Borders books a new e-commerce plan and tells Amazon good-bye
As part of a plan to improve overall financial performance and zero in on what the company calls the “knowledge and entertainment market,” Borders Group Inc. is rolling out an ambitious new e-commerce plan.
The plans calls for the implementation of a new e-commerce site in early 2008, installing more interactive and web-enabled computer stations Borders calls “digital media centers” in its network of more than 1,200 stores and more use of social networking.
After December, Borders also will no longer use Amazon.com as its main e-commerce channel. Amazon has operated Borders.com since August 2001. Instead the company will use a yet-to-be named third-party provider for fulfillment and build a new internal e-commerce engine using IBM WebSphere that will consolidate all of its web sites, including Borders.com and Waldenbooks.com, onto a single platform. Currently Amazon is responsible for the fulfillment of all products sold through the Borders’ web sites and retains all payments from customers. In return, Borders receives referral fees for products purchased on Borders.com and its affiliated sites.
“This is a very significant move for us and will bring us closer to closing the customer experience,” says Borders executive vice president emerging business and technology and chief strategy officer Cedric J. Vanzura. Borders is replacing Amazon as its chief e-commerce partner in part because the current agreement didn’t permit more cross-channel integration, Borders says. “We have respect for who they are, but we have to do a broader brand experience,” Vanzura says.
Borders has been quickly building up its revised web strategy over the past several months through new initiatives and the hiring of new e-commerce and marketing executives. Borders in January launched a co-branded web site with social networking site Gather.com, where Borders’s books, movies and music customers can earn loyalty points good toward purchases or cash by sharing personal content online and participating in online forums.
Borders this month introduced an original online series called "Borders Live at 01," which will feature monthly broadcasts of authors’ readings, music performances and other events at the company’s first store, in downtown Ann Arbor, MI. The retailer’s recent new hires include Jessica J. Harley, vice president, acquisition and retention marketing, who now oversees digital marketing; and executive vice president of merchandising and marketing Robert P. Gruen, formerly executive vice president of Home Shopping Network and HSN.com. Kevin Ertell, former vice president of e-commerce at Tower Records, joined Borders last year and is now vice president of e-business.
“The new e-commerce strategy is brought out of the conviction that technology and Web 2.0 will play a big role in our cross-channel approach to the knowledge and entertainment market,” says Vanzura.
The new e-commerce program will leverage the company’s base of 17 million loyalty club members, Vanzura says. The new strategy also calls for the rollout of new digital media centers that will enable customers to learn about, interact with and purchase new digital products and services, including audio books, e-books, MP3 players and personal publishing. Eventually most Borders stores will have digital media centers, but the chain will conduct a pilot project with a few yet-to-be named locations during the 2007 holiday season, Vanzura says.
To oversee its new initiatives Borders is looking for a new chief information officer. The company also expects the retooled Borders.com to break even after 2008 and become a significant sales channel, Vanzura says.
"We need to reinvent our business to exploit the rapid changes taking place in how consumers access information and entertainment," says Borders CEO George Jones. "Our ultimate goal is to make Borders a vital community gathering place where people come together to see, touch, interact, and learn—online and in-store."
A resurgent web channel would also help Borders improve its financial performance. In Q4 Borders posted a net loss of $73.6 million on consolidated sales of $1.5 billion and for 2006 a net loss of $151.3 million on consolidated sales of $4.06 billion.
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