-integration technology to build the system and software from E.piphany Inc. to analyze the data and manage marketing campaigns based on the findings. The system, which will cost million of dollars and is slated for completion late this year, will be the foundation for future CRM applications, says Gordon Eiland, Border's VP of merchandising, distribution, planning, and analysis.

Borders remains conscious of the issue of data privacy as it proceeds with the project, Eiland says. The bookseller is following a policy under which it will send marketing information to customers only if they give permission.

The data warehouse is Borders' latest step in its efforts to compete against archrivals Amazon.com Inc. and Barnes & Noble Inc. by leveraging information technology. For instance, Borders already has begun installing in its 300-plus stores kiosks that customers can use to order books that aren't in stock.

Eiland contends Borders is ahead of Barnes & Noble in making use of IT for competitive advantage, but he acknowledges that Amazon.com leads the industry--it uses a 3-terabyte data warehouse. "They are ahead of everybody. But their losses are also ahead of everybody," Eiland says. Neither Barnes & Noble nor Amazon.com were available for comment.

Borders and Barnes & Noble built their online operations independently of their stores, and efforts to combine the two divisions' IT systems will be difficult, says Forrester Research analyst David Cooperstein. The challenge, he says, will be finding a way to re-integrate two companies that were created separately.

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