Toys 'R' Us Wins Suit Against Amazon

theodp writes "Having prevailed in its bitter lawsuit against Amazon.com, Toys 'R' Us will create a new and independent Web site. A NJ judge found Amazon breached its agreement and ordered the two companies to sever their partnership Thursday. In a 131-page opinion, the judge termed Amazon's attempts to throw out e-mail evidence on the grounds that Internet communications lack reliability 'incomprehensible' and took a dim view of the testimony of some Amazon execs, including CEO Jeff Bezos' candor and 'rather childlike' explanations."

Comments

contract

[phantomfive]

I didn't realize that Toys R' Us was in a lawsuit with Amazon. Seems back in 2000 they agreed to work together in the online world with a 10 year contract. Toys 'R Us thought they had an exclusive contract with Amazon, but when Amazon started selling things from other retailers Toys 'R Us wanted out (understandably). Amazon tried to force them to stay.

Rather lousy thing to do if you ask me. Good business is about building mutually beneficial partnerships, not about beating up your neighbor and taking his lunch money. If I owned a company I would be wary of doing business with Amazon.

The REST of the story...

[PoconoPCDoctor]

While looking for work a year ago, I attended a job search seminar - one of the persons I met there was a former executive at Toys R Us - he briefly summed up what killed the Toys R Us business model - Walmart.

Walmart simply sucked away any profit margins the Toys R Us Franchise once had - especially during the biggest toy buying season - Christmas.

According to him, going online with Amazon was a desparation move to gain some profitability back from Walmart - managed by Toys R Us execs who had not a clue about managing an online store.

In other news: Shopping online unreliable!

[PC-PHIX]

Amazon's attempts to throw out e-mail evidence on the grounds that Internet communications lack reliability

Wah?

I hope I am not the only person that thinks this is a total contradiction!

Yes, shop online with us... Sure, purchase goods using the Internet... Absolutely, we can email you a new password/invoice/receipt number... Use email to communicate for business purposes - you must be F&*king crazy!!!!

If I tried to explain why, in this day and age, when running an entire business empire online, I considered "Internet communications" unreliable, I think my efforts would end up "incomprehensible" too!

Actually, the relationship with TRUS was complex

[Anonymous Coward]

(Disclaimer: I'm a former Amazon employee who worked with a group that had a close relationship with TRUS)

I think the TRUS relationship was weighing heavily on both companies. Amazon doesn't like to sell toys directly, as they're very difficult to manage in a supply chain -- they're bursty, vulnerable to all kinds of trends that are difficult to predict, and very fragile to ship. TRUS' technical staff was often frustrated by the weird working relationships imposed by our respective corporate bureaucracy. And finally, it really cramped Amazon's ability to create new products and services, since we were constantly having to consider whether a new feature would ruffle TRUS' feathers.

I think both parties are better off with a divorce. It's quite a risk for TRUS to create a new online store from scratch, but they've got some good people who've had several years of experience working with Amazon. I wish them the best of luck.

Reputation is more than epsilon

[hey!]

And that is why you don't own a company of consequence. Business is about making money, not being some kind of 'good neighbor' to competitors.

While it's true that every business looks out for #1, I think you overstate the case in the opposite direction of the grandparent post.

Businesses have cultures and characters, just like people. And partners/allies approach businesses taking these into account; the reputation of a company can create revenue or costs accordingly. Those revenues and costs may not be the determining factor in every or even most situations, but they are real.

"Who steals my purse, steals trash, but he that filches from me my good name robs me of that which not enriches him and makes me poor indeed." Of course Shakespeare put these words into the mouth of a scheming liar. Their truth is situational: it depends on your purse, and how much you need your reputation. If you're a poor tribal clansman, it is very true. You don't have material wealth worth mentioning, and you are mutually dependent on others like yourself for survival and defense. If, on the other hand, you're Louis XIV, you have no friends -- only rivals who have revealed their hands to various degrees. You're reputation is relatively unimportant, as people are tied to you by law and custom. Your purse is relatively more important becuase by it you maintain those laws. No one expects you to keep your word; your actions are like the weather. People can predict them in a general climactic way or a short term by scanning the horizon for fair or stormy weather. But nobody takes you word for what the weather will be at the end of next week.

Businesses exist along the same continuum, from small consultancies whose only real asset is their reputation up to the Sun King of all businesses: Microsoft. Within it's sphere, Microsoft wields unchallengeable power. Nobody who allies themselves with Microsoft today seriously believes that Microsoft won't issue a writ of execution later on if it suits them. This is the natural course of any entity which has untrammelled power backed by money. Other companies who are trying to work in the margins of Microsoft's domain cannot afford to act this way; it's not that they wouldn't; they're just not in a position to. If a company is going to draw customers away from Microsoft, then it has to convince those customers that it's trustworthy. Lack of trust and affection may very well hinder Microsoft's plans outside its core businesses, for example in the music field, where customers do not feel the weight of compulsion.