Borders tries the direct approach

Ashley Milne-Tyte May 27, 2008
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Borders tries the direct approach

Ashley Milne-Tyte May 27, 2008
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Kai Ryssdal: Shares of Borders Books tumbled almost 7 percent today. That’s probably not the response the company had been hoping for on the day it reintroduced itself as an online bookstore.

You see, for the past 7 years Borders has been selling books only through Amazon.com. The company bet that a partnership with the biggest Internet retailer was the best way to manage the online side of its business. But times — and business models — change. So as of today, Borders is out on its own, even as the company has announced it’s looking at the possibility of selling itself.

From New York, Ashley Milne-Tyte looked into why Borders made the web change now.


Ashley Milne-Tyte: Borders has been plotting the launch of its own full-service site ever since its current CEO joined the company two years ago and long before it was considering a sale.

Patti Freeman Evans is a retail analyst with Jupiter Research. She says the new site aims to get more book lovers into the actual stores, where she says most book buying still takes place.

Patti Freeman Evans: Borders is very aggressively going after a stronger multi-channel experience and feel they are better equipped to do it themselves than with the arrangement with Amazon.

She says the website will include areas like staff picks, a tactic that works well in brick and mortar stores.

Jim Milliot is director of business and news for Publishers Weekly. He says Borders has spent a lot of money on the site, though it won’t say how much. He says its success could influence the company’s fate.

Jim Milliot: If it turned out to be a huge disaster and they don’t recoup their investment, it could obviously be another factor in forcing them towards a sale and if it’s a huge success, well, it could be a factor in maybe them wanting to stay independent.

The end of the Borders partnership with Amazon could eat into the online retail giant’s profits, but Jupiter’s Patti Freeman Evans says the damage won’t be too bad.

Evans: Amazon has had record quarters recently, so Amazon has a lot of wind behind it.

She says online sales are predicted to grow strongly in the next few years, so there should be room for both companies to profit.

In New York, I’m Ashley Milne-Tyte for Marketplace.

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