Toys "R" Us: The e-Grinch Who Stole Christmas (Fool on the Hill) December 27, 1999

An Investment Opinion

Toys "R" Us: The e-Grinch Who Stole Christmas

By Yi-Hsin Chang (TMF Puck)
December 27, 1999

Then he slithered and slunk, with a smile most unpleasant,
Around the whole room, and he took every present!
Pop guns! And bicycles! Roller skates! Drums!
Checkerboards! Tricycles! Popcorn! And plums!
And he stuffed them in bags. Then the Grinch, very nimbly,
Stuffed all the bags, one by one, up the chimbley!

From How the Grinch Stole Christmas by Dr. Seuss (1957)

While many an online store has had its share of customer service snafus, Toys "R" Us' (NYSE: TOY) website has won this year's e-Grinch That Stole Christmas Award hands down.

I have long been a critic of Toys "R" Us' brick-and-mortar operations (see my bear arguments in the Dueling Fools match-up that ran on Dec. 23, 1998). At that writing, the indecisive toy retailer was undergoing its second strategic restructuring in as many years and embracing its third store format in that period. Since that writing, the company also has lost its CEO, Robert Nakasone, who resigned due to "differing views regarding the direction of the company." No kidding.

Apparently, Toys "R" Us' problems with execution offline have also infected its online business. Last week, just a few days before Christmas, e-mailed a number of suckers, I mean, its customers that their orders would NOT arrive in time for Christmas. The company won't provide specific numbers but insists that they represent a small percentage of online orders -- yeah, right. Why not disclose the actual numbers then?

The Fool received an e-mail last week -- an e-Grinch nomination, if you will -- from a disgruntled customer (who also posted part of the e-mail on the Fool's Toys "R" Us message board):

"Like The Grinch, Toys 'R' Us has slithered down my chimney and swiped gifts from under the tree. I was notified on Monday that my December 6 online order would not be filled by Christmas, this after being guaranteed on December 18 that everything would arrive on time. In return for my trouble, the toy giant has offered me $100 in 'Geoffrey Dollars' to use at any brick and mortar location. The gift certificate does not begin to make up for the aggravation and stress this has caused me in the days before Christmas. By the way, of the 10 companies I did e-shopping with this season, only Toys "R" Us has let me down."

In this season of giving, Toys "R" Us has made the grinchy mistake of letting its customers down -- hard. It's one thing not to have an online store and missing out on sales because of it. At least then, you enjoy having loyal customers clamoring for you to launch a website. It's quite another problem to open an online store halfheartedly, to not be prepared for massive demand, to fail to deliver on the very products and services you claim to provide. And to do this on Christmas! Especially if you're a toy company. Tsk tsk. It's almost a tragedy, except it's the customers who are paying the price.

Toys "R" Us should've been better prepared. From early December, was having problems keeping up with the volume of orders on its website. One Fool message board poster wrote on Dec. 9: "Their toll-free line alerts callers to at least a 6 day delay in orders.... When I asked to cancel my order, I was told they can't. I can only imagine that there are a lot of unhappy e-shoppers out there, just like me."

For more testimonials from some unhappy campers, including one calling Geoffrey "A Big Fat Liar," check out the Fool's Toys "R" Us message board.

You don't guarantee delivery one week and then the very next week turn around and say, "Hey, sorry about that. Here are some Geoffrey Dollars (i.e., gift certificates) to make up for it." If I had gotten that e-mail, I would have promptly canceled my order and headed to the mall or another e-commerce site, never to shop Toys "R" Us or again. By the way, according to one message board poster, some customers weren't even offered the $100 in Geoffrey Dollars.

With its vast network of mega toy stores, Toys "R" Us could've offered to have the orders ready for pick-up at "a store near you." It could've made an effort to have hundreds of Geoffries deliver toys on Christmas. It could've ordered the toys from competing websites and had them shipped to the customer with an explanation that the company wanted to put the customer first despite whatever problems it might be experiencing. Now that would be real customer service, not to mention some good PR despite a bad problem.

But, alas, our e-Grinch that stole Christmas failed to see the true meaning of Christmas. Our e-Grinch's heart shrank three sizes as it effectively stole toys from the stockings of all too many girls and boys. I hereby declare Toys "R" Us the undisputed winner of the 1999 e-Grinch That Stole Christmas Award.

Related links:

  • Toys "R" Us message board
  • Toys "R" Us website
  • Toys "R" Us Dueling Fools (12/23/98)