Does on-line toy shopping have a future?

Although a number of retailers have begun selling kids products on-line, and Toys `R' Us plans to launch its virtual store site,, later this month, retail analysts remain skeptical about the success of selling toys in cyberspace....
July 1, 1998

Although a number of retailers have begun selling kids products on-line, and Toys `R’ Us plans to launch its virtual store site,, later this month, retail analysts remain skeptical about the success of selling toys in cyberspace.

The nature of toys, as a product, does not lend itself to on-line selling, says Jaime Pereira, a partner at Ernst & Young’s Retail Group, located in Boston, Massachusetts. Unlike hard goods, such as books, which have done well on the Net, Pereira says, toys share qualities in common with soft goods, such as clothes, which people generally like to touch before they purchase. Another reason is that ‘there’s a lot of impulse buying that goes on at a toy store,’ says Pereira. ‘Take a stroll through a Toys `R’ Us and you’ll see what I mean-kids running and screaming around the aisles because they’ve suddenly fallen in love with a toy they’ve picked up. You don’t get that happening on the Net. The technology is not there yet.’

While some toys might eventually do well on-line, in the main, says Pereira, sales of toys will not mirror that of books or electronics. Instead, initially, he expects people to use Web sites primarily to price shop for the cheapest items, and then go to the retailers that sell those toys.

If that were to happen, then companies would be using the Internet’s natural application, as a marketing tool first and foremost, says Stuart Dibble, director of marketing at Cyber Dialogue, a research group that tracks the behavior of Internet consumers.

‘If toy stores look at on-line [retailing] from a selling point of view, then they’ll have a lot more questions to answer. If they look at it from a purely marketing perspective, then they should definitely be there.’ Right now, the great misconception companies have about the Internet, says Dibble, is that they see it only as a potential revenue stream, a belief, he contends, that is just plain wrong.

‘Our research indicates that most people look at product information on the Internet and then place a telephone order, or go to a store. Well, [as a retailer], if that’s the way you got a lead on a sale, . . . what do you care if someone buys on your Web site? If people want to actually come to your store, you can use the Web site as a brochure to draw them in.’ The act of searching for product information on the Internet has become an extension of the shopping experience many people have come to enjoy, says Dibble. It also provides retailers with an opportunity to promote the products and the services they are offering to their customers. According to Cyber Dialogue, at present, 27 percent of consumers are buying merchandise over the Internet, while 70 percent are looking for product information. Dibble predicts that the former figure will increase, as consumers become more comfortable with buying products on-line.

When that shift happens, toys will be at the forefront of products people start buying, says Walter Loeb, a retail consultant and publisher of The Loeb Retail Letter. ‘I believe on-line retailing can account for as much as 10 percent of a toy retailer’s total sales,’ says Loeb, but, he adds, only toys that are advertised on television, which people are familiar with and that do not require much explication, will sell well.

Until the sea change in consumers’ attitudes towards on-line transactions occurs, retailers should be content with positioning themselves in cyberspace, and finding out what works and what doesn’t, says Pereira.

Toys `R’ Us seems to be heeding that advice, on the eve of launching its new site, by keeping official expectations decidedly low key.

‘We hope [the site] will be very well received, but we think it’s going to take some time to increase the awareness of people that we have it, and what’s on it,’ says Rebecca Caruso, senior vice president of communications at Toys `R’ Us. With the site, Caruso says, Toys `R’ Us is hoping to target a new group of consumers, one that doesn’t necessarily include kids or their parents. Kids and parents will still want to come to Toys `R’ Us, but ‘for people like grandparents, or aunts and uncles, who live a great distance from their young relatives, [] will be a great convenience for them to shop on-line, especially if they’re working and their time is at a premium. Certainly, those are the people we hope will use it.’

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