Revenue increased 11.9% in Q1 of 2015, to $17.26 billion compared with $15.42 billion in the year-ago period.
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Niche players like SmarterKids could be vulnerable, says Williams, since Amazon and other high-volume sellers have added more specialty goods. To keep customers on board, many toy sites are ramping up personalization and customer loyalty programs, as well as adding new products and services. “Our theme in 2000 is increased personalization,” says Mark Reese, chief e-commerce officer at Toysmart.com. “Last year was the year we found out who our customers are.”
Along with more promotions aimed at birthdays and newborns, Toysmart plans to learn which categories of toys appeal to which customers, then target promotions accordingly. Reese expects to see Toysmart’s Disney Babyshop, which opened with about 700 products in January, becoming a key differentiator, too. “Users will have a unique way to view and buy all our nursery products,” he says, “and we’ll have a lot of interactive tools.” Shoppers can view all Winnie-the-Pooh theme nursery products at once, for instance.
Other e-retailers, including KBkids, will reward repeat business. The site will unveil a loyalty program early this quarter but hasn’t announced details. “Repeat custom-ers will be treated extremely well,” says Marty Smuin, vice president of business development, “with dis-counts, coupons and special offers.”
Leonard calls these targeted promotions “a welcome trend,” that results from mining data that many e-retailers already collect but haven’t tapped in the past. “Many of these features didn’t exist six months ago,” she says. “Now, they’re able to more proficiently weed through infor-mation on a customer-by-customer basis.” But outside awarding frequent-flier miles, she’s skeptical about sales incentives. “Offline loyalty programs don’t work well online,” she says.
Whatever the marketing and merchandising distinctions among competing sites, basics like fulfillment and customer service still offer the most mileage with customers. That’s especially true as Internet merchants carry more and more products, blurring the distinctions from store to store, points out Annette Gleneicki, BizRate’s director of client research solutions. “When products become commodities,” she says, “differentiation happens with customer service.”
Christine Blank is a freelance writer based in Orlando, Fla.