In its second-largest acquisition, Amazon buys the company for $970 million.
Gomez Advisors, a provider of Internet research and analysis, unveiled Its first Internet Toy Scorecard today. Online toy giant Etoys topped the Scorecard, followed by Amazon.com, KB Kids.com, Smarterkids.com and ToySmart.com.
According to Gomez Advisors Senior Analyst Liz Leonard, "As the critical holiday season approaches, online toys in 1999 will be what online books were in 1997. We expect the market to take off this holiday season as more and more shoppers turn to the Internet, particularly for products that are commodities -- like toys. Why would shoppers fight holiday lines and chaos in crowded toy stores when they can get exactly what they want - at a low price - on the Internet?"
Educational toys are the fastest growing segment of the industry, with sales increasing 12 percent in 1998. Leonard noted that online toy retailers are responding by marketing these products and offering comprehensive information to drive sales. "Online toy stores have seen the potential of the educational market, and they have embraced it heartily. This has not been the case with many bricks-and-mortar stores," she says.
The online toy market is poised to experience tremendous growth, with revenues rising from $43 million in 1998 to what Gomez Advisors estimates will be $230 million this year. By the year 2002, online toy sales will be a $1.6 billion industry.
"Clearly," Leonard says, "the opportunities in the market are enormous, and the leading online players are being extremely aggressive and creative in their attempts to capture customers."
Etoys topped the Gomez Scorecard because, according to Leonard, "Convenience and price are the name of the game in online toy sales, and EToys is the hands down winner in both of these categories. Their customer profile settings, 'wish lists,' gift registry, breadth of products and lowest price guarantee set them apart from their competition. In addition, the Etoys site is well organized, easy to use and offers products for everyone from infants to adults," she concluded.
Of the top five online toy retailers on the Gomez Advisors Scorecard, only one - KB Kids.com - is affiliated with a bricks-and-mortar retailer (KB Kids.com is a division of KB Toys).
As Leonard noted "Many of the dominant bricks-and-mortar toy companies have been reluctant to embrace the Internet in a substantive way, and they will pay a high price for their hesitation. The convenience factor is a big draw for busy working parents who know what toys they want and can research other products online. Why fight traffic and wait in lines at the store when the online toy sites are making it so easy and affordable to buy via the Web?" Leonard concluded.