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
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
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