News

On-line toy biz battle

While the toy e-com biz has thus far been led by contenders from outside the physical toy store realm, toy retailers that are jumping into e-com, such as K-B Toys and Wal-Mart, are seen to have an advantage over cybercos-the ability...
August 1, 1999

While the toy e-com biz has thus far been led by contenders from outside the physical toy store realm, toy retailers that are jumping into e-com, such as K-B Toys and Wal-Mart, are seen to have an advantage over cybercos-the ability to amortize service across platforms.

The latest to weigh in on the category, e-tailing behemoth Amazon.com, began offering toys in mid July after experimenting with seasonal toy offerings last November. Like eToys and toysrus.com, Amazon’s toy store provides many of the same popular mainstream brands, such as Barbie, Pokémon and Star Wars, as well as some more obscure specialty items, like Alex Toys’ Mood Changer Craft Kit.

Brian Birtwhistle, a product manager for toys at the company, wouldn’t reveal how many SKUs Amazon launched with, but added that it would be stocking considerably more product, including video games, for holiday `99.

Also moving into the virtual retailing arena, Consolidated Stores, parent company to toy chain K-B Toys, announced in late June that it had teamed up with specialty toy site Brainplay.com to launch its new store kbtoys.com, which would also offer a variety of specialty and popular, TV-advertised toys.

Understandably, both ops will be have to play catch-up with more established sites, eToys and toysrus.com, in terms of securing market share. On that score, so far most analysts have been bestowing eToys with the title of victor. The Wall Street darling, which was the first to try selling toys over the Internet back in the fall of `97, posted revenues last year of US$34.7 million, which decimated its nearest competitor toysrus.com’s paltry `98 gross of US$2 million to US$3 million, according to Sanford C. Bernstein specialty retail analyst Ursala Moran.

Out of the gate, eToys established a site that contained a wide range of toys, was uncluttered and easy-to-use for consumers.

By contrast, Moran says TRU’s site, which launched in spring of `98, was ‘slow, confusing and featured a poor search engine.’ TRU has since taken several steps to try and remedy its shaky entrance into e-commerce. In May, it enlisted the financial muscle of investment firm Benchmark Capital and announced it would be investing US$94 million in its Internet ops, part of which would be spent on building a new fulfillment center in Memphis. It also rejigged the layout of its site, which now closely resembles-surprise, surprise-the eToys site, making it more intuitive and user-friendly. Starting this month, TRU will also up its SKU count to 10,000 items, which betters eToys’ selection by 500. In part because of these moves, Moran sees toysrus.com quickly becoming a more formidable competitor to eToys.

‘You have to remember that while eToys did an impressive US$30 million in sales last year, Toys `R’ Us is still a US$11-billion company,’ says Moran. That TRU sells more toys-albeit off-line-should give it an advantage over eToys in supplying consumers with the season’s hot items, especially during peak toy-selling periods like Christmas, says Moran.

Sima Williams, an analyst with Forrester Research, agrees, adding that TRU’s e-com fortunes will depend a good deal on its ability to leverage its on-line business against its off-line business. ‘That means bricks-and-mortar stores need to be able to accept returns of merchandise purchased on TRU’s site, or supply product to consumers if it’s out of stock on toysrus.com,’ says Williams.

TRU will have to get its off-line and on-line components integrated fairly quickly, says Williams, since the largest off-line toy seller, Wal-Mart, ‘will make a major foray into on-line toy sales sometime during the fourth quarter of this year.’

About The Author

Menu

Brand Menu