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AIM6348 E-Commerce Strategy and Control Team project

AIM6348 E-Commerce Strategy and Control Team project. Toysrus.com Team Members Huang Huang Cenk Tolunay Greg Cohen Yu-Ling Kao Spring 2003. On-line toy Industry. On-line toy market increased from $425 million in 2001 to $1.6 billion in 2002

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AIM6348 E-Commerce Strategy and Control Team project

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  1. AIM6348 E-Commerce Strategy and ControlTeam project Toysrus.com Team Members Huang Huang Cenk Tolunay Greg Cohen Yu-Ling Kao Spring 2003

  2. 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

  3. 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

  4. Revenues in Divisions

  5. 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 %.

  6. 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

  7. 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

  8. Threats • Wal-mart • Mattel • Other entrants

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

  10. Toysrus.com Status

  11. 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

  12. 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

  13. Pros and Cons of the partnership with Amazon.com Cons • Loss of control • Payments to Amazon.com

  14. Brick and Mortar Toys R Us A successful retailer Sales more than $ 11,000 million 1600 stores International operation Steady profits

  15. E-Commerce Hype Toys.com story Sales $100 Toys purchasing cost $ 81 Web site and technology $ 29 Order fulfillment $ 33 Advertising $ 37 Loss ($ 80)

  16. 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

  17. Revenues in Divisions

  18. Sales Growth in Divisions

  19. 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

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

  21. Questions??

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