Would someone be so kind as to tell our friends over at TMF and YHOO boards, that one more of their alleged virgin territory markets, appears to be quite crowded already and other companies already have amzn's famous "head start" in these areas. I hope that the lobster market (what a quote!) stays open for amzn.
nytimes.com
July 27, 1998
Shopping for Toys Without the Kids
By DANA CANEDY
irst virtual toys, now virtual toy stores.
With toy makers and sellers catching up with the computer age and making a big push into Internet retailing, shoppers can now buy
everything online -- from Tamagotchi virtual pets to Teletubbies plush dolls. The hope is that these stores-without-walls will attract
parents with modems and motivation, people either too busy or too impatient to deal with the big chain stores' huge, warehouse-like
retail outlets.
So, well ahead of the 1998 critical year-end selling season, toy companies are racing to become the Amazon.com of their industry.
Some of the online players include Noodle Kidoodle Inc., Toys "R" Us and the leading upstart company, Etoys, a unit of Idealab.
Some manufacturers, including Mattel Inc., which has a Barbie Web site, are also experimenting with online marketing.
Having had one of its best years in a decade last year, thanks to a healthy economy, and hoping for
a repeat performance this year, the toy industry is in an expansive, experimental mood. Though
online retailing still accounts for only $13 million of the $22 billion annual U.S. toy market, the
virtual toy shop is the industry's attempt to find new or additional sales among the households that
are most likely to value time-saving efficiency and to have the discretionary income to pay a
premium for such convenience. Nearly 20 million Americans now shop online, according to the
Web measurement company Media Metrix Inc.
But the industry's move online is not without risk. The big retailers face the same sort of internal
conflicts that bookseller Barnes & Noble does in trying to counter Amazon.com -- how to respond
to the online upstarts without cannibalizing the brick-and-mortar franchise.
Toy makers must venture carefully into cyberspace, lest their direct-sales activities rankle the
retailers they rely upon to move their merchandise.
For their part, the online upstarts, despite the cost advantages of not having to invest in stores,
warehouses and big inventories, may find themselves struggling to match the marketing muscle of
big established retail brand names.
Then there is the question of whether the touch and the texture of toy shopping can translate as
readily to the digital realm as some other consumer activities that have taken hold online, like
booking airline seats or trading shares of stock.
"One of the big strengths of toy retailing is the in-store excitement, merchandising and the personal touch," said Frank Reysen Jr.,
editor of Playthings, a toy industry publication. "There is a danger of that getting lost in the web of technology. The initiatives, attitude
and approach have to be a virtual representation of the store itself, and that's not an easy thing to do."
The toy merchants are undaunted, though.
The large retailers say they will win the Internet game because their well-regarded names and vast resources give them an in with
consumers that should spill over into online selling. For customers, the companies say, those strengths will translate into low prices,
quick response to orders and a better chance of finding limited-edition items -- like Mattel's popular Share a Smile Becky doll, a
wheelchair-bound friend of Barbie -- that smaller toy sellers may have trouble obtaining in large volume.
But the small, niche operators say they have the upper hand because they offer many of the
must-have items and also specialty products -- like Schylling's make-your-own chewing gum
kit -- that tend to sell in such small numbers that the big guys find them not worth stocking.
And whether large or small, the companies say they can offer online consumers the advantage
of not having to traipse around in search of the last Beanie Baby in town.
Longer term, toy merchants envision that this type of retailing will become the modern
equivalent of that more traditional form of direct-to-consumer marketing -- catalog shopping.
Like catalog sales, which rely on mailing lists assembled from consumers' past buy-by-mail
habits, the databases created by electronic commerce would enable toy makers to observe
the shopping habits of computerized households and use discounts and other enticements to
keep them coming back for more. It is a way for merchants to get to know their customers'
preferences to an extent not possible when a person goes into a store and pays cash for a Sing and Snore Ernie.
All of the industry's behind-the-scenes strategizing for her money and loyalty is just fine by Chana Wilson, a housewife and mother of
two boys, ages 3 and 12, who was in the market recently for an ant farm for her out-of-state nephew. "I knew I had to buy a toy,
wrap it up and ship it to Houston," said Mrs. Wilson, who lives in Beckley, W.Va., and ranks shopping at toy stores right up there with
visiting the dentist.
Trying to avoid "all that rigamarole," Mrs. Wilson, whose husband, Derric, is a supervisor at a prison, went online and found Etoys,
where she bought an Uncle Milton ant farm for $19.95 plus $4 for shipping and $3 for gift wrapping.
"That saved me time and money and a major headache with my 3-year-old," Mrs. Wilson said. "You just don't want to take a
3-year-old shopping for other kids' toys."
