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.

[via Borders]

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Comments

  1. Andrew Fife says:

    I’ve always felt that the Borders/Amazon website didn’t do Border’s brand justice because it was clearly Amazon.com with a small Borders logo splapped on it.
    Tweaking the Amazon platform to emphasize Borders more would seem to make a lot of sense. However, I agree that a full split is probably bad for both parties.

  2. Jon H says:

    Seems to me that Borders needs a site that helps drive store traffic, and which is geared to selling the higher-margin items that Borders no doubt relies on.
    For instance, it’d probably be worthwhile if customers could use Borders’ website to check if a book is in-stock at the local store, buy it, and have it made available for pick up in-store. That’d save time, and some of the saved time might be spent browsing for high-margin gewgaws to impulse-buy.
    I was never quite sure why I’d want to use Borders on Amazon instead of just Amazon.