This week we learned that yet another retail giant has gone into administration because they were too slow in implementing their digital transformation plans. When Toys“R”Us opened their doors in the UK they were already a household name across the pond. By the year 2000 it had partnered with Amazon in what now seems like the world’s craziest ever deal. Amazon would sell exclusively Toys“R”Us products on its platform and Toys“R”Us maintain its strong pipeline of toys.
By 2003 a multi-million dollar lawsuit was underway when Amazon began selling toys from other retailers on its platform. Amazon claimed that this was due to the inability of the retailer to maintain the stock of products. However, by the end of the case, no monetary damages were awarded. Toys“R”Us did win the case and the agreement ceased. By 2006 the retailer belatedly joined the eCommerce market by launching its own site. By this point, however, the information divulged to now it’s the biggest competitor (Amazon) during the partnership meant that they knew what was selling, the frequency of sales and who the target markets were for each product.
Toys“R”Us had made a huge mistake in underestimating the impact that eCommerce would have on its business.
- A clear lack of digital strategy, they had a site but no vision of how it could be developed to meet the needs of the modern consumer.
- An outdated marketing strategy that comforted its lack of digital expertise. Too often focusing on TV advertising, whilst neglecting the ever-growing digital channels.
- Poor internal processes that lead to fulfilment shortcomings. Fulfilment poses a huge problem for retailers, especially those operating in seasonal markets. Toys“R”Us failed to bridge the gap between its consumers and their supply chain.
This is a lethal cocktail of problems for any organisation. In a climate where more than 50% of online transactions start at Amazon online retailers need to move with unprecedented speed to out-innovate their competition and deliver the best possible products and services to their customers.
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