It is just this sort of shopper that the big conventional retailers are going after. Toys "R" Us,
the nation's largest toy retailer, started a Web site last month that it intends to heavily advertise
on the Internet as well as on television and through home delivery circulars later this year. So
far, the site has about 2,000 items, compared with about 15,000 stocked in Toys "R" Us
stores. Tens of thousands of Internet users have already visited the site, though the company
declined to say how many had bought anything.
Visitors to www.toysrus.com are assured that shopping is "fun and fast." Say, for instance,
someone is clueless as to what to buy an 8-year-old girl. The shopper need only choose a
category, like dolls, click on the child's age and the target price. Seconds later a suggested list
of merchandise appears, including Baby Pick Me Up, which sells for $14.97 plus shipping
and handling.
Just like a theater operator who tries to drum up concession sales by piping in the smell of
freshly popped corn, Toys "R" Us is using its personalized suggestion feature also to get
shoppers to consider buying items they may not have intended to. Those looking for dolls, for instance, are also shown a Barbie Disc
Girl CD Player for $16.99. Call it an electronic hard sell.
Prices are typically the same for toys bought online or in stores. But the convenience of Internet shopping does mean having to pay
shipping rates, which are about $5 for a $25 order and around $9 for a $100 purchase. The companies insist, though, that the cost is
more than worth the convenience.
"People are more strapped for time, and they are looking for new ways of shopping," said Joel Anderson, vice president of Toys "R"
Us Direct. "There is a new medium out there that is emerging, and it is an area we need to be in."
Toy maker Hasbro Inc. is feeling the same need. The company, which has been dabbling in online product marketing for more than a
year, recently hired a specialist in Internet commerce to develop a plan to advertise further and sell selected items like collectibles
directly to the consumer. The executive, Wendy Riches, had managed the interactive advertising unit of WPP Group's Ogilvy &
Mather agency, as part of her role as chairman and chief executive of the Ogilvy One North America division.
One potential problem is that Hasbro sells mainly to retailers, some of whom may frown on any form of added competition. This sort
of conflict has also been a problem for computer makers, like Compaq, which has a well-established network of distributors who have
been wary of the company's plan to expand into online direct sales.
Already, some toy retailers are raising concern about Hasbro's intentions. "This is the manufacturer cutting out the middle man," said
Shane Igoe, new media manager at F.A.O. Schwarz, which was one of the first toy sellers to go online when it started a Web site
nearly two years ago.
Toys "R" Us is less concerned, saying Hasbro's Internet appeal will be limited because it will offer only its own brands and not Barbie,
Beanie Babies and other popular toys made by its competitors. For its part, Hasbro says its online selling efforts are not meant to put it
in competition with Toys "R" Us or any other retailer. Rather, the company says, it is seeking to augment what retailers are already
doing, even listing store locations where shoppers can find certain items.
"We look at this as a partnership with the retail trade," said Adam Klein, Hasbro's head of global
marketing. "Each one of our key retailers is going at this thing a different way. We have to have our
own in-house expertise to both work with them and, where there are gaps, to be able to recognize
them and go after these opportunities."
Hasbro also says that, at least initially, it will limit its toy selling to items not available in retail stores.
The company, which has not determined when it will begin selling online beyond the interactive
products like the Yahtzee CD-ROM it already offers, was fuzzy on whether consumers would
have to pay retail prices for toys bought directly from the manufacturer. Klein said only that "the
idea is not to compete with the retail trade, and this is part of everything we are going to be looking
at."
With Hasbro and other industry giants edging in on its domain, Etoys, a year-old company based in
Santa Monica, Calif., that has about 3,000 items listed for sale on its site, www.etoys.com, may need a Star Wars laser to fend them
off. But the company says its strength is in the range of playthings it provides.
"What we do is have the popular products and also have a lot of cool products like kits to make your own chewing gum, products you
never see in Toys 'R' Us," said Toby Lenk, chief executive of Etoys. "A big retail buyer can't buy six of something. It's too inefficient
for them so they buy in bulk and can't test on a smaller scale."
Etoys also knows it will have to rev up its marketing machine to avoid getting overshadowed by the competition. Without discussing
precise amounts, the company said it planned to triple its multimillion-dollar marketing budget for the next six months.
If people like Mrs. Wilson, the mother in West Virginia, are any indication, the online toy market is up for grabs to anyone who can
make toy shopping effortless without significantly adding cost. But won't she miss an intrinsic part of the toy-buying experience by
buying a lovable baby doll without first giving it a squeeze or without reading product information on a box of building blocks?
"Heavens, no," Mrs. Wilson said. "I could care less. I already know what a box of Legos looks like. I wish I'd found this before last
Christmas." |
