April 13, 2015
Case Study 1 & 2
Instructor Divya Kashyap
Case 1 Amazon.com
Toys "R" Us sales exceeded $300 Million by 2004 on the Amazon.com site. In about 200 words explain how Amazon, Toys "R" Us, and other toy sellers who participated in Amazon's Marketplace retailer program benefited from the network effect as a result of the relationship between Amazon and Toys "R" Us.
Toys "R" Us and other toy sellers who participated in Amazon's Marketplace retailer program benefited from the network effect as a result of the relationship between Amazon and Toy "R" Us in many ways. Since Amazon has network deals with companies there will always be a benefit or a profit. A lot of times people go on Amazon looking to buy many different things and to have the ability to one stop shop for most everything that you will need comes in handy and at a reasonable price. Also, with Amazon having the ability to only sell toys from people who are in the retailer program helps both parties. Toys "R" Us had encountered many problems selling toys online before joining Amazon Marketplace program and I feel that without the help of Amazon there could be many business that would have a problem selling their items.This also works for the small businesses and specialty businesses that have things to offer that you may not be able to find anywhere else or that they may be having a hard time selling. If that business is a part of the Marketplace Program not only do their items get sold but Amazon and the business owner get a profit. 2:
In 2004, Toys "R" Us sued Amazon.com for violating terms of the agreement between the companies; specifically, Toys "R" Us objected to Amazon.com's permitting Amazon Marketplace retailers to sell toys. (Note: when the lawsuit was filed Amazon Marketplace was called "zShops".) Amazon.com responded by filing a countersuit. After more than two years of litigation, a New Jersey Superior Court Judge ruled that the agreement had been violated by both parties. The judge ordered the agreement be terminated and denied both companies' claims for monetary damages. Amazon.com appealed the ruling. In 2009, an appellate court affirmed the lower court ruling but reversed the ruling on damages, which had awarded Toys "R" Us $93 million plus interest. In June 2009, the two companies agreed in an out of court settlement that Amazon.com would pay damages of $51 million. Use your favorite search engine and the web links for case c1 to review the courts' findings and rulings. Prepare a report of about 200 words in which you summarize the advantages and disadvantages that Amazon.com should have considered before in entered into the agreement with Toys"R"Us.
There are many advantages and disadvantages that Amazon.com should have considered before entering into an agreement with Toys "R"Us. I am pretty sure that neither Amazon.com or Toys "R"Us could have foreseen the dispute that took place in 2004 and if there were things that both companies could do to change the outcome of this I feel that they would have changed them and had them in writing prior to making a contract. The advantages that Amazon and Toys "R" Us had by working together is not only a customer base that spans across the entire world but the ability to help other businesses that may not have been able to stay afloat without each other. More advantages of Amazon and Toys "R" Us working together would be that customers would be getting the products that they ordered in a timely manner and both parties would be compensated as long as both ends of the contract were held up. In my readings I found that when the companies merged it was good for both of them Toys "R" Us toy sales were going up and customers were satisfied with the promptness and the overall delivery of their products.The disadvantage of Amazon.com working with Toys "R" Us is that they didn’t want them to work with any other toy...
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