HG, at $245 I already conceded the win to you. Not quite there, but close enough. I actually might be in the Bay area next April on business. Maybe I can pick up a dinner.
Anyway, the below article appeared in today's Chicago Tribune. I'm sure it is also reported elsewhere. I've seen the ads for eToys and felt it might help Yahoo's bottom line. But as I mentioned previously, there has not been much said about the "C" word, competition, on this thread. Well here's a start.
TOYS "R" US MAKES BIG PLAY ONLINE
By Susan Chandler
Tribune Staff Writer
April 27, 1999
When it comes to buying toys online, millions of savvy shoppers head to eToys.com, the largest toy seller on the Internet. Its user-friendly Web site offers age-appropriate gift suggestions and allows shoppers to create a personalized address book. They can even choose between Sesame Street or gecko lizard wrapping paper and have their gifts sent express to arrive in two or three days.
But Toys "R" Us Inc., the world's largest toy retailer, vowed Tuesday to dethrone eToys and become the dominant online toy retailer by the end of the year.
The Paramus, N.J.-based retailer also laid out how it plans to do that. In a major reorganization, Toys "R" Us is establishing a separate Internet business unit across the country near California's Silicon Valley.
It also will completely revamp its existing Web site with an investment from Benchmark Capital, a venture capital firm that has financed hot Internet properties such as online auctioneer eBay.
Meanwhile, it will set up a $30 million custom-built distribution center in Memphis to fulfill orders.
The online attraction is easy to see. Last year, online toys sales were estimated to be $68 million. By 2003, that's expected to reach $1.5 billion.
"These initiatives underscore our commitment to market share leadership for the Toys "R" Us e-commerce business, and its critical importance to our overall future," said Robert Nakasone, the company's chief executive.
It's about time, say electronic commerce experts. Toys "R" Us was slow to recognize the commodity nature of the toy business, which made it perfect for electronic retailing. A Purple Bucket of Legos is a Purple Bucket. A Sleeping Beauty Barbie is a Sleeping Beauty Barbie. If you can buy them at home on your computer and avoid standing in a long line with screaming children, why not?
And Toys "R" Us has even helped its online competitors get started because its own stores are mostly unpleasant, cluttered places to shop with poor customer service, retail consultants note.
Toys "R" Us went online last June as part of an attempt to revive its $11 billion franchise in face of increasing competition from discounters such as Wal-Mart Stores Inc. and fast-growing educational toy retailers such as Noodle Kidoodle. Last year, Toys "R" Us closed 90 stores and eliminated 3,000 jobs to cut costs.
But while Toys "R" Us may be late to the cyberspace party, it's still early in the electronic commerce game. Only about 20 percent of the U.S. population is on-line now. And no one is underestimating Toys "R" Us's impact on electronic commerce or the power of its relationships with big toy suppliers.
"They get product nobody else gets. They get it before other people," said George Whalin, president of Retail Management Consultants in San Marcos, Calif. "EToys has a head start, no question. But that won't stop Toys "R" Us from being successful."
Charles Schwab Corp. and Barnes & Noble Inc. have proven that traditional retailers of goods and services can move onto the Internet and become heavy hitters, other consultants note.
Still, some experts say it's no slam dunk that Toys "R" Us will quickly dominate the e-commerce toy business -- or make any money doing it. The company has much to do before the critical fourth quarter, when most toys are purchased, and right now they're still a distant second to eToys.
"EToys has an online cachet that Toys 'R' Us will have to work at building into its name. They have a first-mover advantage," said Ron Rappaport, Internet analyst with Zona Research, an online consulting firm in Redwood City, Calif.
EToys is about to get some big bucks, too. The company is planning an initial public offering in the near future. And given the premiums that Internet stocks are commanding, eToys could soon find itself with billions of dollars to invest in marketing and acquisitions.
That's why it's a smart move for Toys "R" Us to set up a separate Internet business unit, said Lauren Freedman, president of the Etailing Group, a Chicago-based Internet consulting firm.
To attract the online industry's top talent, Toys "R" Us will have to offer them an unbureaucratic environment and lots of stock options.
"You need to have separate business units or you can't get the funding to drive the business or the talent. The talent is options-driven right now."
Do you think that Toys "R" Us might have the resources, the infrastructure and the buying power with suppliers to follow up on their promise to be the #1 toy retailer online? |
