Tech Industry

eToys buys eParties in $1.6 million deal

The online toy retailer says it has absorbed much of what was the struggling party-planning site in an all-stock deal valued at $1.6 million.

eToys has absorbed much of what was struggling party-planning site eParties in an all-stock deal valued at $1.6 million, the online toy store said.

The move was expected. Last Monday, an eParties spokesman said the company was in the process of being acquired. Days before that, eParties, which launched only eight months ago, had laid off much of its staff.

eToys said it bought the eParties name and some of its technology, including personalization software that aids in party planning. Santa Monica, Calif.-based eToys also hired eParties chief executive David Haddad as a senior vice president, eToys said.

Last month, eToys said it planned to expand into party goods and hobby products. In preparation for next holiday season's clash with toy titan Toys "R" Us' Web unit, Toysrus.com, eToys has steadily fortified itself by increasing its products and service offerings. In addition to toys and video games, eToys sells software, books, videos, music and baby products.

eToys wants to be the one-stop shopping destination for all things children, said Gomez Advisors analyst Liz Leonard.

"Moving into party planning is a smart move on eToys' part," Leonard said. "The margins are high in this particular category, and the cost of bringing eParties in is probably low. But they have to do a lot more if they are going to stand a chance against Toysrus.com, which is just too big and possesses too strong a brand name."

For eParties, the sale shut the lights off on the firm begun by Net incubator eCompanies and its co-creators, former Disney executive Jake Winebaum and Earthlink founder Sky Dayton.

Indeed, for many of the event-planning sites, the life seems to have gone out of the party. Analysts say event planners are hard-pressed to generate cash flow and face competition from Web giants who may decide to build their own planning services rather than acquire one. Yahoo has entered the market and, given its sizable audience of users, poses a significant challenge to the existing companies.