Borders Jumping Into MP3 Download Service

Borders readies to take over Web site

Borders Group Inc views the launch of its new Web site as a chance to control its own destiny and help spur a turnaround at the book retailer, executives said in an interview on Tuesday.

Borders has been running its site in an alliance with Amazon.com. Amazon has operated the site, while Borders got a portion of the sales from Borders.com.

But that will change in its fiscal first quarter when Borders' agreement with Amazon is no longer in effect, and it launches its new Web site on its own.

"We're literally starting with a blank page," said Rob Gruen, executive vice president of merchandising and marketing at Borders, of its efforts to build its own Web site.

While the retailer may be late to the game, executives said that developing a site from scratch has allowed it to closely integrate its online efforts with its store operations and try to mimic an in-store experience online.

"We really want it to feel comfortable for people who love to come into book stores," said Kevin Ertell, vice president of e-business for Borders.

For instance, on the beta, or test version of the site that Borders launched late last year, it has developed a "magic shelf," which is a virtual bookcase that displays recommended books, movies and music.

While shoppers cannot yet buy items on the beta site, Ertell said one function that was very popular with users this past holiday season was the ability to check to see if an item shown online was in stock at a local store.

If it was, customers could then reserve the item online and pick it up at their nearest store.

Ertell said Borders hopes customers will then spend more money in stores when they pick their reserved books.

PART OF LARGER REVAMP

Borders, the No. 2 U.S. bookseller behind Barnes & Noble Inc, is taking on the responsibility of its Web site as part of a larger turnaround plan, which it began last year.

It is closing underperforming Waldenbooks stores, weighing options for its international units, and refocusing on its core U.S. store operations.

Borders reported in November a $161.1 million net loss in its third quarter compared with a $39.1 million loss a year earlier.

The retailer is trying to fend off competition not only from Barnes & Noble, but also from online retailers, where consumers have been turning for cheaper books, CDs and DVDs.

Gruen said Borders does not intend to compete on price, although its prices will be "competitive."

"We probably won't be the lowest price consistently out there, but we really believe that the customer comes to us for a broader experience than just our price, and it's just up to us to make sure we deliver on that promise," Gruen said.

To take advantage of the 23.5 million customers enrolled in its "Borders Rewards" loyalty program, it will let customers earn rewards for shopping online on the new site, something they cannot do now.

Borders may also offer MP3 music downloads on its Web site as CD sales wane.

"We know that the customer is downloading music," Gruen said. "We're looking at how do we incorporate that into the whole process."

Right now, the retailer is testing "mix and burn," where customers can come into its stores to develop their own CDs. In the first quarter, Borders will also launch a "concept" store to test different ways to be more interactive with its shoppers.

Anne Roman, a company spokeswomen, said Borders has not disclosed how many users have visited its beta Web site, but she said the retailer sees the site, when it launches, "as a revenue producer" that will eventually "be an important part of future income generation."

Source [Yahoo]