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THE CUTTING EDGE: FOCUS ON TECHNOLOGY

Toys R Us Debuts Online Version of Infants Store

Retail: Launch of BabiesRUs.com is latest salvo in online toy wars. Baby products are seen as critical for growth.

July 24, 2000|ABIGAIL GOLDMAN | TIMES STAFF WRITER

Toys R Us Inc. will announce today the official debut of BabiesRUs.com, a division of its brick-and-mortar infants store brought online to challenge EToys and other Web toy sellers.

BabiesRUs.com is the latest entrant into the lucrative infant market, seen as critical to the growth of all toy retailers. The launch also is the latest in a series of competitive attacks launched by Internet toy retailers, whose ranks have already been vastly thinned by sinking "dot-com" stocks and big-money competition.

EToys has the difficult distinction of being one of the few online-only toy sellers to last this long--outliving competitors such as Walt Disney Co.'s Toysmart.com, Viacom Inc.'s RedRocket.com and ToyTime.com, which all folded during the last few months.

That means the upcoming e-tail toy wars will be harder fought among only the best and brightest competitors with the most money to invest.

In addition to the deep pockets of the most powerful traditional toy sellers, including No. 1 seller Wal-Mart Stores Inc., EToys and its rivals will face a tougher assault from dominant online seller Amazon.com, which launched its toy division last year.

And for EToys and ToysRUs.com, the competition is literally closer than ever. The two companies' soon-to-open West Coast distribution centers are directly across the street from each other in Ontario, a new ground zero for the online toy wars.

Santa Monica-based EToys launched its own targeted baby business a year ago, when it spent $150 million to buy BabyCenter.com, a separate site that offers pregnancy tips and baby-care articles as well as an online store.

BabiesRUs.com will offer content, products and an online version of its popular baby registry. Its official launch follows 10 days of testing.

Many analysts see the infant market as crucial to an online toy-seller's business because sales come throughout the year, as opposed to being concentrated in the holiday season. When Toysmart folded, it blamed its demise in part on Disney's slowness to approve the site's baby division.

In addition, selling products for the 4 million babies born each year establishes an immediate bond with parents, who can become dedicated customers for both their children and grandchildren. BabyCenter claims to have the best customer loyalty of any Web site, a boast that analysts say could be a fair one.

"This is Toys R Us playing catch-up," said David Cooperstein, director of online retail for Forrester Research in Cambridge, Mass. "But Toys R Us is still the biggest toy retailer out there, except for Wal-Mart. For the average toy buyer, Toys R Us is still the place they're going to go first, if grudgingly."

EToys and Toys R Us began wrestling each other and a variety of other upstarts for Web sales last Christmas.

The two rode out the holiday season alternating as the top toy site. This year, the stakes will be even higher, as millions of new customers make their first Web purchase and online spending doubles to an estimated $40 billion, according to Forrester.

But with that growth comes potential liabilities. Toys R Us last year was forced to make the embarrassing announcement that a small percentage of orders promised for the holiday would not arrive in time for Christmas.

"The vast majority of the people who shop with us had a great experience with us last year and continue to have a great experience with us this year," ToysRUs.com Chief Executive John Barbour said late Sunday. "The big difference between us and the competition is that we have the long-term assets that will let us be a long-term success in this business."

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