I wrote about the split between Toys “R” Us and Amazon the other day, and it led me to reminiscing about the days before the two companies got together.
After digging into a bin in my attic, I retrieved the Vol. 2, No. 25 issue of The Industry Standard magazine. The cover of that issue of “The Newsmagazine of the Internet Economy” had a big headline reading, Toys “RN’T” Us … At Least Not on the Internet.
Parts of the article from Aug. 30 to Sep 6, 1999 are eerily similar to the current predicament:
The perception of failure may not linger long for Benchmark. However, the same can’t be said for Toys. The company’s stumble may have already cost it another Christmas.
Of course, it’s still Q1, so they could bounce back in the coming months.
In Toys’ renewed Internet effort, results have come slowly while costs have piled up. The company said last week it will spend $80 million online this year (including up to $36 million in the current quarter) to spruce up its Web site.
How much is it going to cost them to rise from the ashes this time? Surely, they can’t go back to the infrastructure they invested so heavily in back then. That was on of their problems.
At this point, nobody seems to be taking Toys’ bold prediction of future online supremacy very seriously.
OK, well maybe they are more humble this time around. Not sure how their Amazon relationship breaks down, but if Amazon owns those customers, Toys “R” Us has a lot to do in order to re-build their presence.
Back in 1999 when this was all going down, Toys “R” Us did not have an affiliate program. Upon reading the article for the first time, I shot out a letter to the editor at the Industry Standard. The following week (September 13, 1999 issue), they published it…
TOYS “R” DUST?
How can Toys “R” Us expect to lead the online toy market by the end of the year when they are still using yesterday’s marketing model [“How Culture Clash Sank the Toys “R” Us Deal,” Aug. 30-Sept. 6]? According to an April survey of marketing execs by Forrester Research, affiliate programs were ranked No. 1 in effectiveness in communicating marketing messages. This report places affiliate programs ahead of PR, direct mail, sponsorships, banners and all other marketing methods.
KBkids.com, eToys and Amazon.com succeed because they understand the dynamics of online marketing. One obvious example of this is the fact that these companies operate quality affiliate programs. Will Toys “R” Us somehow manage to lead the online toy market by the end of the year? “Not likely,” according to my Magic 8 Ball.
So Toys “R” Us is once again behind the 8 Ball. Can an affiliate program save them this time?