February 1, 2000 9:40 AM PST

Amazon moves into home services with Living.com

Moving its Web site a step closer to becoming an online mall, Amazon.com today announced an agreement with e-tailer Living.com to create a home furnishings store on Amazon's Web site.

As part of the deal, Amazon will pay cash for an 18 percent stake in the Austin, Texas-based Living.com. In addition, Living.com will pay Amazon $145 million over five years for a permanent "tab," or store location, on Amazon's home page.

"Joining with companies that share our core value of customer satisfaction is an important part of our strategy to make Amazon the place where you can find and discover anything and everything you might be looking to buy online," Amazon chief executive Jeff Bezos said in a statement.

The deal between Amazon and Living.com resembles a similar agreement the e-commerce leader signed last week with Drugstore.com. Since last year, Amazon has linked up with a number of other e-tailers, including Pets.com and HomeGrocer. But recently, it has tried to turn those deals into another source of revenue, by creating marketing agreements with its investment partners.

In addition to retail partnerships, Amazon also has looked to enhance its services through investments in technology companies. Yesterday, Amazon took a 5 percent stake in Audible, a provider of spoken-audio services for download or playback on computers or mobile devices.

Along with its equity stake in Living.com, Amazon will receive warrants to purchase another 9 percent of the company. The deal is subject to "closing conditions," the company said.

The Home Living store will show up on Amazon "sometime in the middle of summer," Living.com chief executive Shaun Holliday said. The site will carry Living.com's brand name and will blend the site's design with Amazon's look and feel. However, despite its arrangement with Amazon, Living.com will continue to operate its own, independent Web site, Holliday said.

Living.com will manage the backend systems of its site and the new Home Living store, fulfilling orders made through both Web sites, Holliday said. Initially, Amazon customers will not be able to use the same shopping cart for home furnishing items as they do for toys and books, but Holliday said the two companies eventually plan to add that feature.

"We needed access to the world's shoppers online," Holliday said. "We couldn't be with a better partner to play with."

As part of the investment Amazon will hold a board seat on Living.com.

 

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