March 27, 2001, 12:00 AM

Kozmo backs out of deal to place drop boxes in Starbucks

Kozmo, the Internet package delivery service, has terminated an agreement with Starbucks to install Kozmo drop boxes in Starbucks coffee shops in cities where Kozmo delivers.

Kozmo.com, the Internet package delivery service, has terminated an agreement with Starbucks to install Kozmo drop boxes in Starbucks coffee shops in cities where Kozmo delivers. Kozmo also will withdraw the approximately 500 drop boxes it has in Starbucks shops already. The deal fell apart when Kozmo scaled back its expansion plans last year. The agreement had called for Kozmo to place drop boxes in all Starbucks in all cities where Kozmo delivers. Starbucks continues to be an investor in Kozmo.

The decision to withdraw from Starbucks is only the latest in a string of developments that has had Kozmo scaling back from its grandiose plans, including not only reducing its expansion cities but also withdrawing an IPO last year, laying off 300 employees and charging customers for the once-free service. Kozmo says withdrawing from Starbucks will have no significant financial impact.

 

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