Borders enters Net book war
The company announces plans to launch an online bookstore in January to compete with established players Amazon.com and Barnes & Noble.
According to Kate Delhagen, an analyst from Forrester Research, revenues from online bookstores are going to increase exponentially over the next couple of years. Revenues for online sales of books and music were approximately $156 million in 1997, Delhagen said, and will increase to $1.08 billion by 2001.
With that kind of revenue at stake, Delhagen said that Borders' entry into the market is "better late than never."
Borders is at a strategic disadvantage because it is so late to the game. Distribution deals such as the ones that Barnes & Noble has with America Online and the New York Times have already been inked, and Borders is going to have to spend more on distribution deals and charge lower prices to compete with the existing sites.
"They weren't there when a lot of the deals were getting cut, and now they have to elbow their way into the game," said Bill Bass of Forrester Research. "They're going to have fork over more money now than they would have had to."
Borders has struck several strategic partnerships with established online sites. Many analysts believe that online bookstores best promote and define themselves by the partnerships they form, and Borders seems to be following those guidelines by joining up with such companies as IBM, Infoseek, Salon, and CNET: The Computer Network (publisher of NEWS.COM).