RTM reported in early August that Toysrus.com and Amazon.com had entered into a deal 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.

[Posted 9/15/2000]