We are delighted to be Amazon's first trusted partner in Europe

Carphone Warehouse

In the US, Amazon has already forged relationships with Toys R Us and bookstore Borders.

The alliance represents the growing trend of linking off-line and on-line retail groups.

Amazon was one step ahead of the pack in launching its popular online shop, and boasted of its "first mover advantage".

But it has since discovered that customer preference often stick established on-the-ground brands when they go online.

Cross-linking

Carphone Warehouse pre-payment phones are now available under the new co-branded site. In six months the alliance is due to be extended to landline phones.

Our brands are both vibrant, our services complementary... plus, there are further exciting developments in the pipeline

Steve Frazier Amazon UK

Carphone Warehouse already has its own website selling mobile phones, which it says is "very successful".

This site will continue to exist, offering a parallel service.

The link through from Amazon will give Carphone Warehouse access to Amazon's three million customers, while Amazon will gain Carphone Warehouse's expertise in phones.

Amazon will be responsible for stocking, selling and delivering the products into the market.

Costly deal?

No financial details of the deal were disclosed, but analysts said that the deal was heavily weighted in favour of Carphone Warehouse.

Existing sites with a link to Amazon.co.uk earn 5% commission from anything bought.

Amazon has yet to make a profit, although it remains optimistic of coming out of the red in its core operations by the end of the year.

In the first three months of 2001, the virtual store racked up losses of $49m on sales of $700m.