Amazon.com and Toysrus.com have forged an alliance to create a cobranded toy and video games store, expected to launch in fall 2000. The companies have also agreed to launch a cobranded baby products store in the first half of 2001.
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 inventory, as well as its own inventory, in Amazon.com's U.S. distribution centers.
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% of Toysrus.com. Both companies will market the co-branded store to their respective customers.
The agreement also allows for global expansion of the arrangement, say Amazon.com, Seattle, and Toysrus.com, New York.