One reason that Toys R Us may soon be a relic of the past? Amazon.com Inc.’s dominance of online toy sales.
The retail giant, the No. 1 retailer in the Internet Retailer 2017 Top 500, accounted for a vast majority of online sales across four major toy brands while Toys R Us Inc. lagged far behind and suffered from a plummeting conversion rate in early 2018, according to a new analysis from marketing analytics firm Jumpshot Inc.
Jumpshot analyzed online sales from four top toy brands, at Lego, Mattel, Hasbro and Nintendo. In each case, Amazon garnered no less than 83.3% of online sales for those brands. Toys R Us, on the other hand, had a mere 12.7% share of online Hasbro purchases and a lower share for the other three brands, Jumpshot finds. In each case, either Toys R Us or Walmart Inc. (No. 3) came in a distant second, with the other ranking third.
Adding to Toys R Us’s challenges is its online conversion rate has been steadily declining. The firm says total conversions for ToysRUs.com dipped 41% and 43% in January and February compared to the same period a year earlier. By contrast, conversion rates for the “toys and video games” category across all e-commerce sites were flat in January and down 18% in February compared to a year earlier, according to the analysis.
Deren Baker, CEO of Jumpshot, says the firm’s data shows e-commerce giants like Amazon and Walmart account for more than half online retail purchases. “Of that number over two-thirds goes directly to Amazon,” Baker says. “Combine the sales volume these e-commerce giants deliver for toy manufacturers with all the unique benefits like Amazon Prime, a great online shopping experience and the vast array of products these marketplaces offer, it’s tough to imagine a scenario where Toysrus.com could be very competitive just reselling the products Amazon already offers.”
Toys R Us is currently liquidating its U.S. operations. The toy retailer is ranked No. 38 in the Internet Retailer 2017 Top 1000, with online sales of $1.7 billion.
Retail analytics firm One Click Retail estimates Amazon’s U.S. toy sales were $4.5 billion in 2017, an increase of 12% compared to 2016. Amazon’s top toy category, One Click says, is infant/preschool, with $650 million in estimated sales. One Click also estimates Amazon’s share of the total U.S. toy market (online and offline) at roughly 16.7%.
In an ongoing effort to understand the most vital business strategies of merchants that sell online, Internet Retailer is taking a deep dive on conversion rate. Help us improve our estimates and category benchmarks by answering the two questions below.