Toys R Us Inc. plans to launch an online marketplace in 2018 for its Toy R Us and Babies R Us businesses on its U.S. and Canadian sites.
The purpose of the marketplace, which will allow retailers and brands to sell on websites operated by Toys R Us, is to increase product selection and decrease the time it takes to get new products to market, says Toys R Us, No. 38 in the Internet Retailer 2017 Top 500.
Additionally, the online marketplace will allow the toy retailer to use data from marketplace sellers’ products to identify new retail partners and influence what Toys R Us sells in stores. The toy retailer offers 100,000 SKUs online, Internet Retailer estimates.
“As the leading toy and baby retailer, customers expect us to have the latest and greatest assortment of products available. The marketplace model provides the opportunity to accomplish just that,” Lance Wills, Toys R Us’ global chief technology officer, said Friday in announcing the marketplace.
The toy retailer is working with marketplace technology vendor Mirakl to set up its online shopping portal. Mirakl has more than 100 clients in 40 countries that use its technology. Its clients include Best Buy Canada, Hewlett Packard Electronics (No. 44) and 1-800-Flowers (No. 59). Toys R Us and Mirakl did not immediately respond to request for comment.
Toys R Us grew online sales 10% in 2016 to $1.488 billion from $1.353 billion the previous year, Internet Retailer estimates.
In mid-September, the toy retailer became the largest retailer in 2017 to file for Chapter 11 bankruptcy protection. The company said it will continue to operate its online store as well as its approximately 1,600 physical store locations throughout North America.
Toys R Us is not alone among retail chains in launching an online marketplace to boost product offerings online. Wal-Mart Stores Inc. (No. 3) relaunched its marketplace in March 2016, adding approximately 2 million products to Walmart.com each month, largely from its marketplace sellers. It has 67 million SKUs on its site now, compared with 8 million in January 2016. Web-only home improvement retailer BuildDirect Technologies Inc. (No. 172) and home furnishings retailer Crate and Barrel (No. 78) both launched online shopping marketplaces in 2016.
Like many retailers, Toys R Us faces stiff competition from Amazon.com Inc. (No. 1) and the marketplace it operates. While Amazon does not report its sales by category, marketing firm One Click Retail estimates that Amazon sold $4 billion worth of toys in 2016 in the United States, or approximately 19.6% of the $20.4 billion U.S. toys market. The firm says Amazon’s sales in the category increased 24% year over year, compared with growth of 5% for the toys category as a whole.
Those figures suggest Amazon is the largest U.S. online seller of toys. Toys R Us leads in web sales among retailers that primarily sell toys/hobbies goods.
Once upon a time, Amazon and Toys R Us were partners.
In 2000, the two companies signed an agreement in which Amazon.com would be the exclusive online retail outlet for Toys R Us toys, games and baby products. In the early stages of its marketplace, however, Amazon began allowing other toy retailers and brands to sell on Amazon.com. Eventually the deal ended after Toys R Us sued Amazon in 2004 on the basis that allowing other toy retailers to sell on Amazon’s marketplace broke the agreement that Toys R Us would be the exclusive provider of toy products. In 2006, Toys R Us won the right to terminate its contract with Amazon and set up its own e-commerce site.