Is Toys ‘R’ Us ready to manage its websites in-house?

It’s been a long time since Toys "R" Us managed its own e-commerce sites and its previous attempt was a notable failure. So, is the retailer ready to take another shot at going it alone? Yesterday’s announcement that the company is in the process of bringing its U.S. e-commerce operations in-house with a goal of launching new Toysrus.com, Babiesrus.com and FAO.com websites next summer suggests management thinks it is.

Toys "R" Us began using Amazon.com to manage its online operations following the holiday season of 1999 when its sites, then managed internally, experienced frequent crashes. As The Record reports, the company was subsequently fined by the Federal Trade Commission for its failure to deliver holiday orders on schedule.

In 2006, Toys "R" Us left Amazon for GSI Commerce, which was later acquired by eBay Enterprise in 2011.

toysrus.com

Source: toysrus.com

"As part of our ‘TRU Transformation’ strategy, one of our most important priorities is to optimize our e-commerce business and significantly improve the customer experience online. To accomplish this, we believe it is in our best interest to manage and control all aspects of our e-commerce platform as we move forward," said Fred Argir, senior vice president, chief digital officer, Toys "R" Us, Inc., in a statement. "We expect this will provide us with the flexibility needed to grow and expand in an omnichannel world, while allowing us to rapidly respond to changing customer dynamics and an ever competitive marketplace."

The decision by Toys "R" Us to go it alone comes as another blow to eBay as it moves closer to spinning off PayPal and seeks a sale of its Enterprise unit. According to Internet Retailer, Dick’s Sporting Goods is in the process of switching to its own platform by early 2017.

BrainTrust

"There are probably a number of reasons ranging from security concerns and a desire to better control information to operating cost and the need to provide better customer service. It also frees them from being at the mercy of a competitor (as was the case with Amazon) or a partner with an uncertain future (which may or may nor be the case with eBay)."

Ryan Mathews

Founder, CEO, Black Monk Consulting


"Risk versus reward applies to this decision as it does all others. However, in this case, the risks are higher and so may be the rewards."

Steve Montgomery

President, b2b Solutions, LLC


"Many shops are doing this. Not a new thing. They are leveraging their people and proven platforms to make the process more a part of the business. Omnichannel — who cares?"

Tom Redd

Global Vice President, Strategic Communications, SAP Global Retail Business Unit


Discussion Questions

Why do you think Toys “R” Us has decided to develop its own e-commerce platform in-house? Is the company making the right decision?

Poll

8 Comments
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Grace Kim
Grace Kim
8 years ago

Managing their own e-commerce platform will give Toys “R” Us more control as stated by their CDO. Outsourcing may lead to some savings, but could be more rigid in terms of features, analytics and understanding the true value of data center analytics tied to business applications that give business insights and operational insights. Toys “R” Us would need to make sure that they have visionaries architecting this effort to be successful.

Ryan Mathews
Ryan Mathews
8 years ago

There are probably a number of reasons ranging from security concerns and a desire to better control information to operating cost and the need to provide better customer service. It also frees them from being at the mercy of a competitor (as was the case with Amazon) or a partner with an uncertain future (which may or may nor be the case with eBay).

As to whether or not its the right decision — that remains to be seen. True, it’s a new day and a new team, but that in and of itself is no guarantee of success and the cost of a second failure is likely to be higher than the first.

Max Goldberg
Max Goldberg
8 years ago

Why share data about your customers? Toys “R” Us feels that it can better serve itself by bringing web operations in-house. This will not be an easy transition. Consumer expectations of large retailer websites are high. Toys “R” Us will not only have to deal with keeping the site current and managing distribution, it will need to keep the site secure. Hopefully consumers will not see any glitches during the transition.

Steve Montgomery
Steve Montgomery
8 years ago

Risk versus reward applies to this decision as it does all others. However, in this case, the risks are higher and so may be the rewards.

The e-commerce world has changed a great deal since Toys “R” Us last internally managed their own site. Customers’ expectations are higher and the reaction through social media stronger when things go wrong.

Done right it will be of YTD defined value for the company. Done wrong it may be disastrous.

Kai Clarke
Kai Clarke
8 years ago

This is a smart decision. IT is no longer the realm of a select few organizations and purchasing the equipment, developing a website and controlling the content and timing of changes is a clear reflection of world-class companies in all categories. Toy “R” Us clearly wants control of its own destiny, including that of its IT. Doing this will allow them to reduce costs, increase customer service and focus on alternate e-commerce models which reflects their customer needs.

Gordon Arnold
Gordon Arnold
8 years ago

There are a number of big issues with outsourcing any portion of a company’s enterprise system. Rising costs and third-party tech support turnover are the most glaring for most of us. Where the costs get out of control the most over time is with e-commerce updates and changes. The errors and slow response are largely the result of offshore subcontractors being in the mix. And the more subcontractors the longer every change may take. RadioShack is smart to bring the work back in. This will prove to be an even better decision if the IT talent pool is up to the task. A scarcity in today’s large retail businesses with the high prices the people with capabilities command.

Ed Rosenbaum
Ed Rosenbaum
8 years ago

Good move by Toys “R” Us. It shows they have learned and moved forward after the past attempt. My guess is there will be hiccups. There always are. But they will be minor and back to new business as usual.

Tom Redd
Tom Redd
8 years ago

Many shops are doing this. Not a new thing. They are leveraging their people and proven platforms to make the process more a part of the business. Omnichannel — who cares? All channels are what the retail needs to be focused on and in-house helps to make this focus happen.