Borders Group (BGP) has been reporting losses for years. Its third quarter results showed a sharper loss and is fueling concerns about the bookstore's future, as reported by USAToday.

The company is on the defensive. It has sold off 16 stores and other assets to meet debt payments. Now creditors have cut their credit lines, forcing the bookseller to cut back further. The reason given is that Borders' inventory value has fallen.

Black Friday's online sales were up 35% year over year, and early reports for Cyber Monday put the gain at 19.6%. Amazon (AMZN), as an online pure-play, has felt a lift from both these factors, but its execution in the e-reader category can't be ignored. While Sony (SNE) and Barnes & Noble (BKS) have already sold out of their respective devices, effectively taking them out of the game until early next year, Amazon's Kindle continues to fly off the shelves.

So, what's the prize for effective forecasting and a supply chain that can delivery on it? A new record!

Amazon had its best Kindle month yet in 2009, though it wouldn't reveal how many of the devices it has moved or the revenue it's pulled in from these sales. All it would say is that some buyers were buying more than one Kindle at a time, and businesses and organizations were picking them up in volume for employees or clients.

Small book retailers were buying in bulk from major online booksellers because they could really save some money. One was buying up to 70 copies of a particular title -- it was $5 less a pop from the big guys than it would have been from the publisher. Finally, however, the big retailers have become wise to the trend and taken action, according to the Wall Street Journal (subscription required).

Wal-Mart (NYSE: WMT), Amazon (NASDAQ: AMZN), and Target (NYSE: TGT) have decided to cap the number of books customers can buy online, a measure intended to prevent smaller competitors from treating them as partners. Walmart is limiting customers to two copies of a particular book, with Amazon placing the border at three and Target at five.

For retailers, the crucial season is on its way. Blow the Christmas rush, and next year starts off on a miserable foot. Success, of course, also delivers a healthy dose of momentum -- and a little bit of wiggle room, important in what will continue to be a tough economy through at least the first half of next year. For booksellers, now contending with a new variable in the form of digital readers, e-readers will play a major role in defining the winners and losers. So far, it looks like Amazon (NASDAQ: AMZN) is off to a great start, and it will take some genuine innovation for the competition to chip away at its market share.

Barnes & Noble (NYSE: BKS), once the leading names in literary retail, is expected to release its own e-reader this week. It will look a bit like Amazon's Kindle, according to Reuters, but with a touch screen intended to make the reader's experience easier. The price hasn't been disclosed yet, but rumor has it that it'll be higher than the Kindle's $259. BKS is staying mum on its plans in this space. There are others in the space, as well, including IREX Technologies, which is a spinoff of Royal Philips Electronics (NYSE: PHG), Asutek (tk: tk) and a project called FirstPaper that has Hearst behind it.

Twilight and Harry Potter sales notwithstanding, there's a growing reality in our fair nation -- people just don't read like they used to. And with the slowdown in reading comes a definite decline in book sales.

The Book Industry Study Group reported that publishers sold fewer books in 2008, down 1.5% from 2007 to 3.08 billion. Of course, all was not lost -- total revenue edged 1% higher thanks to increased prices.

Bookseller Borders Group Inc. (NYSE: BGP) continues to bleed money even with the release of the latest Harry Potter volume. If anything, the losses, already substantial, are getting bigger. Despite the fact that consolidated sales as reported in 2Q 2007 results were up 10% to $945 million, the company still posted a net loss of $25 million, or $0.43 per share, a 25% bigger loss than Wall Street had anticipated. Things have gotten so bad that CEO George Jones remarked he was encouraged by flat sales at Waldenbooks. For the last 7 quarters, Waldenbooks' same-store sales have fallen.

Borders stores posted a total sales increase of 9.7%. Excluding Harry Potter, organic sales growth -- a misleading term in this instance -- was less than half of 1%. This is an expensive business model that is not working. In an effort to lure customers into stores, Harry Potter was sold at a large discount to match prices at discount chains. Administrative expenses increased a bit, but debt increased by almost $200 million, to $663 million. No wonder Borders is now negotiating to amend its credit agreement with its banks and considering the possibility of selling its Borders International segment, which still somehow posted a $10 million operating loss even while total sales increased 31% to $170 million.

Waldenbooks is in an even worse situation. Total sales declined 7.7% and operating losses were the same as one year ago, meaning the chain has made made no improvements to its bottom line situation. BGP shares began the year trading at $22.46, reached a high of $23.41 in late May and have been tanking ever since, closing at $14.66 on Thursday, down $0.28.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

So let's imagine that you like the convenience of shopping attired only in your underwear. In this (purely hypothetical) case, which site, Amazon.com or Barnes & Noble.com, would be your first choice?

With over 40 product categories ranging from books and DVDs to pet food to health and beauty products, there is something for just about everyone on Amazon.com (NASDAQ: AMZN). The site contains your browsing history, which can be either good or bad depending on who's looking over your shoulder when you next log in. Amazon offers 1-click check out once you set up an account, and also offers incentives to consumers who use Amazon's own credit card. Orders over $25 ship free to continental U.S. addresses. Amazon provides plenty of graphics of book and DVD covers, so even if you can't remember the name of the item, you might be able to recognize it from its picture. Amazon also offers a simple order tracking option called Where's My Stuff.

Barnes & Noble (NYSE: BKS) offers a narrower range of products, mainly books, DVDs, and vaguely educational toys. Books are new and used mass market, as well as new and used textbooks. The site is much less graphics intensive than Amazon, but holds more information on titles. Barnes & Noble also offers incentives for customers to use its own credit card and to join its membership program in exchange for discounts. Shipping is free on most orders over $25. Payment is via Paypal. Unlike Amazon, Barnes & Noble includes an 800-help number on the web page. Barnes & Noble targets more serious readers with weekly online book club meetings in which various authors participate in the discussion and Q&A about their books.

So, clad in whatever manner makes you comfortable, what is your preference for online shopping?

Be sure to vote in our poll for B&N or Amazon as your preferred brand, and lets us know why you love it in the comments. Results of all Battle of the Brands match-ups coming soon.