It seemed like a good idea at the time, but now Amazon.com's enormous investments in partner online retailers are proving to be lead weights around its ankles.

In its bid to become king of the e-commerce hill, Amazon funneled hundreds of millions of dollars into e-commerce start-ups.

Many of those investments have gone sour, including Amazon's ownership stakes in Living.com and Pets.com, both of which filed for bankruptcy last year.

Overall, Amazon recorded US$305 million in investment losses in 2000, according to its annual report.

Losses were incurred in Ashford.com, Audible, Greg Manning Auctions, NextCard, Sotheby's Holdings and Webvan Group.

Strategic partners such as Ashford and Drugstore.com helped Amazon expand into more product categories and provided an advertising revenue stream, said Carrie Johnson, retail analyst at Forrester Research. However, "what was promised to be a very large revenue stream has trickled down into a very small revenue stream."

Now, the company is trying to fight back. Recently, the world's largest Internet retailer sued struggling partner Webvan for allegedly breaching an advertising agreement between the companies.

In its annual report filed with the US Securities and Exchange Commission, Webvan said Amazon filed its suit in Superior Court of the state of Washington on Feb. 7. A spokesman at Amazon declined to comment.

In the lawsuit, Amazon said HomeGrocer.com, an Internet grocer that Webvan acquired last year, breached an advertising agreement with the bookseller. Amazon, which owns about 6 percent of Webvan, is seeking a judgment of US$6.25 million, plus attorneys' fees and expenses, against HomeGrocer, according to the Webvan report filed last week.

Webvan said it plans to fight the suit, but declined to comment further.

The chances of Amazon recovering damages from Webvan are slim. The online grocer's stock is trading at 13 cents per share and will be delisted from the Nasdaq on April 12 if the stock price doesn't stay above US$1.

In addition, Amazon has lost out on payments from other partners that now lie in the dot-com graveyard.

Last year, when furniture retailer Living filed for bankruptcy, Amazon lost an investment of US$14 million in the company. Amazon also had agreed to promote the online furniture retailer on the Amazon home page in exchange for US$145 million in payments from Living over five years. Amazon never received any payments.

The volatile Internet retailing sector has made many of Amazon's investments seem risky. Amazon invested US$35 million to create a joint-venture auction site with Sotheby's that closed last October. Now, Amazon promotes Sothebys.com, a separate auction site operated by Sotheby's, in exchange for annual cash payments from the New York auction house.

In another partnership, Amazon invested US$57.8 million in bankrupt online pet supply retailer Pets. It also paid US$62.5 million for its original investment in HomeGrocer, and US$60 million for a 32 percent stake in struggling Kozmo.com.

Tom Courtney, a former analyst at Banc of America Securities, doubts Amazon will realise much of a return from any of its e-commerce investments in the end.

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