There’s No Joy in Brick/Click Toyland
According to a report from TheStreet.com, Toys “R” Us wants to renegotiate its deal with Amazon.com. The report alleges that top executives from both companies, including Toys “R” Us chief executive John Eyler and Amazon’s Jeff Bezos, met last month to review the agreement. The net result of that meeting was that both parties agreed to a reduction in the annual payments made by the giant toy retailer to its dotcom distribution partner.
In related news, Toys “R” Us reported a 37 percent decline in net profits for
its fourth quarter. Flat sales and restructuring charges were blamed for the
company’s less than spectacular performance.
Moderator Comment: Can Amazon be profitable without
its services agreements with traditional retailers?
Amazon has deals similar to that with Toys “R” Us with
a number of other retailers including Target. How long will it be before Amazon’s
other partners look to renegotiate their deals? An unidentified source in TheStreet.com
report said that Toys “R” Us wanted to rework its deal, “on the grounds that
the company was paying Amazon too much and getting too little in return.” [George
Anderson – Moderator]