Will the Me's Have it This Holiday Season? - Amazon.com Inc. and Toys "R" Us Inc. alliance - Brief Article - Column

As we move into the heart of the holiday shopping season, one drama I'll be watching with suspense is whether the teaming of Amazon.com and Toys 'R' Us to create what has been viewed as the Internet's dominant seller of toys and video games ends up failing, as I expect it will. Why? Because, once again, another online play is constructing a business model that is concerned with "me," the corporation, not "you," the customer.

In building or extending a great brand, the concern always has to be about "you," the customer, and your needs, wants and perceptions. It is you-focused brands that generally have earned the highest compliment, trust. Think Saturn, Deere, Charles Schwab, Volvo.

A "me" strategy involves focusing on what makes sense for the companies involved. Toys 'R' Us experienced a horrific failing last Christmas holiday season, which in turn damaged its credibility and the trust that consumers had for the brand. By being out of stock or late in filling orders, Toys 'R' Us committed the ultimate sin: they over-promised and underdelivered. They focused on strategies that made sense for them--me--and not us, or you. While they may have had the right intentions in addressing the major drivers of holiday shopping stress, such as long lines and inadequate parking, they unfortunately ended up adding to the stress. Recall the statistics: 53% of online shoppers did not receive their holiday gifts on time and 46% had major issues tied to returning merchandise, according to Price Waterhouse, which noted that the No. 1 online purchase criterion is convenience. What a disconnect!

As everyone knows, Toys 'R' Us and eToys were two of the biggest culprits--so much so that Toys 'R' Us ended up paying $350,000 to the Federal Trade Commission to settle charges tied to not properly notifying shoppers about shipping delays.

With a you approach, the Amazon-Toys 'R' Us alliance might have helped offset those bad holiday memories, increasing the perceived value of both brands as well as their overall market/stock performance this holiday season.

But this click-and-mortar alliance dictates that Toys 'R' Us will buy and manage the inventory and Amazon.com will fill orders and handle customer service. Bottom line: If you buy a toy over this co-branded Web site, you will not be able to return it to a brick-and-mortar Toys 'R' Us store. That's right, the 1,000-plus Toys 'R' Us, Babies 'R' Us and Kids 'R' Us stores in the U.S. will turn you away if you try to return a Toys 'R' Us toy bought through Amazon.com. Incredibly, you will need to go to the Post Office to mail it back to Amazon.com, then wait for the credit or exchange to take place. (That, of course, is assuming that some budding labor problems at Amazon don't keep the toy from getting to you in the first place.)

This is a perfect example of two companies doing what appears to be good for them, or me, and not what is good for consumers, you--who, by the way, will make or break this important strategic alliance this holiday season.

Maybe Amazon.com and Toys 'R' Us should have borrowed a page from Kmart. You can mock the name of Kmart's online presence, Bluelight.com, but you cannot argue with its winning formula. You can make purchases online and return them offline to any Kmart in the country, with no questions asked. This is the way consumers (you) want it; it is logical and it provides a win-win for consumers and Kmart corporate. I guarantee that this effort will have as much brand lift as Kmart got when it landed Martha Stewart in a co-branded relationship a few years back. Moreover, it is a great sign that Kmart is listening to and cares about you, the customer.

With all these brand issues in mind--as well as Jeff Bezos' famous observation that, "If you have an unhappy customer on the Internet, he does not tell his six friends, he tells his 6,000 friends"--I expect that at some point Amazon.com and Toys 'R' Us will take the time to rethink this strategy and remember it has been and always will be the you's of the world that drive business and brand success. Hopefully it won't require a disastrous holiday season to get them to reconsider this harmful me policy.

Scott Davis is a managing partner at Prophet Brand Strategy, Chicago, author of Brand Asset Management: Driving Profitable Growth Through Your Brands (Jossey-Bass) and an adjunct professor at Northwestern's J.L. Kellogg Graduate School of Management.

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