Toys "R" Us: from Yesterday to Tomorrow

2478 Words Apr 18th, 2006 10 Pages
Toys "R" Us: From Yesterday to Tomorrow

MKT 5344

Professor: Dr. Nicholas Gerlich

West Texas A&M University

2004 Introduction

This paper discusses company 's multichannel strategy, its marketing issues and overall approaches to maintain sustainable competitive advantage.
Toys "R" Us Inc. emerged as a public company in 1978. It is an $11 billion dollar company with approximately 1,500 stores worldwide. The company is a market share leader in both the U.S. and Japan. In the U.S., its largest market, it operates the largest free-standing destination toy and baby specialty stores.
Since its inception, Toys "R" Us, Inc., has grown to include the following divisions:
• Toys "R" Us, U.S., including Geoffrey 's Toys "R" Us
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One major way Internet retailers competed in the toy market was based upon price since profit margins were quite slim. Participants in the toy war on the web besides Toys-R-Us included Etoys, Amazon.com, Smarterkids.com, Target.com, and Toysmart.com. The year 2000 brought approximately 28+ million shoppers online and $793 million in total online toys sales, compared to $650 million in online sales in 1999 . In 1998 Etoys.com was the number one online toy merchant, stunning industry watchers-and complacent offline retailers-by selling $23 million in toys and related products during the holiday season. In 1999 Etoys.com topped the market again with $151 million in sales. Analysts attributed Etoys.com win to the company 's superior web store user-interface that enabled shoppers find items easily and quickly. Exhibit 1 shows the selected sales and percentages of toy revenues derived from online sales by the top players in 1999.
Exhibit 1
1999 Online Toy Sales
Company Online Toy Sales Percentage of Total Toy Revenue
Etoys $151million 100%
Amazon.com $95 million 100%
Toys-R-Us $50 million 0.4%
KB Toys $26 million 1.5%
Source: USA TODAY research

But since then situation changed dramatically. Toys-R-Us arrived late to the E-business world with Toysrus.com in 1998 losing critical early battles to eToys.com and ceding some of the market to Amazon.com and KBkids.com. The development, launch, and operation of toysrus.com

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