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<nettime> EToys Return From Dead
Bruce Sterling on Sun, 21 Oct 2001 11:19:00 +0200 (CEST)


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<nettime> EToys Return From Dead


*Should They Be Killed Off Again? *8-/

eToys Site Back in Business
By Nora Macaluso
E-Commerce Times 
October 18, 2001 

The eToys name and Web site is being revived by former rival KBKids.com,
which picked up those pieces - and eToys' inventory - folllowing eToys'
bankruptcy filing earlier this year.


The eToys Web site is back, in time for the holidays.

The online toy seller, which went out of business and had its assets
acquired last spring by toy retailer KB Holdings, is operating as a unit of
KB's subsidiary KBKids.com, according to a notice on the eToys Web site.

Morningstar.com analyst David Kathman told the E-Commerce Times that the
eToys name is "fairly well-known" and is likely to be remembered when
shoppers head into the holiday buying season.

However, Kathman added that the resurrected eToys is not likely to outdo
Amazon.com (Nasdaq: AMZN), which sells toys through a partnership with Toys
'R' Us. 

"They (Amazon and Toys 'R' Us') are clearly the leader in the online toy
business right now," Kathman said. "This revived eToys is going to be a
player, but I don't think they're going to be as big as the Amazon-Toys 'R'
Us combination. It remains to be seen whether [eToys will] do a lot of
advertising." 

eToys, founded in 1998, was once one of the most popular e-commerce sites,
but kept losing money and ended up filing for bankruptcy in March.

KB Holdings bought eToy's Web site, name and logo at a bankruptcy auction in
May for about $3.35 million, following the purchase of the e-tailer's
inventory in April. At the time, the company said it would integrate eToys'
assets into its own online operations.

KB chief executive officer Michael Glazer, in announcing the purchase of the
additional assets in May, called eToys "the most visible and operationally
sound online retail toy site in the world."

A group of shareholders later sued the company over alleged misstatements in
its initial public offering prospectus.

Game for All Seasons

As eToys' downfall shows, "it's just very, very hard to be a purely online
retailer, especially in such a hugely seasonal business like toys," Kathman
said. "You have to have the capacity to handle all the Christmas rush, but
then for most of the rest of the year, a lot of that capacity is going to be
idle." 

For that reason, said Kathman, alliances between traditional toy sellers and
Internet companies are the way to go.

Holidays on Way 

Analysts are divided on how this year's holiday shopping season is shaping
up. Forrester Research on Wednesday said it is sticking with its forecast of
$11 billion in online holiday spending.

Forrester said the September 11th terrorist attacks led many people who had
not previously shopped online to use the Web to make online donations.
Having cleared the initial hurdle, those people might now turn to the Web to
make purchases this holiday season, Forrester analyst Christopher Kelley
said. 

Yet Morningstar's Kathman said he thinks sales will probably be a little
slower than last year.

"The economy is bad, and the whole September 11th thing has people a little
jittery," he said. "People are kind of tightening their belts, and toys tend
to be a luxury item."  

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