Amazon and Borders - a match made in heaven?

[Alexander Turcic]

Should Amazon acquire Borders? Hedge fund manager William Ackman of Pershing Square Capital Management certainly thinks so, comparing the concept of Amazon-owned retailer stores to Apple's successful move into bricks-and-mortar retailing. Of course it should be noted that Pershing Square owns about 30% of Borders.

"Amazon could buy the company for about $400 million to get those locations that would take more than $1 billion to build," he told reporters on the sidelines of a conference in New York. "You have to think of it like how Apple has retail stores across the country."

But Motley Fool's Rick Aristotle Munarriz strongly disagrees, arguing that Amazon should continue to focus on what it does best: online retailing.

Amazon has done little to indicate an interest in bricks-and-mortar retailing. If anything, its most recent media retailing moves seem to indicate a shift away from physical goods altogether. Its Amazon Kindle is all about delivering books, magazines, and newspapers directly and electronically to consumers. The company has digital-delivery initiatives to replace CDs and DVDs, too. Borders has a working relationship with Sony (NYSE: SNE) to promote Kindle's rival, the Sony Reader, but Amazon is smarter than to make a senseless purchase for the sake of snuffing out its only realistic e-book threat.

What would Amazon do with Borders? The online model is all about scalability, and the offline model is about getting shoppers back into the store. If Amazon's aim is true in the online space, real-world booksellers, including Borders, Barnes & Noble, and Books-A-Million (Nasdaq: BAMM), will matter less with every passing year. If Amazon wants to hedge its bets, it's better off not listening to this particular hedge-fund manager.

So... Amazon and Borders... a match made in heaven or a recipe for disaster? And come to think about it, what would a potential match do to Sony's current relations with Borders? The death knell for the Sony Reader?

[delphidb96]

Oh! Gawd! NO!!!

It's bad enough they've swallowed Mobipocket. If Amazon swallowed Borders, they'd want to swallow Barnes & Noble and all the other chains. No F*ing WAY! This is a double-plus-ungood thing!

Derek

[daffy4u]

I think the Apple stores work because they only sell Apple or Apple related product. That is not what Amazon is about.

[pilotbob]

Originally Posted by daffy4u

I think the Apple stores work because they only sell Apple or Apple related product. That is not what Amazon is about.

Yes, but it would be nice to be able to return something bought online to a local Amazon store. You can do this with Circuit City, by on line and pick up at the store same day, or return there is you want.

Another advantage is that you would be able to look at and hold a Kindle (as many here have said) before buying it.

However, Amazons specialty is online retailing and online services. Also, Amazon stores would mean you'd have to pay tax on all your Amazon purchases.

BOb

[lovebeta]

Originally Posted by pilotbob

Yes, but it would be nice to be able to return something bought online to a local Amazon store. You can do this with Circuit City, by on line and pick up at the store same day, or return there is you want.

Another advantage is that you would be able to look at and hold a Kindle (as many here have said) before buying it.

However, Amazons specialty is online retailing and online services. Also, Amazon stores would mean you'd have to pay tax on all your Amazon purchases.

BOb

Lol. I think the fund manager is just trying to pitch his holdings. It hurts to own 30% of a sinking boat like Borders.

[RickyMaveety]

Man ... that's a hard one. Partly because Amazon sells so much more than books now. I've bought everything from tea kettles to power tools from them.

And, I have a feeling that there are a lot of people out there who have never so much as cracked a book that purchase goods from Amazon.

So, what sort of store would it be, versus what the consumer might expect? Would it be a bookstore where you could return a drill press you purchased online?

In the end, I think it would a complete and total mess.

[jplumey]

I would support it if it means a viable competitor to Barnes and Noble. There are only two BooksAMillion within 50 miles of here and I much prefer the quiet atmosphere of my Borders to the hustle and bustle (not to mention the throng of teenie boppers taking up space in the cafe) of Barnes and Noble. Plus competition is good!

[Steve Jordan]

Amazon is an online business... the reason they have been successful is that they have not been burdened with brick-and-mortar stores, and the overhead that demands. Borders would only be an anchor around their necks, slowing them down.

