Amazon.com, Toysrus.com Unite

Amazon.com and Toysrus.com Thursday
teamed to create a new online store offering a variety of toys and video games.

Once the new toy and video store is up and running at Amazon.com in the fall, the Toysrus.com site will serve as a gateway
that redirects users to the new outlet’s location.

Additionally, Amazon.com and Toysrus.com will extend the success of the
recently launched Babiesrus.com with
the debut of a co-branded baby products store during the first half of 2001.

The alliance unites two leading retailers — one
in brick-and-mortar retailing, one in e-commerce — to create a better
online
shopping experience, noted Jeff Bezos, Amazon.com founder and chief
executive officer.

“This is a huge win for our customers,” said Bezos. “Our existing toys
and games business has grown rapidly because
customers appreciate our passionate focus on selection and customer
experience.

By joining with Toys “R” Us, we’re bringing customers an even
greater and more diverse product selection and teaming up with a
leading resource for toys, games and baby products,” he said.

Each company will assume responsibility for specific aspects of the toy
and video
games and baby products stores. Toysrus.com will identify, buy and
manage inventory; Amazon.com will handle site development, order
fulfillment and customer service, housing both Toysrus.com’s and its own
inventory in Amazon.com’s U.S. distribution centers.

Amazon.com will be compensated
through a combination of periodic fixed payments, per unit payments and
single-digit percentage of revenue. The specific amounts of the payments were not disclosed.

It’s a nice, complementary deal, according to Forrester senior analyst
Seema Williams.

“Amazon does not do all that well selling toys, Toys R Us
doesn’t do that well selling online. It’s definitely solving the biggest
problems both of them have.”

Williams added that a 10-year deal is “very uncommon, particularly in a Web
environment, where most agreements do not exceed two years.

The agreement allows for global expansion of the arrangement.

Amazon.com will also receive warrants entitling it to acquire 5 percent
of Toysrus.com.

All parties will market the co-branded store to their respective
customers.

According to Media Metrix, a
source of Internet and digital media measurement, toysrus.com was the
number-one-ranked online toy site for April and May 2000.

Amazon already has partnerships with online retailers such as Drugstore.com Inc. , HomeGrocer.com Inc. and Pets.com Inc. .

Amazon said last week that most of the revenue booked through its network
of such Internet partners came in the form of stock in those companies.

News Around the Web