Borders Closes the Books on Amazon 173
theodp writes "Borders said Thursday that it was severing ties with Amazon and will compete directly against the e-tailer with its own website. The loss of Borders could cost Amazon $80-$160 million in annual revenue, according to one estimate. 'Amazon could gain market share in book selling over time because it will have an advantage over Borders, which now will charge a sales tax for all books sold. Companies have to charge a sales tax for Internet sales if they have a physical presence in states that collect sales taxes, [Stifel, Nicolaus & Co analyst Scott] Devitt said. Amazon collects sales taxes only on books sold in Washington, North Dakota, Kentucky and Kansas. Borders would collect sales taxes in all 50 states, the company said."
Um (Score:1, Interesting)
Re:A bad move for Borders (Score:3, Interesting)
Personally, I'm glad. I never liked the fact that when I went to Borders.com to buy a book, I ended up on Amazon.com to do it. I'm guessing Borders also didn't like the fact that people then had a chance to buy it from someone else, possibly a lot cheaper because it was 'used'. This seems like a good business move for them.
Re:What About Amazon? (Score:2, Interesting)
Also, it's 2007 and there's many more people out there with the skills to put a good site together.
Re:Um (Score:3, Interesting)
Yep, Internet shopping is not as prevelant today as you might think. The average American user is still nervous making on-line purchases and the more they see on the news about ID theft of any kind, the longer they will remain nervous.
Besides, the price difference isn't that much. Unless your buying $100's of dollars worth of books, the tax is chump change. What I hate is the publishers charging exobitant prices for book, especially reprints. There are some classics that re-published on better stock and are priced out at $15-$20 for a paper back!
Re:What About Amazon? (Score:2, Interesting)
Also, it's 2007 and there's many more people out there with the skills to put a good site together.
Re:There's no margin to discount (Score:1, Interesting)
When I was in a Borders once, I BROWSED through their shelves for at least an hour, to buy more than five books, just because I found them interesting. I don't do that with web stores. They are limited by the web browser, and they don't allow the kind of browsing a real book offers. Oh, and even on broadband, sometimes they're just not very snappy (though Amazon manages rather well).
When I was done reading them, I sold most of them on Amazon, heh.
Re:A bad move for Borders (Score:3, Interesting)
The reason Borders partnered with Amazon in the first place was because they couldn't come up with a good enough web site on their own. What has changed since that time?
I don't know about the business side of it, but as a customer I rather liked borders.com, and I deleted it from my bookmarks when it merged with Amazon. In fact, it was a disincentive to shop at Borders stores. Buy.com has since taken up some of the slack, although my opinion of them has declined recently.
One thing that has changed is the rewards card program. I don't know whether Borders had one back then, but they seem to be promoting it pretty aggressively now. The FAQ list [bordersrewards.com] says that rewards can't be earned or redeemed at borders.com at this time. I would expect that to change once they ditch Amazon.
Commodities = Low margins (Score:3, Interesting)
Yes, there are worse businesses to be in than book sales. I assume that is your point? Airlines, consumer electronics, and several others come to mind. UAL (United Airlines parent company) has gross margins of 14% [yahoo.com]. Consumer electronics (and I include PCs in that category) is a low-margin cut-throat business. What do books, airplane seats, and PCs have in common? They are all effectively commodities [wikipedia.org]. Anytime you are selling a commodity of any sort, margins are going to be thin unless demand greatly outstrips supply (see oil) for a period of time or there is some other barrier to market entry such as patent protection (see drugs).
Good Move for Borders (Score:4, Interesting)
With Border own site, it will be easier for customers to order books and pick them up at a Borders store (and save shipping). The web store and B&M store can now be merged into a single shopping experience. More important, Borders will now own the information gleaned from web orders and not Amazon. Loyal customers may get special marketing promotions and be told when new books are available.
It was bound to happen. I see the day when other major retailers will pull out of Amazon's marketing agreement and build their own sites.
Re:Used books by Borders (Score:2, Interesting)
States With Sales Tax 50 (Score:2, Interesting)
Huh? All 50 States? Even those without a sales tax?