Amazon Forges Cross-Marketing Deal With Luxury Site

Amazon.com (Nasdaq: AMZN) announced today that it will make a minority investment in luxury goods retailer Ashford.com (Nasdaq: ASFD) and that the two companies have agreed on a multimillion-dollar (US$) marketing initiative.

In exchange for a $10 million investment and the marketing agreement, Amazon.com will receive approximately 16.6 percent of Ashford.com’s outstanding stock.

Under the terms of the marketing deal, which starts immediately, Ashford.com will offer a selection of its products directly to Amazon.com’s 13 million customers. The deal will last through December 31, 2000. Ashford.com will offer special promotions to Amazon.com’s customers.

“We chose to work with Ashford.com because it offers customers an excellent online experience, outstanding value and a great selection of watches, jewelry, leather goods and other luxury items,” said Amazon CEO Jeff Bezos.

Ashford.com Also Has Deal With Yahoo!

Amazon will feature Ashford.com products in multiple luxury categories, such as diamonds, watches and writing instruments. Ashford.com also offers products such as designer jewelry, sunglasses, and bath and body products for more than 300 brands.

In October, Ashford.com announced that it had become a premier merchant on Yahoo!. Under the terms of that deal, Ashford.com will be featured on Yahoo!’s shopping channel and e-mail service. Ashford.com will also run banner advertising throughout Yahoo!’s network of properties.

Amazon.com Branching Out With Equity Investments

Earlier this year, Amazon.com, which seems intent upon spending whatever it takes to turn itself into an all-everything, one-stop shop, made other notable investments in specialty retailers such as Pets.com and Drugstore.com. Amazon.com also recently acquired tools and home-improvement equipment company Tool Crib of the North in order to launch a new home-improvement area.

Other companies that Amazon.com has invested in include gift registry service Della & James, sporting goods retailer Gear.com, and Homegrocer.com, the online grocer that has former Netscape CEO Jim Barksdale on its board of directors.

Amazon.com Gets Good Deal

Shares of Amazon.com climbed 3/4 to 85-13/16 in early trading today, and shares of Ashford.com climbed 5 to 23. The deal appears strong for Amazon.com because, at $23 a share, Ashford.com is worth nearly $848 million. Accordingly, Amazon.com’s 16.6 percent stake is worth more than $140 million, even though the company is only investing $10 million.

Ashford.com went public at $13 a share in September, becoming the only publicly-traded company that focuses on luxury products.

Ashford.com stock barely moved on its first week of trading, but has climbed as high as 35 in recent trading sessions.