AOL, Retailer Seal Alliance

Internet giant America Online Inc. Tuesday forged a multi-million dollar alliance with brick-and-mortar discount retailer Target Stores to co-brand products and combine sales and distribution channels.

Financial terms of the agreement were not disclosed.

Under the arrangement, Target, a division of Target Corp. will become one of AOL’s premier retail partners. Target’s merchandise will be available in the Shop@AOL online shopping destinations and other areas across AOL, AOL.COM, CompuServe, Netscape Netcenter and AOL Digital City.

The alliance also calls for the creation of a special edition of the AOL service with co-branded features including new offers for consumers and prominent links to Target’s Web site. Exclusive benefits will be offered to new Target/AOL members who subscribe to the service through Target, and customers will be able to use a Target Guest Card as a payment option. In addition, the service will include an “e-zine” to inform members of special offers and branding initiatives created through the alliance.

The two companies said the alliance will allow them to reach a vast customer base. Target said about 1 billion people visit its more than 900 stores across the country each year. AOL and CompuServe have more than 24 million combined members and AOL’s Web-based brands have tens of millions of users, according to the company.

“The Target/AOL alliance is a new standard for how to combine the power of physical retail stores with the power of the Internet to create exciting offerings for American consumers,” said Jerry Storch, president, Target Financial Services and New Businesses.

AOL’s price was down 1.5 percent as of 11 a.m., but Target’s rose 2.2 percent.