HolidayBuyer's Guide

Amazon boosts stake in Drugstore.com

The giant Internet retailer forms a three-year marketing alliance with Drugstore.com and agrees to invest $30 million to raise its stake in the online drugstore.

SEATTLE--Amazon.com, the giant Internet retailer, said it formed a three-year marketing alliance with Drugstore.com and agreed to invest $30 million to raise its stake in the online drugstore.

Under the marketing agreement, Amazon.com will receive $105 million to create a permanent "tab" on its Web site that will let customers directly access Drugstore.com's products and services. Previously, Amazon.com offered temporary links and gift certificates for Drugstore.com.

Seattle-based Amazon.com, which started as a bookseller in 1995, has been adding toys, consumer electronics and other products to its Web site to boost sales. It has invested in other Internet retailers including HomeGrocer.com, Pets.com and Ashford.com.

Amazon.com's investment in Drugstore.com will raise its interest in the company to almost 28 percent. The retailer first bought a stake in Drugstore.com in August 1998.

Earlier this month, Drugstore.com bought Beauty.com in a stock deal initially valued at $42 million, giving the firm access to the $6.2 billion beauty market.

Analysts at Forrester Research project that the online health and beauty products industry, which includes cosmetics, will grow from $509 million in 1999 to $10.4 billion in 2004--or 5 percent of the total sales in the industry.

Copyright 2000, Bloomberg L.P. All rights reserved.

Close
Drag