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Q: With the failure of such toy sites as ToyTime.com, Disney's Toysmart.com, and Viacom's Red Rocket, who do you consider to be your biggest competitors now? A: Our primary competitor is Toysrus.com. Beyond that, Walmart.com and Amazon. But for kids and families, it's Toys 'R' Us. Still, the Web is the Web, and I haven't seen a correlation between having a good Web site and having good offline stores. Q: Why do you believe many companies have struggled in the online toy space? A: Last holiday season we saw companies carpet-bombing coupons for free shipping and 30% off Barbie, as if they all had one playbook: discount because they didn't have every product we had. We thought hard about whether we should match the craziness. But you can't make money discounting. Q: You're expanding into providing hobby and party supplies. Why is that important from a competitive standpoint? A: What we're seeing in the current environment is a lot of narrowly defined companies rapidly going away. On the Web, it's very hard to be a one-channel company. Our great advantage is that we already have this huge customer database and a strong brand, so we can add channels very efficiently. The market potential is huge -- party supplies alone is a $5 billion industry. And that's not an optional product: For kids 10 and under, birthday parties are required. Plus the margins on those products are higher than in mass-market toys. But strategically we have to stay focused on children and families. We won't be selling wine or adult party favors on the party site. Q: Further down the line, how do you plan to enhance the site? A: The most impactful levers have yet to be pulled. Over time we hope to do some unique things with personalization, such as delivering parenting content to a customer as her children age up, or personalizing product pitches for, say, a four-year old or a six-year old. And there will be seamless integration between all the eToys channels. Q: How do you anticipate e-tailing in general will change over time? A: As broadband becomes widespread and with added functionality, service, and features, we can't even imagine what the online-shopping experience is going to be like in three or four years. Today the Web is the Model T compared to what it will become. |
