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Technology Stocks : eToys Inc. (ETYS) -- Ignore unavailable to you. Want to Upgrade?

To: Rajiv who wrote (634)	8/17/1999 2:19:00 PM
From: Bob Kim	Read Replies (3) \| Respond to of 1330

Rajiv and all, I've updated my ETYS page for recent research comments. Here's the link: restex.com Bob

To: Rajiv who wrote (634)	8/19/1999 3:21:00 PM
From: gtc123	Read Replies (2) \| Respond to of 1330

As expected, the expectation of a great e-Christmas has led to a pretty healthy rebound for eToys. And, as expected, eToys continues to get lumped in with the top-tier Internet companies. Here's a just-release article from Internet World with very positive feedback on eToys business model and how Amazon.com won't beat them in this category. One Wily Competitor By Whit Andrews ETOYS IS THE NEXT kind of retailer, and Amazon is not. EToys is building an Internet retail brand by seeking to own access to the demographic that stretches roughly from birth to puberty and then studding it with interesting content, technologies, and merchandising, with the presumption that retail will follow. It didn't start out that way. At launch, eToys, too, was a search blank and a catalog with a shopping cart attached. But all that has changed as Amazon began bearing down on eToys and the company's strategy matured. "In nine months we've gone from being a toy site to a diversified one-stop shop for children," says CEO Toby Lenk. A former Disney executive, Lenk makes no apologies for taking the best lessons from that company's successes and applying them to retail. EToys treats no product as a single entity, for example, any more than Disney treats a movie as just a story to watch on-screen. Toys are bundled with books that are bundled with videos that are bundled with more toys, and shoppers select which items should go in the bundle to avoid duplicating already-owned items. While Amazon has chosen to pursue a traditional retail model via the Internet, eToys has added technologies and competencies that Amazon lacks. EToys has a wish-list feature, rich fulfillment capabilities - such as multiple wrappings and gift tags within a single order that even Amazon can't match - and a compelling product bundling strategy. EToys provides deep content, much of which is independent of retail categories, through its newly acquired BabyCenter property, in a strategy expected to extend to the toddler and young-child markets. And eToys matches Amazon move for move in the demographic it considers critical, offering videos, books, and music for children. The site is, like a Disney property, comfortable for child and adult alike. Design is clean and forthright but not imbecilic. The search engine works simply and precisely, and its wish list is welcome but not intrusive. Lenk says he is most proud of the fact that children and parents can search for products side by side without being cast into a sea of items or straying into unsavory product areas. "There must be 500 fire trucks we could sell," he says, but eToys sells just two dozen. Sales so far are strong, with $34 million in revenue last year. Nonetheless, Amazon is a formidable threat, with more than $1 billion in the bank (eToys' war chest is closer to $200 million) and a traffic stream of online purchasers second to none. In contrast, Amazon has focused on adding categories, including, as of last month, toys. In essence, Amazon has chosen to pursue a traditional retail model via the Internet: catalog sales - with the stupendous product depth the Internet allows - and strong customer service. Having hired several Wal-Mart executives and worked hard on invisible assets like a major warehouse network, Amazon has become a superstore-by-mail. Its acquisitions strategy does hint at a far more complicated future, but that has yet to take shape. In a business overwhelmingly driven by holiday sales, the question is whether the eToys year-round model will have customer attention - always at the forefront of an Internet retailer's mind - and whether it can cherry-pick consumers already on-site looking for other gifts. Lenk says the eToys model will prevail in his demographic. Rivals just don't get how to sell what kids want, he maintains. "What we're doing is, we are really focused on the kids experience," he says. "We're doing more and more kid stuff." Child's play never looked so rough.