Borders turns to Amazon for online help

Internet retailer Amazon.com Inc. and Borders Group Inc. today said they have cut a deal to relaunch Borders' Web site, which will be powered by Amazon's e-commerce platform. The new site will be launched in August.

Borders.com is a separate business unit of Borders Group Inc. Financial terms of the deal weren't disclosed, said Ann Binkley, a spokeswoman for Ann Arbor, Mich.-based Borders.

The companies said in a statement that the deal would have no impact on their previously disclosed financial guidance.

"This is a business arrangement, not an equity arrangement," Binkley said. Officials at Seattle-based Amazon discussed the agreement during a webcast this morning.

According to Amy Ryan, an analyst at Prudential Securities Inc. in New York, Borders will pay Amazon an upfront fee, which hasn't been disclosed, and will receive a percentage of the revenue from merchandise sold on the site.

"For Borders, there will be no financial impact this year," Ryan said. "But they are hoping it will help sales going forward."

Under the terms of the deal, Amazon will be the seller of record, providing inventory, fulfillment, site content and customer service for the co-branded site. The new site will continue to offer information about Borders store locations as well as a calendar of in-store events.

"This is a great strategic alliance. It's a win-win situation for both companies," Binkley said. "We can now provide our customers with the best e-commerce platform, and we will continue to provide the best store ambiance."

"Amazon.com has worked hard to provide its customers with the best possible shopping experience, and we are incredibly pleased to power and manage the new Borders.com," Amazon CEO Jeff Bezos said in a statement.

The deal is similar to one Amazon made with Woodcliff Lake, N.J.-based Toysrus.com Inc. in September (see story).

Under the agreement with Borders, customers of the co-branded site will benefit from access to Amazon.com's editorial reviews, personalization features and recommendations, 1-Click ordering and other key site features. In the future, customers may be able to reserve a title online for later purchase and pick up at their neighborhood Borders store.

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