The worlds of Internet and traditional bricks-and-mortar retailing moved a big step closer yesterday, as Amazon.com and Toys R Us unveiled plans to merge their online toy stores.

The move is an attempt by the companies to shore up their online toy sales amid a slump in confidence on Wall Street over the prospects for e-tailing.

The combination would make the Toys R Us Web business profitable in 2002, two years earlier than would have been the case, while also bringing forward the moment when Amazon would move into profit.

The two plan to launch their co-branded Website for toy sales this autumn. Amazon will operate the online "shop front" and handle distribution and customer service.

Toys R Us, meanwhile, will be responsible for merchandising the selection, purchasing and management of inventory.

Distribution problems at Toysrus.com meant that many of its customers did not receive their orders by Christmas last year, forcing the company to pay compensation. Amazon, meanwhile, was left with unwanted toys after the busy holiday season, reflecting its lack of merchandising experience.