April 23, 2002, 12:00 AM

Amazon adopts a new approach to multi-channel retailing

Amazon.com Inc. and Borders Group Inc. announced today that they will offer an in-store pickup option to shoppers at Borders.com in time for holiday shopping this year.

 

The original pure-play is going multi-channel. Amazon.com Inc. and Borders Group Inc. announced today that they will offer an in-store pickup option to shoppers at Borders.com in time for holiday shopping this year. Amazon has operated Borders.com since the middle of last year.

Under the plan, the details of which are still being worked out, Borders, which operates 365 stores, will make available for in-store pick-up the 40-50% of inventory that it considers the best sellers. Customers who want to buy one of these items will be alerted that store pick-up is an option. If they choose that option, the site will display five nearby stores that have the inventory. The customer will choose the store, which then will receive the order via a wireless device or an e-mail. The store will double check availability then send an e-mail to inform the customer of the item’s availability. Borders expects stores will reply within minutes of receiving the e-mail and no more than an hour.

Local store inventory will be updated at Amazon nightly and Amazon will decrement each store pick-up sale against the inventory. Customers will pay for the item online. If the customer uses coupons or is entitled to other store discounts, the original transaction will be reversed at the store and the store will initiate a new transaction at the lower price. For starters, existing store personnel will pick the items from the shelves. Borders says it has not determined whether stores will have dedicated fulfillment staff.

The move is good for Amazon because it extends Amazon’s reach beyond the web, say observers. But they caution that the execution may be difficult to achieve. “They are going to find it’s a whole lot more work than they expected,” says Duif Calvin, vice president of the retail division with consultants Scient Inc. “The retailers that have been the most successful with store pick-up have been the box operations like Circuit City, where the products are not on the shelf to begin with and the customer has to come to the counter to get the purchase.”

Other retailers who have tried similar plans have found that store pickers were sometimes competing with customers for products. And they often found that what they thought was on the shelf was not--that the few items that they thought were in inventory have been sold or lost. That is why Borders is limiting its initial offering to best sellers, Borders says. “We will offer the 40-50% of our inventory that is in most demand and that we have a higher degree of inventory on,” a spokeswoman says. She says Borders has no expectations as to how many orders stores will receive.

Stores will record the sale of items that customers pick up; Amazon will receive a commission on sales.

Borders and Amazon also announced today that Amazon will operate Waldenbooks.com for Borders. Waldenbooks is an 820-store, mall-based subsidiary of Borders. As with Borders.com, Amazon will receive the revenue from sales and pay a commission to Borders.

 

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