Amazon.com and Toys "R" Us - Filing for Divorce?
So what went wrong?
During that time, the concept to join Internet companies with bricks and mortar stores, was considered genius, however six years later, the two companies are bunting heads in Superior Court in Passaic County, N.J.
"We are at a point in the relationship with Amazon where we have no trust whatsoever in dealing with this organization," testified John Eyler, Toys "R" Us's then-chief executive. Amazon says that Toys "R" Us has "a different interpretation of what "exclusivity" means."
A ruling is expected to come soon - something many retailers who do business with Amazon are waiting to see.
For Amazon, the disagreement with Toys "R" Us cuts right into the core of their profit strategy. Amazon.com maintains it's financial success by selling books, CDs, and products purchased and housed in their own warehouses along with profits earned by retailers who set up shop on the site. This creates a competitive selling arena, much like a bricks and mortar mall. But with close to a third of Amazon's profits based on the independent "shops", bad press as to their competitive strategies could hurt their bargaining power.
"Before anyone gets into bed with them, they need to think about whether they're a successful business, because Amazon or one of its partners one day will compete with them," says Ice.com executive vice president, Pinny Gniwisch.
Retailers, such as Ice.com, have opened up shop on Amazon, only to find themselves in strong competition with Amazon itself who then begins to sell some of the top performing products.
Not offering true exclusivity may eventually be Amazon's downfall as competitors like Google begin taking a stronger seat.
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