Borders turns online operation over to Amazon.com
Detroit News
ANN ARBOR, Mich. — Borders Group Inc. is giving up on its own money-losing online business, turning the operation and a portion of the potential profits to rival Internet superstore Amazon.com.
Associated Press
Amazon and Borders announced yesterday they will relaunch Borders.com in August as a co-branded site. Amazon will handle the inventory, warehousing, site content and customer service. Borders, the nation's second largest book retailer, will provide some content.
Amazon.com CEO Jeff Bezos is taking over Borders online sales business in a deal similar to that with Toys R Us.
"While our customers' needs are met online by the people who do it better than anyone else, we will provide them with what we do best — the books, music and movies they love to explore in an engaging shopping atmosphere," said Greg Josefowicz, Borders president and chief executive officer.
Under the agreement, Borders will pay Amazon an undisclosed upfront fee. In return, it will receive a percentage of revenues from goods sold at Borders.com. Amazon.com will continue to operate its own site for books, music and videos.
The move was fueled by continued losses at Borders' online arm. It lost $18.4 million last year on sales of more than $27 million.
"The alliance essentially eliminates one competitor for Barnes & Noble and Books-A-Million online," said Amy Ryan, analyst at Prudential Securities.
Barnesandnoble.com had sales of $320 million in 2000. Books-A-Million does not reveal its online sales, but it had overall sales of $418.6 million. Sales at Amazon.com were $2.76 billion.
"It's a win for Amazon but not necessarily for Borders," said Carrie A. Johnson, analyst at Forrester Research, an online research firm.
"(Customers) will be confused who they're buying from, and they'll find they won't be able to return products to Borders — they'll have to send it back to Amazon."
