Amazon.com has lost its first appeal to retain its e-commerce platform management and merchandising agreement with Toys R Us Inc.
As a result of a decision handed down by New Jersey Superior Court judge Margaret Mary McVeigh in March, Toys R Us said it was going ahead with plans to terminate its e-commerce and merchandising agreement with Amazon.com by June 30.
Amazon, No. 1 in the Internet Retailer Top 500 Guide to Retail Web Sites, appealed the ruling, but late last week the appellate division of the New Jersey Superior Court denied Amazons motion to stay the termination of the contract. We did not prevail on our stay motion; operating profit could be negatively impacted by as much as $50 million for 2006 and $25 million for the second quarter 2006, much of which is due to ToysRUs.coms failure to pay fees for the second quarter, Amazon said in a filing Friday with the Securities and Exchange Commission.
Toys R Us, No. 31 in the Internet Retailer Top 500 Guide to Retail Web Sites, already has selected different third-party service companies to run its e-commerce sites and provide fulfillment. Effective July 1, Toys R Us begins a new multi-year commitment with GSI Commerce Inc. and Exel. Under the long-term agreements, GSI will provide technology, customer service and support while Exel will provide fulfillment services for both ToysRUs.com and BabiesRUs.com. As part of the transition, Toys R Us also will relaunch the ToysRUs.com and BabiesRUs.com sites with a new look and more product information.
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