If Amazon wanted to have a physical presence, it would be better-served with kiosks in select locations (not bookstores) that access Amazon online, or small displays of the Kindle and online book catalog in non-competing retail outlets (malls, big-box stores, air/sea/railports).

[DixieGal]

It'll never happen. Amazon got big and rich from making clever decisions, and this one would be glaringly stupid move for them. The idea of having to stock and operate stores seems to be a cash hole as opposed to having a near perfect mail order system.

The idea of a kiosk with a sample Kindle and a computer setup for on-the-spot ordering would be a winner. Hmmm, I may need to work a deal with eBookwise.....

[Walk Broad]

Yeah, that would be a dumb idea.

Amazon is too diversified an on-line company to suddenly settle for just selling books. I think that is the reason they got into the whole business to begin with, at least according to Steve Bezos lore of why he created Amazon to begin with. He (says he) saw he could deliver books better and faster to people through an on-line company than brick and mortar stores.

Love it or hate it, history (and people deciding with their dollars) has proven him right.

[pilotbob]

Originally Posted by Walk Broad

Amazon is too diversified an on-line company to suddenly settle for just selling books.

If they did buy Borders, there is no reason they would have to limit the stores to displaying books.

Also, someone above talked about stocking stuff. To me this would be more of a display and service center. You would still order the item and have it shipped to you... either while you were at the store or later when you went home. You would also be able to return purchased to these locations and get stuff serviced. Just thinking out loud (out type?).

BOb

[Nate the great]

Originally Posted by pilotbob

Also, someone above talked about stocking stuff. To me this would be more of a display and service center. You would still order the item and have it shipped to you... either while you were at the store or later when you went home. You would also be able to return purchased to these locations and get stuff serviced. Just thinking out loud (out type?).

BOb

I agree.

But I also think that Borders would add little value to Amazon because the only thing Amazon would need is the stores; not the distribution centers, corporate offices, etc. Amazon already has those components (and they work better, too); whatever Amazon doesn't have, it knows how to develop.

I don't think Amazon wants to buy storefronts. If it did, it would have bought parts of CompUSA.

[Walk Broad]

Originally Posted by pilotbob

If they did buy Borders, there is no reason they would have to limit the stores to displaying books.

Also, someone above talked about stocking stuff. To me this would be more of a display and service center. You would still order the item and have it shipped to you... either while you were at the store or later when you went home. You would also be able to return purchased to these locations and get stuff serviced. Just thinking out loud (out type?).

BOb

BOb, you are correct, there would be no need to limit to just books but I do think that is what they would do.

I wonder how many people think of books first when it comes to Amazon? When I mention to folks they might be able to get "X" piece of equipment from Amazon, they are surprised since Amazon is so well known for books. ("I didn't know Amazon sold ...." is the usual response.)

I can't really see them going with a general merchandise store. And wouldn't see the point of offering kiosk with a link to the web site since you can get that from the comfort of your own home.

I think it's some investor wanting to stir up something and get folks talking about something that isn't going to happen

[JSWolf]

There is a problem enough with the amount of books that can be displayed in a given bookshop. If you started taking away shelf space for books to display more non-book items, then you'd find the store going downhill into the toilet very fast as the reason most go to Borders is for books. The other issue is it's a very bad idea for Amazon to buy Borders just to be able to display the Kindle. What Amazon should do it take a look at how they do business and fix the issues they have with they strong-arm tactics bordering on blackmail.

[Walk Broad]

Originally Posted by JSWolf

There is a problem enough with the amount of books that can be displayed in a given bookshop. If you started taking away shelf space for books to display more non-book items, then you'd find the store going downhill into the toilet very fast as the reason most go to Borders is for books. The other issue is it's a very bad idea for Amazon to buy Borders just to be able to display the Kindle. What Amazon should do it take a look at how they do business and fix the issues they have with they strong-arm tactics bordering on blackmail.

Shame Amazon seems to have burnt their bridges with Target

That would have been the easiest way to get the Kindle in front of Joe and Jane Q. Public.