New Online Toy Store Illustrates Amazon's Strategic Risks (AMZN, GOOG, GSIC)

Excerpt from our One Page Annotated Wall Street Journal Summary (which you can get emailed to you every morning by signing up here):

Amazon Launches Toy, Baby Stores

• Summary: After losing a court ruling in March that allowed Toys "R" Us to regain control of its domain name, Amazon launched its own toy and baby stores Friday night. The new stores have twice as many items as the old stores, offer free shipping on goods shipped by Amazon itself, and include more products from third party sellers like Target, eToys Direct Inc. and the Discovery Channel store.
• Comment on related stocks/ETFs: Amazon's (AMZN) strategy is now looking less certain than ever. The advantage of offering shoppers goods from multiple vendors on a singe web site with a unified shopping cart may have been neutralised by Google Checkout. (See analysis of Google Checkout from Paul Kedrosky, Scott Devitt and Tim Boyd.) Amazon's remaining competitive advantage is its own logistics and fulfilment expertise, and the ability to offer free shipping that flows from that. The extention of free shipping to items in Amazon's baby and toy categories is therefore incrmentally positive. Toys "R" Us, meanwhile, is using GSI Commerce (GSIC) and Deutsche Post World Net's Exel unit for fulfilment and shipping of its own online store. Amazon's re-entry to the toy category with free shipping is therefore incrementally negative for GSIC.