Making Book on Borders

Back in 2001, bookseller Borders Group opted to split its online presence. The company Web site let users check inventory and reserve books for pickup, but Borders outsourced actual online book sales to Amazon.com in return for a portion of the e-commerce revenue.

Come next year, that partnership will be no more. Faced with a $73 million loss in fourth quarter 2006, compared with profits of $119 million in the same period a year earlier, Ann Arbor MI-based Borders intends to debut a revamped site in 2008 that will integrate all operations and enable it to market across in-store and online channels.

For one thing, the new site will allow the company to take online advantage of its popular Borders Rewards loyalty program, now 17 million members strong. And customers in Borders stores will be able to use kiosks to order books not currently in stock and choose either home delivery or in-store pickup.

“It's a smart decision,” says Larry Freed, president and CEO of marketing research firm Foresee Results. “The Web is such an integral part of business that to rent your brand out to someone else is a risky move. Consumers want a consistent experience across channels.”

But the launch may be too late to keep Borders in the Web bookselling game.

“Amazon has been [Borders'] fulfillment, marketing and merchandising partner for years and all that institutional knowledge now resides with Amazon,” says Alan Rimm-Kaufman, president and CTO of online retail consultancy The Rimm-Kaufman Group.

“Borders will launch a beautiful site, but it'll be five years behind the marketing and IT curve because of that delay.”