Weekly Web Watch - Old guard, meet New Economy: Toys ’R’ Us teams with Amazon

The deal of the week, the one everybody was talking and writing about, was undoubtedly Amazon.com’s tie-up with Toys ’R’ Us. Briefly, the two are going to pool their efforts to develop a co-branded site for retailing toys and video games. Amazon is going to handle all the site development, fulfillment and customer service. Toys ’R’ Us will do all the purchasing and management of inventory.

The deal of the week, the one everybody was talking and writing about, was undoubtedly Amazon.com’s tie-up with Toys ’R’ Us. Briefly, the two are going to pool their efforts to develop a co-branded site for retailing toys and video games. Amazon is going to handle all the site development, fulfillment and customer service. Toys ’R’ Us will do all the purchasing and management of inventory.

The deal of the week, the one everybody was talking and writing

about, was undoubtedly Amazon.com’s tie-up with Toys ’R’ Us. Briefly,

the two are going to pool their efforts to develop a co-branded site for

retailing toys and video games. Amazon is going to handle all the site

development, fulfillment and customer service. Toys ’R’ Us will do all

the purchasing and management of inventory.



This has been variously interpreted. One tempting view is of Amazon

finally being forced to eat humble pie. After all, Amazon was once the

great e-force that was going to chew up the brick-and-mortar world. Toys

’R’ Us was the enemy, especially since Amazon had its own online toy

store, going after exactly the same people as Toysrus.com. And who was

going to resist the mighty Amazon, fueled by a stock market valuation

none of its rivals could match. Of course, things didn’t quite work out

like that.



And so the monster was forced into a humiliating alliance with the very

epitome of old world, ’they-just-don’t-get-it’ retailing.



But guess what. The alliance with Toys ’R’ Us may just be the smartest

thing that Amazon has done since, well, since the last smart thing it

did. Far from being embarrassing, it may just save Amazon’s reputation,

not least with the investment community.



You see, as Amazon started adding category after category to its

offerings, it turned out to be not nearly as good at some of them as it

had been at selling books. Toys, as a number of commentators have

pointed out in the past week, are notoriously slave to the fickle whims

of kids. And you can’t just return what you can’t sell back to the

manufacturer for credit. And you have to order a lot longer in advance,

from suppliers mainly in the Far East. It takes a retailer that really

knows the market - really, really knows the market - not to end up with

warehouses full of stupid fluffy toys or games devoted to the wrong

movie, and that no amount of price cutting will shift. Amazon found it

didn’t really know its toy buyers as well as it knows its book buyers.

And as anybody who has kids or talks much to kids will tell you, a store

that offers the wrong stuff, the lame stuff, last year’s stuff is, well,

lame. You wouldn’t want your friends to know you bought something there.

It’s like, social death, man.



Toys ’R’ Us, for its part, had one of the all-time Internet PR disasters

on its hands when it was forced to grovellingly tell thousands of

parents that the gifts they had ordered for the holidays were not going

to be delivered in time. Basically, Toys ’R’ Us found it could not cope

with the level of demand. This e-commerce thing turned out to be

trickier than just building a Web site. Simply having a slicker

operation next time around wasn’t going to mollify parents and kids who

had been let down last year. It needed something rather more drastic to

salvage its reputation.



So with neither having won any kind of victory and both licking their

wounds, Amazon and Toys ’R’ Us briefly raised the white flags and

started talking to the enemy, and that resulted in last week’s

announcement.



Talking and even getting into bed with the enemy, is not a sign of

weakness in the online world. It’s going to happen a lot more, and you

never know, it might just save your business and your reputation. Maybe

you should even recommend it.





Stovin Hayter is editor-in-chief of Revolution. He can be contacted at

stovin.hayter@revolutionmagazine.com.



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