ETOYS.COM

The meaning of the term "electronic commerce" has changed over time. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI, introduced in the late 1970s) to send commercial documents like purchase orders or invoices electronically. After that, it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web via secure servers with e-shopping carts and with electronic pay services, like credit card payment authorizations. Afterwards, many professionals predicted that there will be a big success in E-Commerce. However, part of the success, there are some failures on E-Commerce. One of the Top 10 dotcom failures is Etoys.com

Etoys.com launched in 1997, co-founded by CEO Toby Lenk, COO Frank Han and idealab founder Bill Gross. Etoys seemed like the perfect idea for busy parents. It offered a chance to order thousands of toys by just a click from computer a

t home. Etoys.com considered as a great competitor as they featured articles and newletters for new and expectant mothers, were popular and formed a loyal customer base. Besides that, editorial content also help distinguish itself from competitors and try to avoid the seasonality of the toy industry. As the result, Etoys had a successful IPO on May 20, 1999. The offer price was $20 and it closed at $76 on the day. This helped generate praise for the online toy category.

However, the good views do not long lasting. In year 1999, it failed to deliver some orders in time for Christmas which ruined critical first impressions for new customers and made many wary of using the site again. Many people had critique on the poor customer services by Etoys.com which is an essential part of E-Commerce businesses. In addition, the top management of the company was too fast in expanding company’s operation such as putting heavy advertising and spent a lot of money in building two warehouses in order to keep the inventories. These had resulted in Etoys not being able to adequately meet the need of its customers. Besides that, Toys “R” and Amazon.com formed a partnership in August 2000 has made Etoys.com into more difficult situation. As a result, Etoys sold its inventories which worth $5.4 million and also trade’s name, logos, url’s and trademarks for $3.5 million to KB Toys.