Chapter 9: Understanding Alliances and Cooperative Strategies

toy

After a tragic 1999 holiday season, Toys R Us and Amazon created a strategic alliance. The alliance would combine the strengths of two dominant Internet retailers with a cobranded Internet store just in time for the 2000 holiday season and was to last for 10 years. Toys R Us would be in charge of buying and managing inventory, while Amazon handles everything from warehousing, customer service, web development, and fulfillment. This strategic alliance would hopefully help both firms break into the global market as well. John Elyer, the CEO of Toy R Us at the time said that, “Amazon.com is widely regarded as the gold standard in online retailing, and we are thrilled to deliver to our customers the enormous benefits we know this alliance will bring. The strength of the Toys “R” Us brand and our merchandising expertise combined with Amazon’s unbeatable Internet savvy will create an online presence second to none.”

This alliance did not reach the decade long term that was originally agreed upon by the two firms. By April 2003 the two companies had started a legal battle. After a long battle, the alliance was terminated by a New York judge due to a breach of contract by Amazon.

Sources:
Amazon.com and Toysrus.com Announce Strategic Alliance
How Amazon’s Dream Alliance With Toys ‘R’ Us Went So Sour

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