A new crop of B2B e-marketplaces lure manufacturers, wholesalers and distributors with promises of new markets and growth—but they can also represent tough new ...
Online toy sellers dig deep into the box to compete with the big chains.
On the web site of toy seller Ty’s Toy Box, a chatty blogger informs readers about the newest DVD of Iron Man, the Marvel Comics hero, and offers the latest scuttlebutt on the burgeoning TV career of Olivia, a porcine protagonist of children’s books.
Written by a mother of young children, the blog creates an informal conversation with shoppers in an effort to gain a competitive edge in the rough-and-tumble world of toy retailing. Ty’s uses it to promote products, run contests, and offer giveaways.
“We wanted to connect to our customers,” says Ty Simpson, CEO of the Erlanger, Ky.-based company. “This blog is a way to create a dialogue. We want to keep people engaged and coming back.”
The blog is a perfect example of the kinds of things online retailers can and must do to stay competitive with behemoths that dominate the toy-selling business like Wal-Mart Stores Inc., Toys “R” Us Inc. and Target Corp. Offering content that parents can read any time and that provides insight into particular toys and how children use them sets online toy retailers apart from their offline competitors. “You clearly have to carve out something that is unique in your total offering, whether it’s product, price, experience or convenience,” says Jim Okamura, senior consultant with J.C. Williams Group Ltd., retailing consultants.
Other content that online retailers have been making much of lately includes product reviews, information about product recalls, and videos and other ways of demonstrating toys in use. In addition, because online retailers know the identities of their shoppers and how to reach them, they can be in much more direct-and more frequent-communication with customers than chains could ever be. Furthermore, online retailers have an easier time of tapping into overseas markets and of creating super niches that are just too small for chains to bother with.
Online toy sellers are prime examples of why consumers shop online. Because busy parents may have little time to spend visiting toy stores, and often geographically distant grandparents can’t be there on birthdays and other special days, the Internet can be the perfect venue for people buying toys. Not only can consumers shop from their homes, but they also can comparison shop.
The online toy market is well worth pursuing-if a retailer can figure out the right formula. Forrester Research Inc. projects that in 2012 online retailers will account for 32% of all toy sales, compared to online accounting for 11% of the total retail market. Only computer, hardware, software & peripherals; gifts cards & certificates; and music & videos will experience a higher proportion of sales coming from online outlets than toys.
In many cases, the online environment offers toy retailers a great opportunity to deal with challenges head on. The mother’s blog on Ty’s Toy Box’s web site, for example, provides a way for the retailer to add a personal flair to a marketing medium that lacks the warmth that a friendly store clerk can generate. “The mother who writes the blog is just like our average customer,” Simpson says.
Simpson reports that the content-heavy blog draws toy shoppers to Ty’s web site on its own. And he adds, 10% of those who read the blog go on to browse Ty’s products, with between 4% and 5% of those shoppers making purchases.
The big-toy market
In addition to blogs, which require customers to come to the site to read, retailers can engage in more direct communication with customers. The Parent Co.’s eToys.com, for instance, publishes an e-mail newsletter to reach out to customers with information on new products and weekly promotions. It tries to keep consumers interested in toys year-round with e-mail marketing campaigns targeted to birthdays and toys suited for summer vacations and travel. While a spokeswoman for eToys.com says it is difficult to quantify the newsletter’s direct impact on off-season sales, she calls it “an important revenue driver for us. E-mail marketing plays an important role in our overall marketing strategy year-round.” This spring, for instance, the newsletter promoted outdoor items like swing sets and playhouses.
Online toy retailers believe they have an advantage over stores when it comes to large items like playhouses and swings. While it is not easy for stores to display many large items on their shelves and floors because of space limitations, e-retailers can sell an endless number of such items. They not only run photographs of these products but also can screen demo videos, sometimes in three dimensions, and offer reviews from other parents who previously bought the items for their children.
EToys.com uses its direct contact with customers to connect shoppers with these customer-written product reviews. It e-mails customers about three weeks after they have made an online purchase and asks them to submit their opinions and reviews on the items they bought. EToys.com says it offers 150,000 product reviews on its site, many prompted by the e-mail solicitations it sends to customers.
And when it comes to the negative publicity focused on toy safety, online retailers can use their connection with customers to their own advantage, since they know who their customers are, what they’ve bought and how to reach them. Unlike bricks-and-mortar toy stores, they can list safety standards and tips on their web sites and advise shoppers online about returns. “They’re being proactive in that regard,” Okamura says.
Cutting through the hype
Robert McKay, vice president of marketing and sales and the head of e-commerce for Step2 Co., a toy retailer and manufacturer, says online customer reviews also can help blunt parental concern over toy safety. “Online reviews provide peer feedback,” he explains. “They cut through the hyperbole that often exists in sales copy.”
Another area where online sellers can outperform store-based toy retailers is in product demos. While a store might have some toys set up for kids to try out, space is limited for that purpose. Buyers are limited to what they can tell from the packaging and what they might have seen in TV commercials for big sellers. But a web site can post videos for dozens or hundreds of products. And if done right, those can be an effective sales tool.