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Borders Dumps Amazon: Bad for Both?

Borders' decision to end its distribution deal with Amazon is probably bad for both parties. Estimates vary, but analyst Mark Mahaney at Citigroup thinks that Borders accounts for 2-3% of Amazon sales, which is not gigantic, but is clearly a material loss for Amazon.

Borders, on the other hand, must now create and drive traffic to a retail website via which it makes all the sales it made via Amazon, plus enough extra to justify the cost and disruption of the transition. Given the difficult quarter that Borders just finished -- it announced this morning it lost $73.6-million in the fourth quarter, versus a profit of $119.1-million a year ago -- that is asking a lot.


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