During the holiday season of 1999, right smack dab in the middle of the dot com bubble, a well-known retail store nearly crashed and burned, learning a very important turn-of-the-century lesson in business. Just in time for the holidays, popular retailer Toys ‘R Us opened their primitive website, which just could not stand against the waves of consumers looking for cheap deals on toys for their children. On November 6, 1999, Toys ‘R Us began advertising free shipping from its newly ‘revamped’ website in the sixty-two million copies of their newsletter. Over forty percent of customers found themselves unable to even access the site for several days, as the twentieth-century server was no match for such a large influx in site traffic.
After the holiday horror of 1999, Toys ‘R Us formed a joint venture with Amazon, at the time a growing name in the infant world of Internet retail. Rather than fixing the problems that made their site inaccessible, they decided to give up on making their own stride into the Internet all together. The deal was simple enough and seemed mutually beneficial at the time. Toys ‘R Us agreed to supply Amazon with toy products, making money as a supplier and allowing Amazon to deal with the process of actual sales. This marked the beginning of the end for Toys ‘R Us.
Recently, the company announced that they would be closing all US and UK based Toys ‘R Us stores, something that has been proposed in headlines since November of 2017. In the world of expanding technology, Toys ‘R Us joined the ranks of old-aged corporations that refused to adapt to a changing market. In fact, as proven by their 2000 deal with Amazon, they went out of their way to avoid e-commerce after faceplanting at the very beginning.
In a previous article that I wrote in 2016 titled “Is Traditional Retail Dead?”, I stated that traditional retail is not dying before our very eyes but transforming into a market that offers more accessibility, more convenience, and more problems. Monopolization has become more of a threat than ever in recent years, with Amazon being the Prime example of what we should expect from allowing so much wealth into one vertically and horizontally monopolized market.
The deal between Toys ‘R Us and Amazon did not last long. In 2004, the toy retailer filed suit against Amazon, who allegedly failed to live up to its end of the bargain. Toys ‘R Us was floundering, all in part to their inability to accept a growing ‘trend’ in business and due to the terrible trade deal that supposedly existed to prevent such a grave mistake from happening again. Although Amazon and Toys ‘R Us settled in 2009, there was not enough time to reverse nearly a decade of poor business decisions and overall ignorance.
According to an article by CBS News, Toys ‘R Us has spent somewhere in the ballpark of “$100 million” in an attempt to improve its neutered stance on e-commerce. Looking back, such an attempt would have possibly worked had it began immediately after the disaster that unfolded in the holiday season of 1999. Unfortunately for them, it was far too late to implement an entire framework as anything was being outperformed by the growing forces of the now monopolized industry.
In many ways, it appears that Toys ‘R Us put themselves out of business. For decades, the toy retailer has sponsored the sales of overpriced toys in an oversaturated market that was increasingly turning to the convenience of growing corporate giants such as Amazon. Executives can claim that the bankruptcy and failure of Toys ‘R Us et al. rests on the generation that prefers electronics over age-old toys. However, there is no argument that can hide the fact that Toys ‘R Us did this to itself. There was no proper ingenuity that could rival the unsettling monopolization of e-commerce, and from the very beginning the corporation decided to bolster the very company that would eventually be their ultimate demise.
Toys ‘R Us was very fearful of dipping their own hands into the then-shallow pool that was Internet retail after their failure in 1999. At the time, this could have been seen as a very cautious business decision to leave e-commerce to the so-called professionals. Looking back, it was perhaps the biggest mistake that could have been made. Toys ‘R Us followed suit of their vintage advertising campaign. They didn’t want to grow up, and now there will never be another Toys ‘R Us kid.