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After the bubble: eToys’ head buyer ruminates on survival tactics for the new dot.com world

It's been a fun-free summer for eToys. Once the shiny new toy of investors, the Santa Monica-based company has more recently suffered the ambivalence of Wall Street, which in turn has sent its stock price spiraling. Exacerbating matters has been the...
September 1, 2000

It’s been a fun-free summer for eToys. Once the shiny new toy of investors, the Santa Monica-based company has more recently suffered the ambivalence of Wall Street, which in turn has sent its stock price spiraling. Exacerbating matters has been the highly publicized closures of its competitors (Red Rocket, Toysmart et al.) earlier this summer, and now the more recent news that its biggest rivals, Amazon.com and Toysrus.com, have merged their toy operations. Perhaps lost amid all the doom and gloom, however, is the fact that company revenues actually increased last year by an impressive 366%. And though profits continue to elude it, eToys has promised investors it will be in the black by 2003. KidScreen recently spoke to Jane Saltzman, eToys’ senior VP of merchandising, about the company’s successes, its failures and its future.

Q: Why do you think the toy e-tailing sector has encountered so much difficulty recently?

A: In the beginning [of e-commerce], there was this myth that if you put up a pretty web page, people would come and shop, and things like fulfillment and customer service would take care of themselves. I think what you’re seeing during this shakeout is the realization that all of these things are really hard to do.

Q: Given the fate of many of your

competitors, what have been the keys to

the success of eToys?

A: It’s a combination of many things. You need to have a website that works. You need to have a fulfillment system that gets the goods to a customer in a timely manner. It’s stuff that sounds like it’s no big deal-like having a search engine that functions properly, for example, is a really big deal.

Q: Fulfillment was a problem for many toy sites last year, including eToys. How does the company plan to avoid a similar experience this holiday season?

A: Last year, we had to outsource some of our fulfillment, and what we found-as many companies discovered-is that you have to control every aspect of the customer experience. The reality is that more than 99% of our packages did get to customers before the holidays. That said, we want it to be 100%. We already have a West Coast hub and we recently added an East Coast distribution center in Danville, Virginia, so we’ll be able to get packages to consumers even quicker than in the past.

Q: Will eToys be adding any new product categories this year?

A: This fall, we’ll be entering into private label merchandise and party goods, and you’ll also see us tapping into the teen market with room decor products.

Q: What advantages does eToys provide consumers with that its competitors don’t?

A: The flexibility to shop our site the way that you want. If you choose to shop by age or brand or category, you can. My favorite example: If you just want to see all pink toys for a three-year-old, you can. We don’t have one fixed way of shopping our site, and that’s fundamentally different from anything else that’s going on out there.

Q: Has eToys considered opening off-line stores?

A: No. We think one of our strengths is that we’re strictly an Internet company.

Q: Why?

A: Because deep down, I’m not competing against my store. I don’t have a store manager out here with one set of goals and myself with another set of goals. So, there’s no innate conflict going on.

Q: Many people have argued that bricks-and-clicks operations have an advantage over pureplays when it comes to service and post-sale support, which they can-in theory, anyway-facilitate via their off-line stores.

A: Our customer service is available 24-7. So you can call anytime of the day to ask a question, which is something that a bricks-and-mortar retailer can’t offer. Also, the amount of information we can provide on a product (because we’re not constrained by the knowledge of a US$6-an-hour store clerk) is a huge advantage for us.

Q: Five years from now, what type of company do you envision eToys being, in terms of the services it will be able to offer?

A: We’ll definitely be one of the first companies to offer consumers a full multimedia experience, which will include downloads of products and 3-D imaging. The broadband technology isn’t there yet, but when it is we’ll be ready.

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