Expected to launch in Fall 2000, the new online store will combine the strengths of the two e-tailers' existing stores, bringing customers the best toy-buying experience available online. Amazon.com and Toysrus.com have also agreed to launch a co-branded baby products store, in the first half of 2001.

The two companies have entered into a strategic alliance under which each company will assume responsibility for specific aspects of the toy and video games and baby products stores. Toysrus.com, in collaboration with its majority shareholder, Toys R Us, Inc., 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. The agreement also allows for global expansion of the arrangement.

Under the terms of the 10-year agreement, Amazon.com will be compensated through a combination of periodic fixed payments, per unit payments and single-digit percentage of revenue. Amazon.com will also receive warrants entitling it to acquire 5 percent of Toysrus.com. All parties, including Toys R Us, Inc., will market the co-branded store to their respective customers.

Marking a milestone in online shopping, the Toysrus.com and Amazon.com alliance is designed to maximize operating efficiencies and provide meaningful benefits to consumers. The alliance brings together the highly complementary strengths of two leading brands and premier retailers -- one in brick-and-mortar retailing, one in e-commerce -- to create a better shopping experience.

``This is a huge win for our customers,'' said Jeff Bezos, Amazon.com founder and CEO. ``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 the world's leading resource for toys, games and baby products.''

``Amazon.com is widely regarded as the gold standard in online retailing, and we are thrilled to deliver to our customers the enormous benefits we know this alliance will bring. The strength of the Toys R Us brand and our merchandising expertise combined with Amazon's unbeatable Internet savvy will create an online presence second to none,'' said John Eyler, CEO of Toys R Us, Inc. ``Together, we will be the global leader for toys and children's and babies' products on the Internet.''

John Barbour, CEO and president of Toysrus.com, added his endorsement, noting, ``This relationship truly embraces the best of both businesses and will take our business to a totally new level. We look forward to working with Amazon.com to create the world's best online toy, children's and baby store.''

[SOURCE: Business Wire]

[Posted 8/09/2000]