Amazon.com and Toysrus.com Announce Alliance

Posted on August 11, 2000

Amazon.com, a leading online retailer, and Toysrus.com, a retailer of children's products, have announced a strategic alliance to create a co-branded toy and video games store. The companies expect to launch the new store in Fall 2000 and plan to use the strengths of the two etailers' existing stores. Amazon.com and Toysrus.com have also agreed to launch a co-branded baby products store, in the first half of 2001.

The two companies have entered into a strategic alliance under which each company will assume responsibility for specific aspects of the toy and video games and baby products stores. Toysrus.com, in collaboration with its majority shareholder, Toys ``R'' Us, Inc., will identify, buy and manage inventory; Amazon.com will handle site development, order fulfillment, and customer service, housing both Toysrus.com's and 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 percent of Toysrus.com. All parties, including Toys ``R'' Us, Inc., will market the co-branded store to their respective customers.

``This is a huge win for our customers,'' said Jeff Bezos, Amazon.com founder and CEO. ``Our existing toys and games business has grown rapidly because customers appreciate our passionate focus on selection and customer experience. By joining with Toys ''R`` Us, we're bringing customers an even greater and more diverse product selection and teaming up with the world's leading resource for toys, games and baby products.''

``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,'' said John Eyler, CEO of Toys ``R'' Us, Inc. ``Together, we will be the global leader for toys and children's and babies' products on the Internet.''