Class-action Suits `R’ Us

I’m not a fan of Toys `R’ Us.

I think its chairman or president or Grand Kahuna or whatever his title is, is overpaid. I think its icon, that giraffe, is 20 years out of date. I think many of its stores are unkempt, more likely to exude disaster area than smart and contemporary retail ambience.

But I also think Toys `R’ Us is getting a bum rap.

Everyone in our business knows what happened last Christmas. Many e-businesses screwed up. They took orders for merchandise, then found they either didn’t have the inventory or the shipping capability to fill them in time to get them under the tree – so the kids could thank Jolly Old St. Nick instead of their parents.

The way the media handled the story, this was a crisis parallel to missing the midnight deadline for filing income taxes. (Please note: We have two extra days this year. Ah, would that Christmas had such elasticity.)

Apparently a great many e-tailers, including macys.com and eToys.com, shared this problem. Many just waited until they had the merchandise or the personnel or the completed data entries and then shipped. Ready or not, here I come!

Remember the Pepsi-Cola 800-number fiasco of a few years ago, when the flood of calls drowned several telephone exchanges? Toys `R’ Us mailed more than 60 million catalogs with this offer: Visit the Toysrus.com Web site and get a $10 discount when buying as little as $25 worth of merchandise.

Theoretically, whoever figured the current technology could handle the flood generated by millions of discounts up to 40% in the short pre-Christmas season had to be smoking Manila hemp.

But hold it! According to The Wall Street Journal, the Toys `R’ Us Web site produced $39 million in revenue during the Christmas season. $39 million from 62 million offers of a $10 discount? That’s a gross return of 63 cents for each catalog mailed. Gross is right. These guys need our help. Keep your stores open, fellows, until you figure out how to use the Web.

Other reports say Toysrus.com had close to 2 million people leaping to the site each week between Thanksgiving and Dec. 12. The site crashed and crashed and crashed. When it was up and running, visitors saw this infuriating message: “Due to the overwhelming popularity of the Toys `R’ Us Big Book of Savings, we have had to limit the number of guests to our Web sites. Please accept our sincere apologies and try again later.” Shades of America Online! In no way is the psychology of a Web visitor like that of someone waiting in line to get into a store or through a checkout counter. And we begin to understand why 2 million hits delivered just $39 million.

So yes, Toys `R’ Us shouldn’t have been so greedy. It shouldn’t have been so marketing-naive. If it had tested by including the $10 discount in 5 million of the catalogs instead of all 62 million, it might have had a) even more than $39 million total revenue, b) certainly a happier CRM case history, and c) a peaceable kingdom.

Peaceable? A woman in Lynnwood, WA was outraged when Toysrus.com wasn’t able to deliver toys she had ordered. She had asked for three- to six-day delivery when she ordered the toys Dec. 7. She was told at 9:30 p.m. Dec. 22 that the shipment wouldn’t make it. She called the press, the television cameras and the burgeoning online world to report that she spent the next two days – “48 hours,” she put it – frantically searching for replacements.

Toysrus.com apologized and sent her a $100 gift certificate, redeemable at any of their brick-and-mortar stores. Too late. A Seattle law firm that specializes in class actions grabbed this opportunity the way a shark grabs a flounder. (Not a bad simile.) Yep: a class action against Toysrus.com. The law firm, in keeping with the dignity and respectability of the profession, issued a news release, proselytizing others to join the suit.

So OK, another class action joins cigarette smokers and airline attendants, and people who either shot somebody or were shot by somebody, and drivers who either ran into another car or were hit by another car, and parents whose offspring stuck oversize toys into their mouths. Let’s sue!

I can only opine that until wily legal mind pried open the Pandora’s Box of class actions, someone who entered an order to save $10 and whose order was late would have accepted the $100 gift certificate and either sworn to never again buy from that source or decided life wasn’t so bad after all. This is especially true since the person at hand had two days – excuse me, 48 hours – to get the presents at a retail store, which is what she would have done before e-tailing became a shoppers’ darling.

I can only opine, too, that if she had gone to a Toys `R’ Us store and been told the stuff she wanted was temporarily out of stock but was expected before Christmas…then gone back Dec. 22 to discover the merchandise hadn’t arrived…she’d have bought something else and deprived the class-action lawyers of their opportunity to demand a settlement of which the bulk goes you know where.

Now for the other side of the story.

Just as fax machines speeded up decision-making, e-tailing has initiated a new era of seller/sellee relationships. We’ve spawned a “while-you-wait” attitude, and the medium is the message.

Add to this three nasty complicators: consumer unawareness that something bought online won’t usually be accepted as a return at that same company’s retail location; nouveau online shoppers’ irritation when they realize they have to pay the postage for returns, or worse, restocking fees; and vendors charging credit cards, which then accrue interest charges, when the order is entered instead of when the order is shipped. We’ve made some enemies, guys, and the bad-mouthing can affect online market acceptance next Christmas.

>From the Toys `R’ Us episode, unresolved as I write this, we can draw two >conclusions:

1. If you’re an e-tailer planning a promotion, why not be sure your advertising and marketing departments are in sync with your fulfillment centers? And if you can’t do this, test.

2. When a law firm specializes in class actions, don’t let your son or daughter marry a member of that firm without a pre-nuptial agreement…prepared by another firm.