April 10, 2001

6:34 PM

Borders outsources online sales to Amazon.comThe alliance, scheduled to be announced at a press conference in New York, is expected to involve Amazon effectively taking over the online operations of Borders, according to people familiar with the matter. Borders is expected to effectively exit from the online book-selling business, these people said. Further terms of the alliance couldn’t be learned, though Amazon is expected to receive promotion from Borders through its chain of off-line book stores.
posted by Brilliantcrank (30 comments total)

Very good - anything to keep Amazon.com going strong and vindicate my long-held belief that Bezos is a benevolent god and Amazon.com the true harbinger of great things on the web. Yes, I am serious.
posted by davidmsc at 6:36 PM on April 10, 2001

Yes you are serious? At least give Amazon.com credit for camouflaging its slow but inevitable failure in the best possible clothes. Does anyone still believe Amazon will survive, to say nothing of thrive? Predictions on a bankruptcy date anyone? I bet on sometime in 2002. I'm not sure why I',m so eager to see Amazon's demise; probably because the sooner myopic/hype-based businesses depart the Web, the sooner viable ones will get attention and funding.
posted by ParisParamus at 6:56 PM on April 10, 2001

You know, I honestly believe that Amazon is going to make it - and that it will be the only one of the "out of the gate" superhyped web-businessed to do so (not much of a stretch there, huh? Most of the others are already gone!). They will just continue to mutate until the reach the right size and product offering; betcha they dump everything but small shelf items like books, CDs and videos before they're done. Anyway, I'm a big believer in brand equity and although the sight of Bezos' smug mug makes my stomach churn, I have to give them credit for turning "Amazon.com" into pretty much a household name.
posted by m.polo at 7:16 PM on April 10, 2001

"viable" like... which?

and how would the mighty amazon.com's failure not DOOM every other web-based business; afterall, if amazon couldn't do it, why do you think anyone else could?!
posted by palegirl at 7:16 PM on April 10, 2001

i hope that, if the inevitable happens and their "profits" disappear, amazon will get back to its roots and just sell books. it is without a doubt the best place to buy them online, i would hate to see that destroyed just because their gardening tools division drags them down...
posted by johnboy at 7:26 PM on April 10, 2001

Seriously. Amazon was best when it just sold books, cd's, and videos. The jump to consumer electronics, kitchenwares, and cars at a time when other online firms were showing it wasn't a viable business strategy was simply a silly move on their part.
posted by dogmatic at 7:32 PM on April 10, 2001

and how would the mighty amazon.com's failure not DOOM every other web-based business; afterall, if amazon couldn't do it, why do you think anyone else could?!

I think that the premise of selling mass market books on-line is intrinsically flawed for several reasons. Generally, I don't think selling any mass market good (i.e., widely-available in stores) on the Web will ever work, except, perhaps as an adjunct to a non-virtual store, e.g., GAP): the shipping cost alone almost assure that. As for books in particular, while it's not clothing, going to a bookstore, even a B&N, is satisfying and part of the purchase experience. In addition, leave the city and the burbs, where there are less or no bookstores, and there are just too few consumers. Further assurances of Amazon's demise? The coming of e-books and downloaded music (minor factors, actually).

As for why Amazon's demise won't signal the end of e-commerce? Tell me why it should? Services and specialty goods (i.e., goods only readily available on the Web) are not what Amazon purveys. A short-term chilling effect on VC? Maybe... Sorry for the simplifications, but life calls...
posted by ParisParamus at 8:05 PM on April 10, 2001

going to a bookstore, even a B&N, is satisfying and part of the purchase experience.

um thats assuming you can get to a store with that book. as someone from "overseas" the beauty of amazon is i can get access to a huge range of books that a bookstore isnt willing to risk importing here to oz. if i want to browse, i go down the street. if i need one book in particular i open my browser. two different shopping models, that arent mutually exclusive.

is this what you meant by mass market? for me amazon is just a collection of niche markets, all of them in fact. that, in my mind, what such a huge inventory is for.

it would be interesting to see how much of amazon's book sales are made OS, and whether this would be enuf to keep them afloat...
posted by johnboy at 8:43 PM on April 10, 2001

Amazon will survive. E-books suck. Ungha bungha.
posted by fusinski at 8:46 PM on April 10, 2001

the shipping cost alone almost assure that.

