| BUSINESSWEEK ONLINE : OCTOBER 23, 2000 ISSUE | ||||||||
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| BUSINESS WEEK E.BIZ -- COVER STORY
Toys 'R' Both of Us Amazon.com (AMZN) and Toysrus.com (TOY) are allying to run a single online store--the biggest clicks-and-bricks mix to date. Each has big jobs and challenges ahead, but the payoff for each could be huge. AMAZON.COM Main job: Amazon will handle shipping and customer service for Toysrus.com, which sends the customers to a joint store on Amazon's Web site. Biggest challenges: Amazon must make sure its complex fulfillment systems mesh seamlessly with Toysrus.com's. Amazon has to coordinate the tricky placement of products in distribution centers to avoid cost overruns. The payoff: The e-tailer has eliminated the risk of gauging demand for thousands of different toys. And Amazon will get three revenue streams: a single digit revenue share on the products that Toysrus.com sells, an annual upfront fee, and payments for handling shipping. TOYSRUS.COM Main job: Toysrus.com will pick the toys and--using the buying power of its parent's 1,600 stores--get more of them than anyone else. It also handles the placement of products on the site. Biggest challenges: On hot toys, the retailer will need to balance between supplying Toys 'R' Us stores and the joint Web site so the fewest customers are disappointed. To make orders profitable, it must get people to buy multiple products. The payoff: Toysrus.com offloads the trickiest and most expensive parts of selling online--distribution, inventory management, and customer service. The prize of this deal: Toysrus.com expects to become profitable two years ahead of plan. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS EBIZ Contents for issue dated Oct. 23, 2000 Cliff-Hanger Christmas TABLE: Building the Perfect E-Tailer TABLE: Breakeven or Bust TABLE: E-Tailers vs. Retailers Double Play TABLE: Toys `R' Both of Us Service, Please TABLE: Profile of the Online Shopper ONLINE EXTRA: Q&A with Toysrus.com CEO John Barbour ONLINE EXTRA: Q&A with Amazon CEO Jeffrey Bezos ONLINE EXTRA: Q&A with Toys 'R' Us CEO John Eyler INTERACT E-Mail to Business Week Online | |||
