LONDON (Brand Republic) – US internet retailer Amazon.com and toy giant Toys R Us have teamed up for a 10-year deal to sell toys and baby goods online.
The deal marks a sea change in the strategies of both companies, as Amazon seeks out a bricks-and-mortar partner and Toys R Us joins an online rival to develop its existing site.
The deal means Toys R Us will pay for and manage the inventory for the two co-branded online stores for toys, video games and baby products. Amazon will run the websites, order fulfilment and customer services, for which Toys R Us will pay Amazon. The toys site will be launched before Christmas, with the baby products site coming next spring.
The partnership should see the end of availability and delivery glitches, which thwarted both companies last year as they raced to set up their internet toyshops in time for Christmas. Toys R Us was forced to pay compensation to customers who did not receive their goods on time.
Jeff Bezos, Amazon chief executive, said the deal would speed up the road to profitability for both Amazon and ToysRUs.com. He said it would help cover the cost of Amazon’s new warehouse and distribution centres.
Bezos added that the alliance with Toys R Us could be the first in a series with established retailers.
Industry speculators said Amazon was conceding it could not sell “everything to everyone”. One research analyst said, “If they can’t do it in the toy sector, there is no way they are going to do it in lawn and garden and any other category outside their core business.”