September 17, 2008, 12:00 AM

Top 500 toy and hobby retailers aren’t playing games with e-commerce

The combined 2007 web sales of toy and hobby retailers ranked in the 2008 Top 500 Guide totaled $1.12 billion, an increase of about 15% from combined web sales of $979.1 million in 2006. In comparison, store sales for the segment grew by just 4.9%.

Toy and hobby retailers weren’t playing games with growing their Internet channel in 2007.

In 2007 the combined performance of toy and hobby merchants ranked in Internet Retailer’s current Top 500 Guide easily outpaced the growth of store-based sales, which grew by only 4.9% to $17.3 billion from $16.5 billion in 2006, according to the U.S. Department of Commerce. In comparison and led by Toysrus.com, No. 43 in the Internet Retailer Top 500 Guide, the combined 2007 web sales of all online toy and hobby retailers reached $1.12 billion, an increase of about 15% from combined web sales of $979.1 million in 2006.

In 2007, Toys ‘R’ Us, which owns and operates Toysrus.com and Babiesrus.com, generated e-commerce revenue of $407.4 million, up 20.3% from Internet revenue of $338.5 million in 2006. Following Toys ‘R’ Us in The Top 500 toy and hobby rankings are American Girl LLC (No. 97) at $143 million; GameStop Corp. (No. 116) at $109.2 million; The Parent Co. (No. 117) at $106.5 million; Lego Brand Retail Inc. (No. 140) at $84.1 million; Big Fish Games Inc. (No. 198) at $48 million; JoAnn.com (No. 210) at $42.1 million; OpticsPlanets Inc. (No. 220) at $38.8 million; GameFly Inc. (No. 271) at $27.5 million and eHobbies.com (No. 364) at $16.2 million.

Toysrus.com now controls 36% of the online toy and hobby retail market as measured by the Top 500 Guide, compared with 13% for American Girl, 10% for GameStop and 9.5% for The Parent Co., the company formed by the merger of eToys Direct and Baby Universe in October 2007.

The big chain retailers used 2007 to grow their share of the market, but the fastest growing retailers were niche merchants and companies with a strong games business. In 2007 Big Fish Games was the fastest growing toy and hobby retailer ranked in the Top 500 Guide. Big Fish Games, which this week raised $83.3 in new capital from Balderton Capital, General Catalyst Partners and Salmon River Capital, doubled sales last year by embracing social networking and interactive gaming. In December Big Fish acquired Thinglefin Inc., a developer of perpetual online games that can be played by vast numbers of players, for an undisclosed price. Thinglefin develops “massively multi-player online,” or MMO, games. “The Thinglefin team and product vision are best in class among emerging MMOs,” says Jeremy Lewis, CEO and president of Big Fish Games. MMO games can accommodate large numbers of players and are characterized by perpetual “worlds” that players can drop into and out of at will. The games can go on indefinitely.

Following Big Fish, the next-fastest growing web retailer was Fat Brain Toys (No. 457). A one-time garage startup in Elkhorn, NE, the company has grown into one of the largest independent online retailers of specialty toys with 2007 e-commerce sales of $9.3 milion, up almost 60% from web sales of $5.9 million in 2006.

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