As long as there are state sales taxes, the shipping charges will be a non-issue.

going to a bookstore, even a B&N, is satisfying and part of the purchase experience.

With its user reviews and "other people who bought X also bought Y and Z" suggestions, Amazon.com is satisfying, too, albeit in a completely different way than a physical store. I'd rather browse for books at Amazon than at almost any physical store, although since I now live in the state of Washington I don't actually order from them much anymore because of the state-mandated 8.6% "I live in the same state as Jeff Bezos" surcharge. (Now I tend to order books from BookPool and Buy.com, though I still browse for them at Amazon.com.)

There's a University Books (local independent store with two locations) across the street from where I work, a Borders a couple blocks further, and another bookstore in Westlake Center about the same distance away. I've been in all three and never bought anything at any of them, because even if I see something I like, one look at the price tag gives me sticker shock. I've also been down to Powell's in Portland, and while I did buy a good stack of stuff there (no sales tax!), I was also unable to find a couple of titles I was specifically looking for -- this, in what's claimed to be the largest bookstore in the world. Never had that problem with Amazon either.

In short, Amazon is one of the few Internet stores that has spent significant effort providing the kinds of information shoppers really want but can't get at traditional stores. Their shopping experience and store feature set are leaps and bounds above anyone else's, which is why I think if any dot-com will survive, they certainly will.
posted by kindall at 8:50 PM on April 10, 2001

As long as there are state sales taxes, the shipping charges will be a non-issue.

I was speaking more generally than just books. On the other hand, the last time I looked, s&h on a $20.00 CD or book was more than $1.65, which is what the sales tax would be, so....
posted by ParisParamus at 9:07 PM on April 10, 2001

as long as amazon doesn't get greedy like most of those regular stores out there in the malls... I think it'll stick around for a long time.
posted by kv at 9:17 PM on April 10, 2001

What's the penetration of B&N on the West coast? Here, in NYC, there are, I think, two Borders, and they are, comparatively, dreary. By the way, Borders was, at least until recently, in Chapter 11 Bankruptcy, no?
posted by ParisParamus at 9:19 PM on April 10, 2001

last time I looked, s&h on a $20.00 CD or book was more than $1.65, which is what the sales tax would be, so....

True, but who buys just one CD or book at a time?
posted by kindall at 9:25 PM on April 10, 2001

I'm with both polo and paris. Amazon should survive, because they offer online things that regular bookstores don't (they could, but still not as easy or accessible). From the Wishlist that you can give out to friends, to the recommendations wizard, to the immediately browsable backlist, it's a boon to a certain kind of book buyer. That said, I do still love to spend an afternoon browsing a bookstore, and it often leads to a purchase or two. They're two separate kinds of experiences.

Remember that not all books are fiction or the type that will respond to that kind of emotional experience. Also, many purchase decisions are made outside of a store, for instance, reading about a book in a newspaper review. With Amazon, you can take care of that right there and then, instead of putting it on your shopping list.

Paris, Borders started in the Midwest (Ann Arbor, to be precise), and really sparked the superbookstore phenomenon. Ironically, Louis Borders was explicitly copying the best features of independent booksellers, and in the process creamed the previous trend of "lite" mall discount bookstores -- while helping in the demise of the indie bookstores he copied. B&N scrambled to adjust, but managed to do so successfully. You may be thinking of Crown Books, the biggest discounter, which did go through bankruptcy a couple of years ago.
posted by dhartung at 9:45 PM on April 10, 2001

Apologies to Borders....
posted by ParisParamus at 10:01 PM on April 10, 2001

Their headquarters are nearby, they've offered me two jobs over the years... all I can say is that I'm glad I'm not with them now.
posted by Dean_Paxton at 10:05 PM on April 10, 2001

This continues the off-point discussion, but Borders should hire some cool designer to re-do their stores. No one ever tries to pick up women in a Borders cafe in NYC: they definitely have a problem...
posted by ParisParamus at 10:11 PM on April 10, 2001

I remember the arrival of Borders in Union Square years ago to be sort of sudden. It just appeared. Great shop though...

