After Toys ‘R’ Us Announces Closings, a Digital Postmortem
Whether or not the retail apocalypse is really here, or if it is really an apocalypse, there’s no doubt that the retail landscape is changing dramatically. The closure of 735 brick-and-mortar Toys ‘R’ Us locations is the latest in a string of hits to traditional retailers who been unable to fully adapt to the eCommerce landscape. So we wanted to know what data on customer behavior on toysrus.com could tell us about how the company was doing online, and the ramifications for its exit.
I took a look at their status among eCommerce channels in a few different ways using the Jumpshot Insights tool. First, I analyzed at the total performance of the toysrus.com domain over the last fourteen months. Then I reviewed a larger set of data from the Toys & Video Game category across all eCommerce sites to understand if they’re running about even with other channels. Finally, I broke out a few major toy brands to see how much of their digital sales relied on toysrus.com.
Conversions on Toysrus.com
Let’s start with the basics. toysrus.com has converted about 1.5% of all visitors to their site since January 2017. This number jumps to about 4% when you just count conversions from interacting customers, that is, everyone who visited a product page or ran a product search within the “toys & video games” category. This is toysrus.com’s leading category, as you might expect, though the “baby” category also drives a significant amount of sales as well, since the Babies ‘R’ Us site rolls up into the toysrus.com domain.
Over the last 14 months toysrus.com’s conversions have declined substantially. They saw a huge bump in the holiday shopping season, of course, but when the first two months of 2017 are compared to the same time period in 2018, the data shows a huge drop. Total conversions on the domain were down 41% and 43% in January and February of 2018, respectively, compared to the same months last year.
Toysrus.com Against the Rest
In the same time period at the beginning of the year, the toys & video games category at large saw remarkably different numbers. Compared year-over-year, conversions were flat in January and down 18% in February. I’m not sure why the numbers were low across the board in February, but whatever caused the dip, the dip for toysrus.com was substantially worse.
The news was better for toysrus.com in the baby category, but still bad. Across all sites conversions for baby products were up 27% year-over-year for January, and down just 1% in February. Toysrus.com saw a more muted 1.3% gain year-over-year for January, and a 15.7% drop in conversions in February.
The Amazon Effect
Amazon dominates in total share of toy purchases, as they do in most product categories online, but here their effect on toysrus.com is outsized. From 2017 to now, Amazon converted an astonishing 20.5% of interacting consumers within the toys & video games category (toysrus.com, remember, converted just 4% of interactors). And among all the domains we measure, Amazon won roughly 95% of all toys & video games conversions.
Because Jumpshot data can quantify consumer behavior across multiple walled-garden retailers, we can understand how many customers research products on multiple sites, and where they end up buying. For toysrus.com, these numbers are slightly staggering. 1% of all customers who interacted with a product in the toys & video games category on toysrus.com, but didn’t buy there, ended up converting on amazon.com in the same category.
1% may not sound like much, but remember that toysrus.com only posts a 4% conversion rate among interacting consumers in the toys & video games category. That means that over the last 14 months, the number of toys & video games conversions Amazon has taken from toysrus.com interactors amounts to 27% of all conversions on toysrus.com. In December 2017, at the peak of the toy-buying season, the number of toys & video games conversions Amazon won from toysrus.com this way added up to 60% of all their conversions.
Top Marketplaces for Top Toymakers
Major toy brands–we analyzed Lego, Mattel, Hasbro and Nintendo, see below–tend to follow this trend across multiple online marketplaces. That is to say, they don’t rely on toysrus.com for much of their total online sales. Over the course of 2017, Amazon dominated online toy purchases for all four brands, grabbing outsized majorities of conversions for each. Toys ‘R’ Us only captured a fraction of online purchases for every brand, though Mattel and Hasbro both depend on the ailing retailer for somewhat significant portions of their sales. That helps explain why investors were spooked by the news of the retailer’s closure and sold off shares for both brands.