honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Sunday, July 30, 2006

Miffed Toys 'R' Us, Amazon launch toy war in cyberspace

By Joan Verdon
McClatchy-Tribune News Service

HACKENSACK, N.J. — Former partners Toys "R" Us and Amazon.com spent two years fighting in court before a judge granted Toys' request for a business divorce.

Now their battle has moved into cyberspace.

The two companies, which ended their six-year online partnership June 30, launched dueling online stores this month. Both are determined to prove that they can do a better job taking care of the kids — and the customers who shop for them.

In this fight, consumers will be the judges, and the crucial verdict will be delivered in December, when the online stores must have the right toys in stock and get them to customers on time.

Toys "R" Us holds the advantages of being able to focus all of its online attention on toys and baby products, and driving shoppers to its site with its hefty advertising budget and network of 600-plus U.S. stores.

Amazon has the edge that comes with years of experience selling online and getting products to customers on time.

Toys "R" Us turned to Amazon for that expertise after the disastrous 1999 holiday season, when the Toys Web site failed to deliver thousands of gifts in time for Christmas. Toys executives called the Amazon partnership "a really nice marriage" and the relationship was cordial for the first three years. It turned sour after Toys accused Amazon of cheating on their exclusive partnership by also selling toys for other merchants.

Toys "R" Us opened its online site to customers July 1. Amazon followed with its own online toy store July 5. And both insist they are better off without the other.

Both say they offer many more toys for sale than under the previous arrangement. And they claim to offer more perks for customers.

John Sullivan, who heads the online division for Toys, said one of the biggest changes at Toysrus.com is that Toys now controls how customers are greeted when they come to the site. Instead of being routed to the Amazon site and buying toys on a site that also sells everything from lawn furniture to lava lamps, customers who go to Toysrus.com are greeted with banners with the familiar Toys "R" Us and Babies "R" Us logos. "We let customers know exactly who they're buying from," Sullivan said.

The Toys site also lets shoppers search by age because, Sullivan said, the company has learned customers often are looking for "the right gift for a 3-year-old" rather than a specific toy, and want suggestions.

The Amazon online toy store also highlights its new, improved features for toy shoppers, such as a broader selection and opportunities to earn free shipping.

Amazon spokeswoman Patty Smith said the two-week-old Amazon toy store already has "two times the selection of what we were able to offer under our relationship with Toys "R" Us, and we're continuing to add even more selections."

The biggest change for consumers, Smith said, is that many toys now qualify for the company's free shipping program. Now that it's on its own, Amazon is buying some toys directly from such manufacturers as Fisher-Price, Mattel and Hasbro and offers free shipping on those. (Toys stocked by Amazon's retailer partners, such as eToys and Target.com, are subject to shipping fees.)

Sucharita Mulpuru, senior analyst for Forrester Research Inc., predicts that Toys and Amazon will both do fine. Amazon, she said, "made a lot of money off of that relationship" with Toys, and that's why it fought the divorce, but toys remain a small part of Amazon's total business. "The bulk of Amazon's revenues still continues to come from their core businesses — books, music and DVDs," she said.