Amazon and Toys R Us Case Study

1. Amazon and Toys R Us entered a partnership in 2000, giving Toys R Us exclusive rights to sell products on Amazon.com. According to Amy Martinez, both companies had different motives for wanting the partnership. For Amazon.com, it was a strategy to expand through partnerships. For Toys R Us, the deal meant “access to a major online sales channel.” The partnership was terminated early when Toys R Us sued Amazon.com. They argued that Amazon allowed other toy sellers to sell products through Amazon.com. Amazon countersued and argued that Toys R Us failed to keep products in stock. In 2006, Judge Margaret Mary McVeigh ruled that Amazon.com did in fact, breech the contract. My opinion is that because Toys R Us did fail to keep products in stock, it should have automatically voided the contract. I think that the outcome should have been that both party’s claims be denied and the contract terminated.

References:
Amy Martinez, Amazon Settles Long-Standing Legal Dispute With Toys R Us. February 1, 2012. The Seattle Times, Retrieved August 1, 2012 from http://seattletimes.nwsource.com/html/businesstechnology/2009333705_amazon13.html

2. An advantage that could have been considered is that Toys R Us is a nationally known toy store. They offer a wide variety of products that is much larger than most toy stores. The partnership between Amazon.com and Toys R Us brings in more business for both companies.
A disadvantage is that Amazon.com could not sell any other company’s toys without disciplinary actions.
At the time the agreement was made, it did benefit both companies. However; to better fit both company’s needs, the terms should have been planned out better.

3. My recommendations for Amazon.com would be to talk to Toys R Us and make up a new contract. Neither company is achieving their goals by taking this case to court. Put clauses in the new contact that will better benefit both Amazon and Toys R US. Obviously Amazon is making money for Toys R Us by selling

References: Amy Martinez, Amazon Settles Long-Standing Legal Dispute With Toys R Us. February 1, 2012. The Seattle Times, Retrieved August 1, 2012 from http://seattletimes.nwsource.com/html/businesstechnology/2009333705_amazon13.html 2. An advantage that could have been considered is that Toys R Us is a nationally known toy store. They offer a wide variety of products that is much larger than most toy stores. The partnership between Amazon.com and Toys R Us brings in more business for both companies. A disadvantage is that Amazon.com could not sell any other company’s toys without disciplinary actions. At the time the agreement was made, it did benefit both companies. However; to better fit both company’s needs, the terms should have been planned out better. 3. My recommendations for Amazon.com would be to talk to Toys R Us and make up a new contract. Neither company is achieving their goals by taking this case to court. Put clauses in the new contact that will better benefit both Amazon and Toys R US. Obviously Amazon is making money for Toys R Us by selling their products or else Toys R Us wouldn’t have run out of stock. A clause that could maybe work for both companies might be that Toys R Us is not the only toy seller that can sell products with Amazon.com but they are number one. Therefore; if a Toys R Us happens to run out of stock, Amazon has the right to use another company but in that case, Toys R Us gets a percentage of the profit. Another recommendation may be that they just terminate the contract and go back to being independent companies but for a fee, Amazon can advertize products for Toys R Us. 4. To Whom it May Concern: I believe that the Zappos should continue to operate in its own form. If Amazon.com folds Zappos into its site it will not only take away from Zappos but from Amazon as well. I recommendation is to keep both sites separate but for Amazon to but an advertisement for Zappos on its site and vice versa. Thanks for your time,