Amazon also established partnerships with several large retailers, including Target, Toys ‘R’ Us, Babies ‘R’ Us, and Circuit City. Effectively, Amazon became a service organization to manage the online presence of these large retailers. However, it also uses its distribution system to deliver the products. The Circuit City arrangement was slightly different from the others—customers could pick up their items directly from their local stores [Heun August 2001]. After Circuit City went under, the relationship ended.
By mid-2003, the Web sales and fulfillment services amounted to 20 percent of Ama-zon’s sales. Bezos points out that most companies realize that only a small fraction of their total sales (5 to 10 percent) will come from online systems, so it makes sense to have Ama-zon run those portions [Murphy 2003].