Borders Cuts Loose from Amazon

After losing heaps of money trying to run its own online bookstore, Borders essentially turned over its online store to Amazon.com. Links on the Borders bookstore turned users over to Amazon, and Borders got a commission on the sale. Borders might have been the second largest book retailer in the United States, but even it couldn’t make money selling books online. Now, seven years later, Borders has decided to give e-commerce a second try by relaunching its own online bookstore at Borders.com.

“We are thrilled to have launched our new Borders.com site today as it will be extremely meaningful to our business,” Borders CEO George Jones said in a statement. “The site has several innovative features that we believe shoppers will find compelling, and importantly, we will be able to market it to our over 26 million Borders Rewards loyalty program members who will now be able to earn and use program benefits online as well as in our stores.”

Borders has faced increasing retail pressure from the likes of Barnes & Noble and Wal-mart, and has even considered putting itself up for sale. Taking back its online bookstore may be a move to make Borders a more attractive takeover target—no having to mess with Amazon to get the e-commerce business back. But Borders’ online strategy doesn’t seem to be to out-do Amazon at its own game: instead, the site offers features designed to remind customers of the atmosphere of a brick-and-mortar Borders location, including the unfortunately-named “Magic Shelf” that tries to simulate the experience of semi-randomly perusing a bookstore, looking for things that catch your eye. The site also offers automatically-generated recommendations based on user preferences, and existing Borders customers will be able to use their Borders points and coupons online—which is about the only way the new stores’ prices can compete with other online retailers. Borders sees the online store as an extension of its physical stores, and a way to reach out more strongly to its brick-and-mortar customers. In fact, Borders plans to put the new Borders.com on existing kiosks in its retail locations to get its customers used to the idea.

Using an online store to retain and build business for a brick-and-mortar business is certainly a novel business model; time will tell whether it pays off for Borders.

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