Amazon Electronic commerce
The Amazon was disappointed to the judge findings they said that they strongly disagree with the judge’s ruling, and they are in the process of reviewing a number of different options Regardless of the outcome and they remain committed to ensuring a great selection of toys for our customers atgreat prices. For its part the Toy R Us said that the company are preparing for the decision and iscommitted to providing customers online access to its web store. The Amazon spokesman said that the company disagrees with the suggestion that other retailers will be wary of working withit.
They said that this ruling is specific to Toys “R” Us and it really doesn’t have any impact on otherrelationships with merchants and partners. The judge found its ruling to be fair because amazon. com did not have the necessary reports that were required to be given yearly to Toys r us as part of the agreement, so after 2 years of battling on March 1, 2006 the Judge ruled against Amazon.
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com and gave Toys R Us the win and settled for 51 million. Amazon also permitted third parties to sell toys on its site via use of its 1×1 GUI technology, and via various merchant agreements.
These agreements permitted third parties, including toy sellers, to sell toys on Amazon’s website. Breaking the agreement was both parties fault. If Toys ‘R’ Us didn’t lack the supply of exclusive items to Amazon. com they wouldn’t be tempted to get or purchase other companies’ items. Also, Amazon. com should’ve thought of the agreement before purchasing certain items on different toy supplier. 2. There are some advantages and disadvantages that that Amazon. com would have considered before they made the agreement with Toys R Us to limit competing toy sales.
One of its advantages is gaining full trust of other company’s confidential informations. They can consider the fact that having a partnership with Toys R Us will make them more popular than before. At the same time receive percentage from the purchased products of Toys R Us. They also have the opportunity to get skip the learning curve for the toy business. Also, vastly increasing product base and potential without having recreated the e-commerce code. Amazon. com could also see potential increase in crossover sales from consumers who go to Amazon to buy toys and discover other products.
Customer bases and agreed to not sell toys itself on behalf of other partners for whom it might provide online sales services in the future. Example, when amazon agreed to sell target products online, it could not sell target’s toy lines on its website. If we have the advantages there are always the disadvantages. One of amazon’s disadvantages is Amazon would be restricted from entering into potentially more lucrative partnerships with other toy retailers. The financial success and reputation of Amazon would be tied to another company they have no control.
Also, Amazon. com will have limitations in terms of selling products and might have conflicts especially with transactions from other retailers. And the decisions they have to come up to will need to be discussed first with Toys R Us for they work as a partner. 3. One possible recommendation is that Amazon could offer to only allow zShops that sell toys notavailable from Toys R Us. This scenario would allow Amazon to honor the exclusivity agreementwith Toys R Us, but continue to realize profits from specialty toy retailers.
Toys R Us would benefitfrom this scenario because zShops would not be able to undersell on identical products. Also,consumers who go to Amazon searching for a specialty toy may end up ordering a toy from Toys RUs instead. Amazon should’ve negotiated instead coming up with penalty. Penalty which will make Amazon. com pay either cash or they will suspend the contract in few months. From this, it will avoid litigation and their contract as well as working relationship will continue. Another is coming up in a renewed agreement, which will specifically state that Amazon. om is not allowed to work with other toy retailer and if not met, Toys R Us must be paid in cash for breaking the agreement. 4. The partnership made sense at the first wave of E-commerce, but is no longer good for the two companies because the holiday sales fell well short of expectations and rival and category leader Best Buy surged ahead. It’s better to end the partnership seeing the effects rather than keeping the contract and both companies are no longer getting benefits from it. Amazon investors did not seem fazed by the development, with the e-tailer’s shares up about half a percent in early trading.
Meanwhile, Circuit City is hoping that its own e-commerce efforts can be part of a turnaround, an effort that is taking place in a rapidly changing retail environment. Also, during the first wave of e-commerce consumer may have been more likely to trust a relatively more established e-commerce like Amazon. com for online transactions/order. Also, Amazon as a popular e-commerce portal may have provided Circuit City with access to a larger volume of online buyers. But as consumers became more comfortable with e-commerce, the Circuit City brand became more established, and these benefits may have been minimized.