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Amazon invests in Kozmo
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March 20, 2000: 3:22 p.m. ET
Internet retailer unveils its $60 million stake as part of three-year alliance
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NEW YORK (CNNfn) - Amazon.com Inc. announced Monday that it will take a $60 million stake in Kozmo.com, enabling delivery of Amazon books, CDs and toys to customers within hours.
The companies said that in exchange for warrants to purchase additional shares in Kozmo.com, Amazon.com has reached a three-year strategic alliance with Kozmo that will include the launch of an hourly delivery service at a later date.
Kozmo's couriers currently deliver videos, CDs, books, snacks and personal care items in major metropolitan areas, including New York, Boston, Washington, D.C., San Francisco, Seattle and Los Angeles.
Amazon just disclosed the long-rumored alliance, which was finalized in December 1999. Amazon said the one-hour delivery service will be launched at a later date, and is non-exclusive to Kozmo.
"We're always looking for new ways to offer more choices to our customers, whether it's new products or new delivery options," said Joe Galli, president and chief operating officer of Amazon, in a statement. "In a short time,
Kozmo.com has developed a strong track record for meeting a unique customer need, and this agreement provides us a one-hour delivery option for the types of products that customers may want immediately."
Credit Suisse First Boston analyst Lisa Buyer issued a research note applauded the partnership and reiterated a "buy" recommendation on Amazon (AMZN: Research, Estimates) stock.
"We believe this same-day delivery option (presumably also available to Amazon eventually through its Home Grocer investment) will be an increasingly critical link in the company's distribution chain," Buyer said. "While many are content to wait several days, we believe Amazon does lose out on significant potential sales to those often less price-sensitive customers needing the product (gift) now." 
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