The Borders Story: The Final Chapter?
Chapter 2: Online vs. Overseas? Decisions, Decisions...
Around the same time Amazon (AMZN) began to ignite a frenzy, emerging as an online seller of cheap books. But instead of going head-to-head with the rookie, Borders chose to focus its attention overseas, opening stores in the late 90s in the U.K., Singapore, Ireland, Australia and New Zealand, among others.
Borders' international push was a distraction to its U.S. business, and it wasn't until May 1998 (three years after Amazon's launch, and one year after Barnes & Noble went online) that the company rolled out its own e-commerce site.
Ultimately, Borders' attempts at e-commerce were unsuccessful, generating just $5 million in revenue in its first year in operation. By comparison, Amazon raked in $610 million, while Barnes & Noble (BKS) posted $70 million in sales during the same period.
By 2001, Borders shuttered its Web site, relinquishing its online book selling to Amazon. Borders paid Amazon an undisclosed sum to develop a co-branded site. While Borders remained a partner and received a percentage of sales, Amazon was responsible for providing inventory, fulfillment, site content and customer service.The partnership lasted until 2007, when Borders finally decided to create its own company-run e-commerce division.
Chapter 3: Borders Gets Aggressive -- Or Foolish It was also in the late 90s speculation first arose of a potential merger between Borders and Barnes & Noble. While both companies fervently denied the rumors, the chatter resurfaced several times in the early part of the new millennium. In 2000, Borders hired Merrill Lynch to explore strategic options, including a recapitalization, merger or leveraged buyout for the purpose of extending shareholder value. But by July of 2000, the company had removed its "For Sale" sign. While management did not provide a reason for taking Borders off the market, analysts at the time hypothesized that it had been unable to find a buyer.
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