Toys 'R' Us Wins Suit Against Amazon 157
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."
TRU/Amazon Bargaining (Score:4, Interesting)
Re:Amazing! (Score:3, Interesting)
How about, say, Powell's, B&N, Tattered Cover, Borders... There are less-evil companies.
Anyway, where's the false statement? Amazon are lying scumbags. They have been abusive and evil since the day they came into play, they have dramatically harmed the state of the art in patent law, they have spammed... Why should we tolerate them just because Sony's nasty?
Re:Amazing! (Score:1, Interesting)
Re:My fellow American (Score:2, Interesting)
Unreliable communications is not an excuse for breaching a contract. It's up to BOTH companies to use reliable communication. If Amazon thought email wasn't reliable, they shouldn't have used it. The should have insisted on a more reliable method.
Actually, the relationship with TRUS was complex (Score:5, Interesting)
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 (Score:5, Interesting)
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.
Shananigans!! (Score:1, Interesting)
And yes, they are horribly corrupt. And incompetent. I've seen it myself.
Everybody wins. (Score:1, Interesting)
As another former Amazon employee who worked on the TRU projects, I can say that Amazon's customers are likely much better off without the TRU partnership.
Here's why:
- Dozens of merchants will now sell toys directly in the Amazon.com toy store, driving prices down and options up.
- The selection will increase. More merchants equals broader selection.
- Amazon can create new features and form new partnership without TRU around it's neck.
When I was there, we couldn't even sell Magic: The Gathering or Pokemon (some of, if not *the* bestselling products in the industry at the time) because Toys R Us lost money selling 3 dollar products online, which was a consequence of the way the contract was written.
Amazon was making bank off this relationship. My impression was that Amazon was spending *far* less than the $50 million per year that TRU was paying. I could never count more than about a dozen people working directly on the project (myself included). There were probably a bunch more in the warehouse and lots of operational expenses there, but I couldn't say.
TRU, on the other hand, was losing money the whole time. They blew it when they negociated the contract and both sides knew it.
The new toysrus.com, whatever it will look like, will never be able to compete with Amazon on price and selection because of Amazon's multiple merchants strategy. They'll have to compete on brand, for better or for worse. Good luck to both of them.
What they should have done all along is give toysrus.com their own site, a la target.com (which is run by Amazon). Then have TRU sell product on amazon.com/toys as just another merchant.
Barring that, by breaking up, everybody wins. Amazon gets to sell whatever they want, TRU stops bleeding money, and the customer gets a better Amazon toy store and another option in toysrus.com.
OT: Buying local food (Score:5, Interesting)
Down the street from my house here in the city of San Francisco I have a little corner produce store. You can get pretty much any fresh food that you can get from Safeway: vegetables, fruit, dried goods, eggs, milk, etc.
First I started shopping there because it was just as convenient to get to as Safeway, and buying local seemed like a good thing. Then I noticed that the quality of the produce was much, much better than Safeway's. Safeway is buying in massive volume and they are buying vegetables that have been grown, treated and/or engineered to have long shelf lives. The stuff at this corner store is coming from the farmers to my street corner. It looks and tastes better in every way.
But, as I said, over the last year I noticed something even more surprising. You might think, based on what I've said, that I'm paying a little more to support my convictions and/or get nice produce. That's usually how it works: Buy from the big vendor, get the deep volume discounts. Buy from the little guy and pay more. BUT NO! The fact of the matter is that just about every single thing I buy at the corner store is cheaper than the same thing at Safeway.
There are some exceptions; mostly packaged foods like salad dressings or mayo. But mushrooms that cost $2.49/lb at Safeway cost $1.89 at the corner store. A container of milk that's $2.19 at Safeway is $1.79 at the corner store. Even something like a sack of flour or a packet of yeast costs less.
The lesson is that Safeway's business model does not necessarily work the way you think big retailers' business models work. I expect what they do is negotiate deep discounts with the packaged, prepared food vendors: Hot Pockets, Lean Cuisine, etc., and they sell them to the consumer at a minimal profit margin. They make up the difference on produce, fresh fruits and vegetables, and dry household goods.
Your average Joe Consumer is used to comparing prices on individual branded items. If a 12-pack of Coke normally costs $3.50, he'll notice when it's on sale for $1.99 and that will get him into Safeway. That same consumer, however, has fallen out of the habit of comparing pricess on piecemeal, by-the-pound items like fruits and vegetables -- and so that's where Safeway jacks up its prices.
Try it sometime. If you have access to a local green grocer, shop there a few times and make a note of what you pay for things. Then see what happens when you try to buy the same items the next week at your local Safeway or Albertson's. I bet you'll be surprised. Shop at the green grocer and you support local business, get better quality food, and pay less.
(Oh, and you should be eating more fruits and vegetables anyway.)
Re:OT: Buying local food (Score:3, Interesting)