Still, I definitely hope Amazon survives. I buy tons of stuff from them. I'm currently awaiting the arrival of my new Netgear DSL router w/ firewall and 4-port switch. I got a few books a couple of weeks ago, and a new George Foreman grill a bit before that. Amazon's user comments if nothing else are reason alone it deserves to survive... Then there's the godsend they named the Recommendations Explorer... Amazon just has so many good things. I hope it never dies.
posted by swank6 at 10:35 PM on April 10, 2001

I was at a Borders just tonight on something of an impulse run, poking around for new PHP4 books, and found myself trying to hack one of their product locator terminals to see if I could pull up a browser so I could get to Amazon's user reviews and recommendations.

I had no success but if anyone out there has any tips, I'd be willing to listen ;)

As much of a buzzword "online community" is, there's something there. The smartest Borders clerk on the planet is not going to replace the entire user base of Amazon.com when it comes to helping me make a decision on which tech reference tome to buy. God knows they all look more or less the same sitting on the shelf.

This is the part where the uppity geek shreds the clueless journalist for his obvious technical ineptitude, because someone's gotta do it: I love this article's continued references to Barnes & Noble.com... is that RFC2396-compliant?
posted by Sapphireblue at 11:41 PM on April 10, 2001

Amazon is not selling a "mass market good" when it sells books. Amazon sells essentially every available book out there. And as big as physical bookstores are, they can't fit all those books in one store. Physical inventory in a (forgive me) "bricks and mortar"costs BUCKS to maintain. I can't imagine how big a bookstore would have to be to carry one copy of every book Amazon makes available. In one place. With reviews. With links to related books. Searchable. With a means to get emailed when books matching your searches come out.

When I lived in Roanoke, Virginia the closest good record store was essentially 400 miles away -- the Tower Records in Washington DC. And when I got there and could find obscure records, imports, and the like, it was wonderful. Amazon provides *just* that kind of "we have everything" - and they deliver it to your door.

This is the core competency of Amazon in my mind, and why they have a fighting chance to survive. Incidentally, they produced some other good news recently.
posted by artlung at 2:17 AM on April 11, 2001

I fail to see how less than an expected loss (for Amazon) constitutes "good news" in the normal universe.

BarnesandNoble.com? I was speaking of B&N's physical stores, which, at least on the East Coast, are as common as Starbucks (and serve their coffee)

Sure, Amazon has its value. All I'm saying is that the company's hoped success is predicated on being an alternative, and a superior one at that, to B&N and Borders and traditional bookstores. And I suspect average, or even semi-average Americans don't think so.

And, except, perhaps if you're Microsoft attempting to defend charges of monopoly, (IE for Mac) healthy businesses don't team up with competitors to provide infrastructure.
posted by ParisParamus at 5:26 AM on April 11, 2001

Clueless journalist?! I'm a clueless lawyer posing as a clueless analyst, silly.
posted by ParisParamus at 5:42 AM on April 11, 2001

There is no Borders in Union Square. You are thinking of Barnes & Noble. The only two Borders locations in NYC are the World Trade Center and up on 52nd. NYC is very B&N-centric, as they are headquartered there.

I helped build the Title Sleuth kiosks that SapphireBlue is talking about. None of the good ideas (UPC scanners, card readers, Palm synchronization, etc.) we suggested were implemented and the whole thing is just a simply kiosk interface to the some synchronized databases, namely the in-store db and the online fulfillemnt db. The kiosks run a version of IE 5.0 for Windows in kiosk mode. As far as I know, it's pretty hard to get around it. I've never tried.

