In its second-largest acquisition, Amazon buys the company for $970 million.
Borders On Line-launched in May 1998 by Borders Group Inc. of Ann Arbor, Mich-will attempt to create a dynamic relationship between its Web site and its stores as it tries to make up for lost time against Internet rivals Amazon.com and barnesandnoble.com.
Under the leadership of Cedric J. "Ric" Vanzura, who was named president of Borders' online subsidiary in April, the company will attempt to create a dynamic relationship between its Web site and its stores, leveraging the strengths of both businesses to make each more successful. That strategy has several components:
- Borders will provide store personnel and customers access to Internet technologies. Employees already can access the Internet database and distribution center to place special orders from the stores-a business that is several times larger than online sales and growing, Vanzura says. Later this year, Borders will roll out kiosks at its stores that will allow customers to search the company's Internet database and order books, CDs and movies that may be out of stock or unavailable at the stores. The distribution center has more than 700,000 items ready to ship.
- Borders.com and Borders stores will participate in promotions that help drive traffic from one to the other. People who register at Borders.com, for example, can get a coupon for a free cup of coffee at a Borders store. Borders stores will sell gift certificates and hand out coupons that are redeemable online.
- Borders.com will attempt to appeal more to the company's traditional Borders clientele and win back the many Borders customers who buy books elsewhere online. The Web site will enhance its content and serve as a direct communication vehicle to customers who shop at Borders stores.
Right now, Borders.com is winning just a tiny percentage of overall Internet sales. Consumers will purchase $1.1 billion in books online this year, which is less than 4% of the overall U.S. book market, according to Jupiter Communications, a New York-based research and consulting firm. Borders, which has annual revenues of more than $2.5 billion, is predicting revenues of only $25 million from Borders.com in 1999.
Borders Group's holdings include the 245-superstore Borders division and 1,000-store mall-based Waldenbooks chain. "A lot of cross-promoting and cross-pollination can go on between Borders.com and the in-store experience," Vanzura says. "That's where we can start getting the payback for all of the effort we've put into the Internet."