AIM6348 E-Commerce Strategy and Control Team project

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AIM6348 E-Commerce Strategy and ControlTeam
project

• Toysrus.com
• Team Members
• Huang Huang
• Cenk Tolunay
• Greg Cohen
• Yu-Ling Kao
• Spring 2003

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On-line toy Industry

• On-line toy market increased from 425 million in
  2001 to 1.6 billion in 2002
• The main companies are Toysrus.com and Etoys.com
• The industry is fairly new, but the the market is
  still highly intense
• Toysrus.com has advantages in this competition

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Overview

• One of leading retailers of toys, children's
  apparel and baby products
• An 11 billion business with 1600 stores
  worldwide
• Operates in five divisions
• In 1999, Toysrus.com had been established

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Revenues in Divisions
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Advantages- brand name

• Back up by the Toys R us, Inc. the biggest toy
  retailer
• Convenience of the land-base chain stores all
  over the states and globally
• Toysrus.com spends 18 of revenue in marketing,
  while competitor Etoy.com spends 37 .

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Advantage-products

• Long history in toy industry, have different
  product lines and operate globally
• .com , as store front , collects information to
  make the company understand customer needs
  quickly and provide products comprehensively

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Advantage- integration with Amazon.com

• One is a longtime leader in toy industry, another
  has strong e-brand online.
• Reduce cost to upgrade the e-commerce system

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Threats

• Wal-mart
• Mattel
• Other entrants

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Strategy

• Alliance with Amazon.com
• Allow customer to return online shopping to chain
  stores and order online but pick up in stores.

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Toysrus.com Status
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Team up with Amazon.com

• 1999 Christmas on-line orders flushed into
  Toysrus.com
• In 2000 announced its internet joint venture with
  Amazon.com
• Amazon will oversee Web operations, order
  fulfillment, and customer service
• Toys R us will take charge of buying and managing
  inventory

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Pros and Cons of the partnership with Amazon.com

• Pros
• Expertise in buying and merchandising toys
• Builds Toys R us brand identity
• Saves its fulfillment and customer service
  costs
• Removes the need to invest in upgrading its
  distribution facilities
• Attracts more customers

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Pros and Cons of the partnership with Amazon.com

• Cons
• Loss of control
• Payments to Amazon.com

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Brick and Mortar Toys R Us

• A successful retailer
• Sales more than 11,000 million
• 1600 stores
• International operation
• Steady profits

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E-Commerce Hype

• Toys.com story
• Sales 100
• Toys purchasing cost 81
• Web site and technology 29
• Order fulfillment 33
• Advertising 37
• Loss ( 80)

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E-Commerce at Toys R Us

• A very bad start in 1999
• Smart decision of joining Amazon.com
• 65 million and growing number of visitors every
  year
• Number one site in its category
• Explosive growth in sales reaching 300 million
• Posted profit for the fourth quarter of 2002

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Revenues in Divisions
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Sales Growth in Divisions
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E-tail vs Retail ?

• E-commerce is a great tool to lower costs and
  increase sales
• E-commerce complementary not an alternative
• Old and new economy functions better together
• Concept E-tail is not an a foe to Retail but a
  friend

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Conclusion

• Renew / Renegotiate contract with Amazon.com in
  2010?
• Re-Launch own site
• International online sales

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Questions??