Wherehouse And CheckOut.com Forge $40M Alliance

Brick-and-mortar entertainment retailer Wherehouse Music and online entertainment superstore CheckOut.com announced a strategic alliance today that makes CheckOut.com the exclusive Internet partner for Wherehouse Music.

The companies will jointly invest $40 million (US$) in their new partnership.

Starting today, visitors to Wherehouse’s Web site are being redirected to CheckOut.com, which was co-founded in May by former Hollywood super agent Michael Ovitz. Under the terms of the deal, CheckOut.com will be promoted in the nearly 600 Wherehouse stores nationwide and integrated into all of Wherehouse’s marketing and advertising, including television, radio and print.

Clicks and Mortar

“The merger allows both companies to do what most online and traditional brick-and-mortar businesses are striving to achieve, and that is to create a cohesive experience for consumers both off and online,” said Richard Wolpert, co-founder and CEO of CheckOut.com. “The Wherehouse Music and CheckOut.com partnership is one of the first real examples of `clicks and mortar,’ a trend that we will see many traditional retailers and online businesses follow in the near future.”

This alliance is notable to many because it illustrates that brick-and-mortar retailers are becoming more likely to partner with an online retailer rather than start their own e-commerce business. Toys R Us has struggled mightily to keep up with eToys’ online presence, and barnesandnoble.com has not been able to slow down Amazon by itself.

“We quickly realized that the best way to successfully compete online was to partner with a well-established and independent online company,” said Tony Alvarez, chairman and CEO of Wherehouse Music.

Content and Commerce

CheckOut.com will be featured in Wherehouse’s Southern California stores by the holiday season and be featured in all of Wherehouse’s stores shortly thereafter. Kiosks that feature CheckOut.com entertainment content and e-commerce offerings will be added to Wherehouse stores.

In addition to selling items such as music, movies and video games, CheckOut.com features a variety of entertainment content, including more than one million product and artist information pages. Also included are chats with celebrities, interviews and entertainment news.

CheckOut.com seems to be having some success with securing well-known entertainers for its online chats. Later this week, the site will feature chats with up-and-coming female Hip-Hop group 702 and indie-rock favorites The Violent Femmes.

About Wherehouse

Wherehouse, based in Torrance, California, is the third-largest music retailer in the United States. The company, which has acquired Blockbuster Music, operated 600 stores in 33 states.

Wherehouse had more than $800 million in revenue last year.