Borders superstores, for the most part, are very good. B&N struggles to copy the innovative things that Borders has done over the years, and has succeeded in that. B&N didn't have cafes in their stores until Borders proved that it was a profitable venture. B&N was late in the game on providing a comprehensive computer book selection in their stores and it was the early 1990s before they realized that people were actually clamoring for computer books. Borders has always had very large technical (and computer) book sections, mostly due to one person; a woman named Carla Bayha who does the computer book buying for all of the Borders stores nationwide. No one knows the industry better than she does.

Here's another fact. The online group for Borders.com has hovered around 80-100 people for nearly two years. When I was working there, I was employee #23 or something. Barnesandnoble.com's online group is over 1000 people! Amazon's group is of similar size, or larger.

I have many ideas about why Borders.com failed to attract the revenue they needed to sustain the venture and expense of operation. I know how the executives there think (at least the ones who were there when I was). I also know they lost a lot of very smart online people about a year to a year and half ago because the executives weren't listening to the people who understood the web and how it worked. I left precisely for those reasons.

But, when you look at the book industry, you realize right away that books have a very low profit margin rate, which is made lower by the ability to return unsold portions of your inventory to the manufacturers and distributors. This is also the case for videos and music. This makes running a retail operation selling these kinds of products very difficult, and it's amazing that Amazon is still kicking, considering the price war they had with B&N for those formative years of their business. The astute online shopper will have noticed that the prices on books, music, and DVDs have slowly gone back up to a reasonable price, thus assuring at least a small profit on each sale. This definitely wasn't true two years ago when you could buy just about any DVD for $10-$13 and most books were often 40-50% off the retail price.
posted by camworld at 8:34 AM on April 11, 2001

camworld, I meant the Union Square in San Francisco. :)

I don't even know if we have a single Barnes & Noble around here... I actually faintly remember seeing one but I have no idea where. We have several Borders, the ones in Union Square and Stonestown come to mind.
posted by swank6 at 12:28 PM on April 11, 2001

I think the Union Square referenced is in DC, not NYC.
posted by ParisParamus at 12:31 PM on April 11, 2001

I never realized that every city has a union square... =P
posted by swank6 at 5:44 PM on April 11, 2001

But every Union Square doesn't have a hideous modern art "sculpture/clock"--only NYC!
posted by ParisParamus at 6:43 PM on April 11, 2001

My little Borders nostalgia trip:

I used to work at Borders when there was only one. Actually, not at Borders proper, but at BIS, which was the back end. Tommy Borders ran the store and Louie ran BIS. At that time, we sold, besides books, inventory services and the Borders look and feel to six stores around the midwest. There was, Let's see, Jocundry's in East Lansing, John Rollins in Kalamazoo, Borders, and a couple others I can't remember. BIS was all about tracking inventory and ordering books better and faster than any independent bookstore had ever been able to. We had a little mini-computer (run by one person) and it generated orders and pull lists every day. An independent store, by contrast, would be lucky to do a major inventory and reorder twice a year. It was an incredible advantage.

At the time, book people in Ann Arbor had a kind of love-hate relationship with Borders, which had driven another beloved local store, Centicore, out of business but which had a committment to keeping books in stock even if they only turned over once every few years--unheard-of in the book biz. Borders also had a local legend of a manager, a cranky bastard named Joe Gable, who we were all convinced was the only reason Borders was any good.

When Borders opened up a second store I was shocked--how were they going to have a store without Gable?--even though the BIS experiment had showed that it could work. I lost more and more emotional connection with the store as it grew, Tom sold it to K-Mart, opened cafes, sold music, feh!, and it became more and more just any other corporate enterprise, but I'm still amazed that the book operation has more or less kept the same high level of quality. Those of you that didn't grow up with a Borders or B&N on every block have no idea how good you have it compared to the old days.
posted by rodii at 8:18 PM on April 11, 2001

That last sentence makes no sense. I leave the fix as an exercise for the reader.
posted by rodii at 12:20 PM on April 12, 2001