The power of intermediaries like
Google, Amazon, and Blu-ray is
rapidly growing. Be prepared.
What’s
YourGoogle
Strategy?
byAndreiHagiuandDavidB.Yoffie
W
When Toys “R” Us executives signed a 10-year “
exclusive” agreement with Amazon in 2000, they saw
the deal as the perfect solution to a vexing challenge: how to establish an online retail business
that would dominate its category and achieve profitability sooner rather than later. Having struggled
to build an online business on their own, they believed they needed Amazon’s internet savvy and
order-fulfillment skills. They agreed to pay Amazon
a hefty $50 million annually plus a percentage of
the toy retailer’s online sales in exchange for Amazon’s building and running a Toys “R” Us virtual
storefront on its e-commerce site. Less than four
years later, the deal had turned into a money loser
for Toys “R” Us, and the company sued Amazon,
seeking $200 million in damages.
Jessica Hische
