eToys Expanding To U.K.

Internet toy marketer eToys, Inc. announced today that it will soon expand internationally by launching a Web site in the United Kingdom.

The move marks the first time that the Santa Monica, California-based company has ventured outside of the United States. eToys said that it intends to introduce a Web site designed specifically for the U.K. in time for this year’s holiday season and added that warehousing for its toys and other children’s products has already been established in Swindon, west of London.

“Our U.K launch will enable us to bring to this market the same combination of superior selection and customer service that has made us the gold standard in kids’ retail in the U.S.,” said Toby Lenk, eToys’ president and chief executive officer.

Establishing A Beachhead

eToys officials expect that the U.K. will serve as a beachhead for further expansion across Europe and will provide the company with valuable international operating experience. According to industry analyst firm Jupiter Communications, Internet usage on the continent will quadruple to nearly 50 million households by 2003.

New Management Team In Place

The company said that Ruben Rodriguez, who joined eToys in May as vice president of international operations, is spearheading the overseas drive. Rodriguez brings a decade of international general management and toy industry experience to the position.

In addition, eToys also announced the appointment of James Bidwell as the director of marketing for Europe. Bidwell, a U.K. national, brings a diverse international marketing background to his slot, having served in senior marketing posts with companies such as Sega Amusements Europe and The Walt Disney Co.

Stakes Are High

eToys’ European push comes less than a week after Toys “R” Us, Inc.’s chief executive officer stepped down. Industry observers believe that the resignation was a direct result of the Paramus, New Jersey-based company’s inability to formulate an effective online marketing strategy.

Evidence of the failed strategy was on display earlier this month when the toy giant announced that it had severed its much-touted partnership with Benchmark Capital. Toys declined to go into the details as to why the deal crashed and burned, but some speculate that the Silicon Valley venture capital firm felt Toys would have insisted upon applying its brick-and-mortar mindset to its e-commerce-marketing foray.

This turn of events came only a month after Robert Moog — recruited in May to be Toys’ Internet guru — decided to pack it in. Some say that the former founder of University Games, Inc. abandoned Toys’ cyberproject after the company brass rebuffed his suggestion to heavily discount toys it offered online. Moog said the action was necessary in order to compete with eToys and Amazon.com. Management apparently feared that such a discount plan would undercut its network of 700 franchises throughout the country.

Despite Toys’ turmoil, eToys still faces stiff online competition from both Amazon.com — which only recently got into the toy-selling business — and Wal-Mart, which is beefing up its Web site for the holiday season. Moreover, a study by Net Effect Systems, Inc. shows that during the five weeks prior to December 25, there will be more than 1.3 billion online shopping sites visits — an increase of 71 percent from the 1998 holiday season.