Borders turns a new page on e-commerce

Reporting disappointing earnings, Borders Group has announced a plan to revitalise the company that includes launching an e-commerce website in early 2008, ending an alliance with Amazon.com that began in 2001.

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Reporting disappointing earnings, Borders Group has announced a plan to revitalise the company that includes launching an e-commerce website in early 2008, ending an alliance with Amazon.com that began in 2001.

The company would also close nearly half of its Waldenbooks stores in the US and consider options for its international units.

Borders made the announcement of a new strategic plan on the same day it reported a fourth-quarter net loss of £35m, or 60p per share. That compares to net income of £59m, or 90p per share, in the prior-year period. Also, the bookseller said it had a net loss of £75m in 2006, compared to net income of £50 in 2005 on a GAAP basis.

Meanwhile, the new proprietary website, which has been under development since last autumn, will allow Borders to extend in-store programmes like Borders Members Rewards programme to the web, said Rick Vanzura, executive vice president of emerging business and technology and chief strategy officer. He said Borders is consolidating its web properties into a single infrastructure to facilitate a cross-channel experience that will integrate consumers' in-store and online experiences.

"To go back in history prior to when we engaged with Amazon I had run Borders.com," he said. And I was fully supportive of the decision at the time because we appreciated that to build a really solid website and [online] presence was a very expensive and complicated operation."

Now, however, Vanzura said, "technology costs have gone significantly down [on] the internet while capabilities have gone up, and the availability of solid people to run these operations has gotten stronger."

"We've been happy with the Amazon relationship; it definitely served its purpose from the time we struck that deal, but now it's a new era, a new opportunity and we plan on taking advantage of it," he said.

Amazon could not be reached for comment.

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