CNBC- POWER LUNCH
ETOYS (ETYS) PRESIDENT, CEO AND FOUNDER TOBY LENK ON THE TOY BUSINESS FROM THE WYNDHAM BEL AGE IN WEST HOLLYWOOD, CALIFORNIA
SEPTEMBER 13, 2000
SUMMARY: Lenk says the company is very excited about the upcoming holiday season. Lenk comments on the competitors in the toy retailing space. Lenk says that consumers like to shop online.
Bill: You could sell these at eToys, Toby Lenk the founder and CEO of eToys.
We could, but typically our focus is on children's things.
Bill: You don't want to broaden your horizons?
We like to stay focused on just kids and family.
Bill: Last year there were problems. The high-profile problems are not just for you, but the whole industry. The shortages of products and problems of delivery and so forth. What do you make of this holiday season?
I think that this holiday season is going to be the time for us to shine. For the really good e-tailors to shine and prove their stuff and every holiday we get very excited and we are very excited about this holiday season. I will add there is a lot fewer people out there this holiday season. The other people aren't going to be around this year.
Bill: Fewer, but bigger and more prepared and your pals at Toys "R" Us are teaming up with Amazon.com.
We have increased our capacity by 10x and in house capacity. We have capacity for the next two years and we have a major investment this holiday. We will be good as we were last year.
Bill: Let me bring in some email questions, I forgot to set this up, I can't do it the sun is shining in my eyes there. Two prevailing points from viewers. One says why buy your company's stock when I can buy a stronger retailer like an Amazon.com and who is teamed up with Toys "R" Us. The other says why not buy you? You continue to show growth and the stock has fallen off, but that is systematic of the other e-tailers, not you.
Last year we had upwards of ten competitors in the space. This year there is one competitor out there and that is Toysrsus.com, using Amazon as a third party service provider. Last year with the intense competitive environment, we are at number one, we are almost three times the size of the number the two player, Toys "R" Us. We have the best customer experience, the best content and the best children's selection and the best brand name and we have dominant leadership. In an environment of upwards of ten to one competitors the market leader can only gain or hold share. The other thing is I always expected one competitor to be out there. There is plenty of to go around.
Bill: What about the possibility of hooking up with a bricks and mortar site? I will give you example, I recently bought something from an online retailer, I won't mention who it is. They have a bricks and mortar and online presence. What I did online was I was able to access their warehouse of my local bricks and mortar store, find out if they had it in product and I could choose to either pick it up or they would deliver it to me in the next day. Isn't that where we are going in this business?
It is an interesting question, in our space, Toys "R" Us made a strategy, to buy online and return to stores. Interestingly no longer will you be able to buy at a Toys "R" Us store and return to the store. Some players are repudiating that and going the other way. There are different segments of customers out there and they care about different things. The customer we are looking for wants more selection are more content, more convenience and they don't want to have to return stuff they want it right the first time. That is what we help them do.
Bill: What do you think of the holiday shopping season, even with the Fed raising rates?
In our space, you always buy stuff for the kids. People want to shop online and that is the thing. People who do a good job of servicing that and will have a great opportunity ahead of them.
Bill: Nice to see you, thank you for joining us.
Thank you, Bill.