PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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“That’s where we felt we had a potential competitive advantage over eToys,” Ahearn says. “We could spend our money on creating conversion-oriented programs so consumers can get toys at the same discounts online that they can get in the stores as opposed to spending money to drive them to the site in the first place.”
Now, when other multi-channel retailer web sites have been reabsorbed by the larger corporation in response to rising costs and a sinking economy, ToysRUs.com believes its continued status as an independent company-and its alliance with Amazon-constitute an edge: it can ride on Toys R Us Inc. advertising and avail itself of its buying power without bearing any responsibility for store performance.
It bears responsibility only for its own performance, and though the life-stage strategy is a sensible one for the web site, the toy retailer still faces significant challenges in the current economy and the battle for share, Goetzinger says. “The web could be a meaningful contributor if the strategy works, but for right now, people simply aren’t spending as much and there’s more competition,” he says.
That’s not stopping Toys R Us from setting its sights on expansion as it plans to leverage the brand with tighter cross-channel integration in months to come. Already, Toys R Us catalogs provide product numbers for items available online that, typed in the web site’s search box, will bring shoppers directly to that item. Toys R Us Inc. has recently started taking phone orders from its catalogs and the web site for the Babies R Us business, and is eying expanding that service to the Toys R Us catalogs and site.
“We have been concentrating on operations. We’ve been driving this business toward profitability, and we think that 2004 will be the year,” says Arthur. “We have a tremendous opportunity here and-and a tremendous amount of work to exercise that opportunity.”