the mature level of the alliance life cycle that real value is gener-
ated, so if attention is not paid throughout the early cycles of devel-
opment, launch, and learning, the return on that investment may
be compromised.
For example, the supply relationship could be expanded to
include an online component, and this may well be in the middle
stage of the alliance life cycle. Looking at supply relationships as if
they were alliances with life cycles that require different resources
at each stage and even different teams of managers will ensure that
the relationship has the chance of reaching its fullest potential.
Toys “R” Us created an online activity for the sales of its
products, the development process of the fulfillment of buying and
selling and shipping toys online. Yet its in-store sales and the effec-
tive way it had of buying, selling, and serving its customers contin-
ued to be its core competency. Finally, executives at Toys “R” Us
realized that the online segment of the business was not working
the way they wanted it to. In fact, it was diluting the company’s
brand value. An alliance looked like the solution to the problem.
The company that fulfilled online orders better than anyone else
for Toys “R” Us was Amazon.com. Toys executives began discussing
and planning the integration of facilities and the two brands on
Amazon’s virtual real estate. They piloted the program before
rolling it out in full.
This online alliance has been highly successful, and it is an
example of understanding the various stages of the alliance. As the
Toys “R” Us and Amazon alliance grows and begins to reach its
potential, the alliance is changing, and the market is becoming
more comfortable with the joint marketing, supply, and outsourc-
ing relationship of the two organizations. Making it transparent was
the goal, and it is working. Now Amazon not only markets and
sells the goods but also shares revenues as well as payment for the
turnkey operation of the fulfillment process. It has been so success-
ful that Amazon is now repeating the approach and is moving into
the apparel business.
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