The best-of-breed in the physical world

Amazon on Borders

Borders has been suffering from intense competition from bigger rival Barnes & Noble, and is seeking to rid itself of the running costs of its online version.

Under the link-up, Amazon will take control of the Borders website, re-launching it as a co-branded site offering both Amazon and Borders products.

The existing Amazon site will exist independently and in parallel to the Borders site.

Secret finances

Amazon chief Jeff Bezos declined to comment on the financial terms of the alliance, but said that neither company had taken a stake in the other.

Borders.com will be re-vamped and re-launched

Earlier in the day, market rumours suggested that Amazon was about to buy out Borders online.

The new site - due to be launched in August - will run off the Amazon software and sales model.

This will lead to all 70 jobs at the Borders.com site being cut, although the firm is seeking to find replacement jobs for the staff.

The companies did not address the prospect of customer overlap between the two online stores, which would seem to be in competition with each other.

Extremely happy

"We would be extremely happy to have a customer make a purchase on either site - we don't care which one," said Mr Bezos.

"I'm not saying that the economics are identical in both cases, but we would be happy anyway."

Our customers' needs will be met by the people who do it better than anyone else

Borders on Amazon

The additional sales outlet for Amazon may help it reach its target to break even in the fourth quarter of the year.

It marks a growing trend amongst dot.coms to link-up to popular brand names with a strong on-the-ground presence.

"We are incredibly pleased to power and manage the new Borders.com," said Amazon chief Jeff Bezos, calling the store the "best-of-breed in the physical world".

Borders chief Greg Josefowicz said the deal would help it reach its aim of seeing revenues increase by 20%.

Borders is the second biggest book shop in the US and also owns 31 Books etc stores in the UK.

In March, the firm reported that profits fell 48% in the last three months of last year and said that it was seeking a partner for its online operations.