Toysrus.com Moves to Balance Seasonal Business

BOSTON (06/13/2000) - In a effort to attract new customers to its Web site and gear up for this year's holiday shopping season, Toysrus.com has inked a deal with Nickelodeon to launch a Nickelodeon boutique channel on its Web site.

In addition, Toysrus.com, a division of Peramus, New Jersey-based Toys R Us Inc., will acquire the inventory of its former rival, Red Rocket, owned by New York-based Viacom Inc., which also owns Nickelodeon. Red Rocket shut its virtual doors in May. Terms of the deal weren't disclosed, according to a statement issued by the companies.

John Barbour, CEO of Toysrus.com, said his company decided to team up with Nickelodeon in part because of its loyal audience - Internet-savvy children.

"Nickelodeon is one of the world's most recognized entertainment brands," Barbour said. "This new content will provide a fun and rich experience for our customers and help drive millions of visitors back and forth between our Web sites."

Starting this fall, Toysrus.com will offer a Nickelodeon boutique channel on its Web site. The channel will feature a variety of toys, video games and CD-ROMs based on Nickelodeon programs such as Rugrats, Blues Clues and Wild Thornberrys, the companies said. The boutique will link to the Nick.com Web site, which attracts more than 500,000 visitors per month.

Today's announcement comes as other online toy retailers close up shop or lay off employees - victims of a very crowed, very competitive market.

Since May, at least two pure-play Web-based toy stores, Walt Disney-owned Toysmart.com in Waltham, Mass., and ToyTime.com in Torrance, California, have shut down. KBkids.com in Denver, meanwhile, said it laid off 45 employees and fired CEO Srikant Srinivasan.

Toysrus.com, however, announced last week that it was doubling its staff to 600 and bolstering its online presence with new East and West Coast offices.

Alan Alper, an analyst at Gomez Advisors Inc. in Lincoln, Massachusetts, said the deal is a way for Nickelodeon to distance itself from the bad experience it had with e-commerce - the failed Red Rocket toy site - in the past. He said it's also a way for Toysrus.com to bring more business to its Web site as a means of balancing itsseasonal business.

"However, it still hasn't been proven that these links between offline and online properties work," Alper said. "Just look at the Disney-owned Toysmart.com and the Nickelodeon-owned Red Rocket. It's just a paper tiger until they figure out how to make it work."

David Cooperstein, an analyst at Forrester Research Inc. in Cambridge, Mass., said the move by Toysrus.com is a way to link itself with a valuable source of content in order to drive more traffic to its site.

"For Nickelodeon, maybe there will be some kickbacks or payment when its products are purchased," he said.

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