Amazon may make play for toys this month
An equity analyst that covers the online toy market says all signs point to Amazon making a major play in the second half of June.
In the past few months, Amazon has taken a number of steps to make a serious foray into the online toy market, said Derek Brown, an analyst who covers e-commerce companies for Volpe Brown Whelan. Amazon has hired people with experience in the toy market, has cemented relationships with toy manufacturers and distributors, and has amassed "significant" inventories of toys, Brown said.
But Amazon's plans would go well beyond those limited offerings, and could help the company pose a serious challenge to eToys, which is now the leader for online toy sales. Other companies such as Toysrus.com, Mattel, and Netoy, are also trying to make inroads.
For that reason, "It's hard to see them dominating in this area," said Srikant Srinivasan, chief executive of toy seller BrainPlay.com."Their distribution is not in place. It's a question of focus and industry structure." But, he added, his company fully expected Amazon to make the move.
Amazon also has a tough marketing job ahead of it, Johnson said. Every time the company enters a new line of business, it faces the challenge of "trying to convey all the multiple things that Amazon does." Having a customer base of 10 million "is always an advantage," he said. "But you got to wonder when the brand starts to lose meaning."
Still, Amazon is perceived as the king of online commerce, and "you can't be happy if you're KB Toys or eToys," Johnson said.