Amazon, Borders Ink In-Store Pickup Deal

Amazon.com (Nasdaq: AMZN) has announced the expansion of its year-old partnership with Borders Group (NYSE: BGP), in which Amazon operates the Borders.com Web site. Now, customers who buy certain books, music and movies through the e-tailer will be able to pick up their purchases in Borders stores nationwide.

The news came just hours before Amazon's scheduled first-quarter earnings report. While a second straight profitable quarter remains an outside possibility, analysts mainly are looking for signs of growth in the e-tail giant's key books, music and video categories.

Perennial Issue

The new deal also extends Amazon’s brick-and-mortar reach and may help address the perennial issue of shipping and handling costs by offering consumers an alternative to paying those costs.

Already, some electronics items are available for in-store pickup through an agreement with Circuit City (NYSE: CC).

"Customers overwhelmingly indicate a desire for the convenience of in-store pickup," Borders Group chairman and CEO Greg Josefowicz said.

Early Christmas Present

The in-store pickup offer, which will apply to all 365 Borders stores in the United States, is slated to be in place before the 2002 holiday season. Only products in stock at Borders stores will be available for pickup, and customers at the Web site will be given a list of the five nearest stores as they visit product pages online.

Around the same time, Amazon also will take over the online operations of Borders subsidiary Waldenbooks, establishing a co-branded site similar to the one Amazon now runs for Borders.

The deal also calls for a "multiyear extension" of the two companies' original partnership.

Building on Success

"We're pleased to build on the success of our original alliance with Borders," said Amazon CEO Jeff Bezos.

Although specific financial terms were not disclosed, the two companies said that sales picked up in Borders stores will be credited to Borders, with Amazon receiving an unspecified commission. Borders also will accept returns on books picked up in its stores.

The in-store pickup feature is one that Amazon competitor BarnesandNoble.com put in place in late 2000. In fact, BN.com has been lauded for its brick-and-click integration, though those efforts have done little to help the e-tailer's stock price, which has long languished around the US$1.50 level.

Bottom Line

Waldenbooks.com will operate like the Borders.com site, with Amazon recording all sales and paying a commission to Waldenbooks, which operates 820 retail stores in all 50 states.

The two booksellers first linked up last April, with Borders becoming the second brick-and-mortar chain, after Toys "R" Us, to hand its online ordering and fulfillment operations over to Amazon.

Since then, Amazon has inked deals with department store chain Target and electronics retailer Circuit City, and has made no secret of its desire to ink similar deals.

Amazon is slated to report earnings after market close Tuesday. Most analysts say that while a second straight profitable quarter remains an outside possibility, the main question is whether Amazon can spark growth again in its core books, music and video categories.