The Lessons Tom Hanks & Meg Ryan can Teach us About the Power of the Internet.

The film You’ve Got  Mail is based around the story of a small independent bookstore operator in Seattle who is slowly put out of business by the appearance in Seattle of a large bookstore chain. The small bookstore has a small but loyal following, but the vast majority of ‘book shoppers’ prefer to go to the large chain bookstore – as they have a bigger selection of books, and sell other stuff as well.

In a predictive sign of the future for Joe Fox, the character in You’ve Got Mail played by Tom Hanks and the owner in the film of the chain bookstore – virtually all of the communication conducted between himself and the owner of the independent bookstore, Meg Ryan’s character, were conducted over the internet. In 1998 when the film was released – the idea that people would prefer to spend money online rather than in person was, to a large degree, not widely accepted.

Borders, the well known book retailer, could well have been Joe Fox’s chain bookstore in 1998 – moving into urban centers and opening up large box stores and putting independent bookstores out of business. In 1998 Borders Group had yearly revenues of $2.27 billion – which is pretty impressive. At the same time Amazon.com had revenues of $609 million. Internet shopping was in its infancy, and the migration from mom and pop stores to big box stores – with the big box store’s selection, choices, and attractive pricing – was in full effect. In the years that have passed since 1998 another migration has taken place – with shoppers migrating away from big box stores such as Borders to online vendors such as Amazon.

In 2009 Borders’ revenue was $3.3 billion – which seems fairly good, but not if you consider that Amazon.com had revenues in 2009 of $24 billion. Borders’ revenue over the course of a decade had grown 57%, whereas Amazon’s revenues have grown a staggering 3,840%. Borders is now in the position of the independent bookstore owners they previously put out of business, with Borders’ previous and exisiting customers migrating to Amazon.com for their selection, choices, attractive pricing and – let us not forget – free shipping.

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