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Home Depot, Amazon exploring partnership

The behemoth real-world retailer says it is in talks with the Internet retail giant about an alliance.

Home Depot today confirmed that it is in talks with Internet retail giant Amazon.com about an alliance.

While still in the early stage, the talks show the shifting importance of partnerships between online and physical world retailers. Online retailers crave the wide distribution that most retail giants have through their stores across the United States, while brick-and-mortar retailers enviously covet the huge number of users registered with e-tailers.

Home Depot spokesman Jerry Shields said his company and Amazon had held some preliminary executive-level discussions, though he did not know what was discussed or when the conversations occurred. Shields also said that any talk of an agreement between the two companies would be "premature."

"All they've had is a conversation," Shields said.

Amazon declined to comment on the conversation. "We have a rather long and consistent policy that we do not react to rumors and speculations about what we may or may not be planning," said company spokesman Bill Curry.

Although Hambrecht and Quist financial analyst Genni Combes said she did not have any inside information, she said the possible deal could benefit both companies. The home improvement category is poised to be a big seller on the Web, and by teaming with Home Depot, Amazon would be able to jump into the market quickly and get the first-mover advantage that propelled the company to its huge success in the book market.

Conversely, Home Depot would get access to Amazon's computer expertise and huge customer base, which she said the company will need to succeed on the Web.

"A partnership makes sense if it's structured properly," Combes said.

In August, Home Depot said it would sell a comprehensive array of products online early next year, bolstering an earlier e-commerce effort. Having access to Amazon's more than 10 million registered customers could give the company a jump-start that many retailers coming online sorely miss.

The talks were originally reported in TheStreet.com.