Archive for Friday, November 24, 2000

Toy shops seek warm reception, eToys battle for this year’s $790 million market

November 24, 2000


— When Susan Macon buys her toys and other holiday gifts this year, she will do it in the crowded aisles of actual stores and not at anybody's Web site.

"I had a friend who had such a bad experience with one of the toy sites last year that I am nervous about trying it out," said Macon, who had just purchased some sketch pads for a friend's daughter at FAO Schwartz's main New York store. "Anyway, I get more pleasure out of shopping in toy stores."

The big challenge for online toy companies this new shopping season is not just attracting new customers but also luring back those who got burned last year by late deliveries and Web site crashes.

Online toy and video sales are expected to reach $790 million this year, according to and the Boston Consulting Group. While that is only 2.4 percent of all toy and video sales, it would be twice last year's sales.

Last year, many companies' sites were overwhelmed by heavy traffic and their delivery systems were clogged. couldn't take orders after Dec. 10, costing it millions of dollars in sales.

Many sites didn't last for a new season. But the survivors, including and eToys Inc., and new challengers are taking steps to prevent another disaster.

EToys, for example, scrapped its arrangement to have an outside company handle shipment and instead built two distribution centers covering a total of 2 million square feet. It also conducted "stress tests" jamming packages through the system to simulate the holiday rush.

In August, merged its toy unit with, which shipped virtually all of its packages on time last holiday.

The biggest cyber-toy battle is expected between Toysrus .com and eToys, both of which are touting exclusive products, huge selections and competitive prices.

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