Borders preps for life after Amazon with new Web site

Despite being one of the largest bookstore chains in the United States, Borders for several years has relied on Amazon to operate its entire online business.

But that will soon change, as Borders is building its own e-commerce site from scratch and expects to go live early next year. It is an intensive process that began late last year and involves about 100 Borders employees and a variety of vendors.

"It's a large undertaking," says Tamara Mendelsohn, an analyst at Forrester Research. "There are a number of challenges. From a technology standpoint, there's the commerce platform itself, the technology needs to be built out, customized to support Borders' unique requirements. They are a large multi-channel retailer, it needs to integrate with other systems."

Currently, the "Borders" Web site is a version of Amazon.com with a Borders logo at the top. Amazon itself actually supplies and ships the merchandise, and Borders receives a commission on sales, according to Kevin Ertell, vice president of e-business at Borders.

Such an arrangement is rare for a retailer of Borders' size, Mendelsohn says. "The majority of large, multi-channel retailers are attacking this in-house," she says.

Department store chain Target has an arrangement with Amazon to handle order fulfillment, checkout and other e-commerce needs, but the products the company sells on Target.com are its own.

Borders executives decided to drop the partnership with Amazon because operating their own online business is important to the company's strategic plan and cross-channel capabilities, Ertell says.

"It's an extremely large project, as we're building a new business, really, for Borders from the ground up," he says. Borders, which has more than 1,200 stores selling books, movies and music worldwide, incuding Australia, has not operated its own Web site since 2001.

Once the Web site debuts, the 17 million customers who have Borders Rewards cards will be able to use them online, Ertell says.

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Borders recently selected vendor Sterling Commerce to handle order management, which orchestrates the fulfillment of an order and gives visibility into the whole process, from the sale through delivery.

For Borders, this will include giving customers the ability to pick up items ordered online in a store. The actual behind-the-scenes process to make sure inventory ends up in the right place is fairly complicated, says Ken Ramoutar, director of applications product marketing at Sterling.

Currently, Borders customers can reserve books for in-store pickup on this site, but can't pay for them online.

Borders is building the basic e-commerce platform with IBM WebSphere, while Endeca will take care of search and CyberSource's technology will handle payment processing. Ertell was reluctant to reveal details about what new capabilities customers can expect, saying he wants some of it to come as a surprise. For him, one of the most important things is "it will be a Borders-branded experience from start to finish."

Mendelsohn says she expects the new site to give customers numerous options utilizing the various channels through which Borders sells merchandise. For example, if a book is unavailable in one store a customer could use the Web to order it from another Borders store and have it shipped to the customer's house or the nearest Borders. Having a seamless operation among channels and visibility into the process is incredibly important for a large retailer, she notes.

"They do a little bit of it right now, but bringing their e-commerce business in-house brings with it a whole new set of requirements that they'll need to tackle," she says. "In some ways, they're starting with a clean slate, so it gives them the opportunity to make sure they really organize in the most optimal way."