BAMM/WMT announcement from July
From the WSJ
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July 2, 1999
Wal-Mart Signs Books-A-Million
To Help Improve Its Web Store
By EMILY NELSON
Staff Reporter of THE WALL STREET JOURNAL
Wal-Mart Stores Inc., preparing to ramp up its Internet efforts, signed Books-A-Million Inc. to supply and deliver books for its online store, where it will compete directly with Internet leader Amazon.com Inc.
The agreement underscores how the world's largest retailer will rely on third parties for important online functions when it launches an expanded Web store this fall. Wal-Mart, of Bentonville, Ark., is expected to form additional alliances with other vendors soon. It said last week that Federated Department Stores Inc.'s Fingerhut unit will handle orders and ship some merchandise purchased at Wal-Mart's Web site (www.Wal-Mart.com).
The announcement sent Books-A-Million shares soaring in Nasdaq Stock Market trading Thursday; it closed at $13.875, up $6.3438, or 84%. The company's shares frequently have spiked on news that it is increasing its Internet presence. In New York Stock Market composite trading, Wal-Mart fell 50 cents to close at $47.75.
Financial terms of the agreement with Books-A-Million, the country's third largest bookstore chain after Barnes & Noble Inc. and Borders Group Inc., weren't disclosed. Several analysts said Wal-Mart's business won't have an impact on the bookseller's earnings in the near term but promises future revenue.
Wal-Mart isn't saying how it will price books on its new Web site, but it currently offers 50% off bestsellers, 30% off hardbacks, and 25% off paperbacks. It also charges a flat $3 shipping fee, no matter how many books are ordered.
By lining up logistics now, Wal-Mart is positioning its Internet operation to be ready for the holiday season, several analysts said. Wal-Mart's search for partners highlights that home delivery is the hard part of selling online. Wal-Mart, which has usually aimed for self-reliance to keep down costs, can deliver pallets of goods to its about 3,600 sprawling stores but has little experience getting small packages to individual doorsteps.
"It's more efficient for our customers and more economical for us to contract with companies like Books-A-Million, which have established online distribution networks already in place," a Wal-Mart spokeswoman said.
Books-A-Million, whose name won't appear on Wal-Mart's Web site, will let Wal-Mart greatly expand its selection, which emphasizes bestsellers and advice books. Books-A-Million also will supply book-related merchandise. A spokesman for Books-A-Million, Birmingham, Ala., called Wal-Mart's current offering "a very modest book effort" and said the alliance "is about taking them to a competitive level."
Several analysts see a Wal-Mart challenge to Amazon, which has often been nicknamed the Wal-Mart of the Web. The two had a nasty spat earlier this year, when Amazon hired some Wal-Mart executives, and Wal-Mart accused Amazon of stealing trade secrets. A lawsuit between the two has since been settled. With Thursday's alliance, the rivalry is "intensifying with a fervor," says Richard Church, an analyst with Salomon Smith Barney.
Books-A-Million, through its wholesale unit, already supplies books to Wal-Mart's Sam's Club warehouse stores. Anderson News Corp., a closely held company run by the brother of Books-A-Million's president, supplies Wal-Mart stores with books, music, and magazines.
The agreement with Wal-Mart affects only Books-A-Million's wholesale operations, a Books-A-Million spokesman said. The company will continue to sell books through its own Web site, which will compete with Wal-Mart. |
