Amazon Keeps Borders

Amazon.com (Nasdaq: AMZN  ) and Borders Group (NYSE: BGP  ) have reupped a multi-year contract that puts Amazon in charge of providing Borders with e-commerce solutions for its online operations, including technology, site content, product selection, and customer service for the co-branded Borders site.

A partnership between the two former competitors was originally announced April 2001, years after Borders was slow to launch online services -- at one point arguing it did not need to -- and had lost the early race to Amazon and distant runner-up, Barnes & Noble (NYSE: BKS  ) .

Today, if you visit Borders.com, it looks a lot like Amazon (in fact, the URL reverts to Amazon), except it offers only a few product categories to Amazon's dozens. The Amazon partnership also extends to Waldenbooks.com, another Borders company.

Since 2001, this arrangement is something close to admittance of total online defeat for the venerable Borders, which decided it's better to get a tiny slice of the online pie by teaming with the leader rather than nothing at all.

As with recent news that limping BarnesandNoble.com (Nasdaq: BNBN  ) would be taken private, the Borders deal just reflects Amazon's dominance. At least through the Amazon partnership Borders has grown online sales 50% in the past year, compared to sales for the year ended Jan. 2001, but, of course, it shares the revenue.

What once was one of the most controversial stocks on the market now makes for a pretty boring story. Amazon has won. How will a competitor come along and displace it now? That may prove next to impossible. The late '90s made kings -- and it looks like those early Amazon investors weren't crazy after all. Just Foolish. (Wink, wink.)

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