| This could be considered an admission of defeat by both Amazon.com and toysrus.com. Both companies have effectively admitted they cannot make their online toy business profitable on their own. Managing a new joint venture of this type may be even more complex than either company has anticipated. This new strategy from Amazon.com calls into question what the company's core business model should be. It effectively takes Amazon.com into the eRetail fulfillment business. This might be seen as a departure from its core business, or it could be considered an economical way of leveraging its online presence. One of the biggest advantages toysrus.com has over rivals like eToys is that purchases can be returned to any Toys R Us store. On the new site, Amazon.com will handle all returns, preventing consumers from taking advantage of Toys R Us locations near their homes. This will remove one of toysrus.com's chief competitive advantages over companies like eToys. Another crucial question centers around competitors that are not yet flexing their online muscles. What will happen when retail goliath WalMart, already the biggest toy retailer in the US, gets its act together and carves out a sizeable chunk of the online toy business for itself? This will no doubt put even more pressure on pure play eRetailers like eToys. However, to say it means the end of eToys would be highly premature. eToys may however find itself looking around for strong brick and mortar retailers to buddy up with as a defensive move. If it does, the Amazon/ToysRUs operation will come under even greater pressure. Amazon.com started out as "the world's biggest bookstore" and created a powerful online brand image. Over the past few years the company has expanded its brand across a wide range of products, although it is yet to make a profit. This new strategy stretches the company's brand identity even further, potentially confusing the brand image in the minds of consumers. It is no longer clear how Amazon.com wants consumers to perceive the Amazon brand. Amazon may be in danger of spreading its brand identity too thinly and loosing control over its brand image. Can Amazon.com really create a brand that consumers identify with any type of online shopping? Whether this will prove to be a winning strategy for Amazon.com and Toys R Us will be determined this holiday season and into 2001. If Toys R Us can get the right product in the right place at the right time, and Amazon.com can deliver at the right price, both companies may be creating a new e-business model. If not, competitor's sites are just a click away! Voice Your Opinion!
We use your feedback to determine potential future research and to provide analysis on industry events.Is this a winning combination or just a ploy to boost flagging share prices? How should eToys retaliate? Why was Toys R Us unable to succeed on its own given its huge brand identity in the toy market? What does this mean for Amazon.com? Has Amazon.com lost its way or is it beating a new path for others to follow?......click here! Related stories Amazon.com and Toys "R" Us form a new online brand Amazon.com backed Living.com switches off the light! Features Index 08/17/00 | 