Borders (BGP) has officially severed its relationship with Amazon.com and is now running its own web site for the first time in 7 years (the site had been powered by Amazon). Borders hopes that taking its site in house will compensate for its sputtering bricks-and-mortar store business. Unfortunately, it’s more likely Borders will now be able to fail at two businesses instead of one.
Borders abandoned their 2001 web retail business because it was unprofitable, but it believes the current online shopping climate is different (no details on why, of course). Borders expects the site to be independently profitable in 2009 (no details as to how). Borders hopes to leverage the 26 million members in their Borders Rewards loyalty program who will now be able to redeem rewards online (key word: hopes). Furthermore, Borders sees urban customers who have difficulty receiving packages taking advantage of the option to deliver orders directly to nearby stores. (The same strategy Barnes & Noble has employed for years?)
Will Borders.com succeed? Almost certainly not. To succeed in a commodity ecommerce business like books, you need scale, and as the chart below shows, Borders has none.
So what should this proud possessor of not one but two crappy businesses do? Sell the company immediately
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