When Online Customers Show No Mercy

In what was possibly the most crucial trading season for Toys R Us, it stuffed up during the final quarter Christmas trading period in 2017… badly.

Given the retailer’s US and Canadian businesses filing for bankruptcy in 2017 and its recent announcements to close 180 physical stores and then a further 200, Toys R Us really needed to win the peak holiday trading season, which represents nearly half of its revenue.

But, the US-based retailer fell short on several accounts during the final quarter. In a letter to customers sent in January, Toys R Us CEO Dave Brandon acknowledged the retailer’s e-commerce “operational mishaps” that occurred over the holiday season.

“Our primary focus is on reimagining our business with you in mind,” wrote Brandon. “We want to make it easier for you to shop with us, whether online or in our stores. This past season, we were successful in accomplishing this objective for millions of customers. However, there were also far too many transactions where this wasn’t the case — due to our operational missteps.”

Brandon didn’t, however, say exactly what those “operational mishaps” were in his note, but some clues can be found on the Toys R Us social media accounts, where enraged online shoppers expressed their dissatisfaction and showed no mercy.

“I will never shop at Toys R Us again. My son was very disappointed this morning when he opened his gift from Santa to find NOTHING in it,” wrote one customer on Toys R Us’ Facebook page after she purchased a Star Wars Droid as a Christmas gift for her son but the box was empty and droidless. “Absolutely unacceptable. No kid should have to deal with this on Christmas morning. Amazon and Target will get my business from now on.” She went on to say that she ended up buying from Amazon with Prime coming to the rescue.

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Another customer wrote: “Your online website is horrible,” after repeatedly getting no response from her queries. “So frustrating!! You guys need to fix this issue it’s been going on for MONTHS. Please fix this!!”

“I’ve spent 3 days trying to make a purchase online. I have contacted customer service several times to be told I would be called back or wait for an excessive time,” expressed yet another online shopper. “I’m simply trying to use endless earnings that I have acquired through my baby registry and I am unable to do so. This is very disappointing as I and several others have made purchases at your stores in order to accumulate these points, all to be told I can’t use them until December 27th. Well that doesn’t really work for Christmas purchases.”

You get the picture. These posts are just three examples among dozens that represent some of the operational mishaps that saw Toys R Us fail its online customers over the Christmas period.

Many online orders were shipped later than expected, some transactions were cancelled after being processed with money taken out of customers’ accounts but not refunded and a plethora of other digital flops were highlighted by disappointed consumers. Toys R Us responded by asking shoppers to privately message them.

On 18th September 2017, Toys R Us US and Canadian subsidiaries, crippled by US $5 billion in debt and more powerful online competition, voluntarily filed for bankruptcy under Chapter 11 of the Bankruptcy Code relating to protection from its creditors, before the key holiday trading season.

Analysts warned that the toy chain’s financial predicament was not helped by its slow uptake of going digital as well expanding on its in-store experience.

“The fact that Toys ‘R’ Us ceded control of its own online offering to Amazon during a period where e-commerce began to really take off meant that the retailer was always playing catch up with its online competitors,” said Jon Copestake, chief retail and consumer goods analyst at the Economist Intelligence Unit, according to MarketWatch.

“Alarm bells will have been ringing for some time but it took until May this year (2017) for an online store revamp to take effect and it is difficult to see how Toys ‘R’ Us could address the structural challenges it faced without reducing its store footprint and significantly changing its proposition,” explained Copestake.

In October last year Toys R Us announced that it closed on US $3.1 billion of financing facilities that will support the company’s operations during its recently announced bankruptcy filing regarding its financial restructuring process.

Toys R Us said it will use the new funding to invest in “various initiatives” that will see it resurrect itself from its turmoil in the retail environment, including modernising its store network and updating its e-commerce platforms and infrastructure to better reflect its brand, promote its products and provide improved delivery capabilities so it can effectively compete in the online shopping space. It looks like it’s a far cry from what Toys R Us set out to do.

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