Borders reclaims territory

Fulfilling a vow it made early last year, Borders announced plans to launch its own e-commerce site.

This brings its relationship with Amazon, which has managed Borders' online orders since 2001, to a definitive end.

Moving forward, Baker & Taylor Inc. shall handle fulfillment and shipping of merchandise ordered from the bookseller's online properties, writes the Atlanta Business Chronicle.

MarketingPilgrim positioned the Borders/Amazon break-up as a sign of how New York State's online sales tax negatively affects e-commerce. The new law (pdf) stipulates that online retailers with New York-based affiliates must charge sales tax for purchases made by New York inhabitants.

The law, conceived by ex-governor Eliot Spitzer, goes into effect on June 1 and is expected to generate an extra $50 million per year for the state of New York. Amazon filed suit against the state, and rival site Overstock abruptly ended its relationships with its 3400 New York affiliates.

A potential legal conflict with New York's new law would not represent the first time Borders has found itself in a state tax fracas because of its relationship with Amazon.

But while its defection from Amazon is timely, it likely had little to do with New York's so-called "Amazon tax." Borders has been planning to leave Amazon for over a year.

In March 2007, Borders made public its intention to build a proprietary e-commerce engine that unifies all of its websites, including Borders.com and Waldenbooks.com, on one platform. Its relationship with Amazon, it added, would end in December.