What’s Your Google Strategy?

by Andrei Hagiu and David B. Yoffie

WHEN TOYS “R” US EXECUTIVES SIGNED a 10-year “exclusive” agreement with Amazon in 2000, they saw the deal as the perfect solution to a vexing challenge: how to establish an online retail business that would dominate its category and achieve profitability sooner rather than later. Having struggled to build an online business on their own, they believed they needed Amazon’s internet savvy and order-fulfillment skills. They agreed to pay Amazon a hefty $50 million annually plus a percentage of the toy retailer’s online sales in exchange for Amazon’s building and running a Toys “R” Us virtual storefront on its e-commerce site. Less than four years later, the deal ...

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