Toys ‘R’ Us Just Foolishly Gave Amazon The Christmas Gift Of A Lifetime

This past week Forbes received confirmation that Amazon

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will provide the digital capabilities and fulfillment services for the new Toys “R” Us brand going forward, which is quite possibly one of the worst ideas in the history of retail.

For background, last holiday former executives from Toys “R” Us, along with executives from b8ta, debuted a new physical Toys “R” Us store concept in two cities, Paramus, New Jersey and Houston, TX. Only last year, Target

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, not Amazon, provided the digital fulfillment for any products sold within the stores. 

Flash-forward one year later, Target is out and now Toys “R” Us has asked Amazon to provide the same services. However, the fact that anyone, let alone Amazon, still has to serve as the concept’s digital experience and fulfillment option in 2020 is downright ludicrous. 

I asked Toys “R” Us to provide its strategic rationale for the partnership, but it did not return my request in time for publication. Perhaps because, given all the technologies available, there is no reason why Toys “R” Us needs to set up its stores this way.

One idea of far better merit, for example, would simply be for Toys “R” Us to create its own front end digital experience, conjoined with an ominchannel capable POS, and to treat the whole setup like its own third-party marketplace. That way the toy vendors could plug into the experience and, here’s a radical thought, do their own gosh darn fulfillment, with Toys “R” Us simply facilitating the transaction much like Amazon does with its marketplace today. And, no joke, this is not that hard to do, especially since Toys “R” Us has now had almost two years to develop it, too.

All of which is why partnering with Amazon is just downright unfathomable. It’s like opening up Pandora’s box on a road to nowhere, or, better yet, giving Amazon a Christmas gift that will just keep on giving for decades to come.

Here’s why:

Two years ago, Amazon partnered with Good Housekeeping to bring a similarly principled idea to life called GH Lab at the Mall of America. The video below shows how it worked.

Good Housekeeping curated a set of home furnishings products, and the entire experience was shopped by scanning QR codes next to the products in the store by way of the Amazon app. Products were then delivered by Amazon to customers’ homes at a time of their choosing.

Overall, the concept is an easy pivot and one that is not that far off from what Toys “R” Us tried to do with its stores last year.

So, play it out.

Amazon will provide digital and fulfillment services for Toys “R” Us this year, likely in exchange for some form of compensation, which means Amazon will, in essence, get paid by Toys “R” Us to run another GH Lab experiment for the toys category, making the whole thing a revenue positive way of understanding if a GH Lab-like toy model works. 

Or, said another way, it is like the retail equivalent of Amazon buying a $1 million home from an old lady with dementia for next to nothing because Amazon is getting paid to run a test that it would probably love to run on its own. 

If the test doesn’t work, Amazon learns the results from the experiment with no skin off its back.

If it does work, then Amazon will hold even more of the cards. 

What is Toys “R” Us to do down the line? Think that Amazon will buy them? Try to find a different partner? C’mon.

I asked Amazon to comment on this conjecture, but Amazon, too, did not return my request in time for publication.

What happens next is that Amazon will go out and build its own “Toys by Amazon Shops” (my quotes) throughout every mall in the country for future holidays. As much as the brand name “Toys R Us” may mean something to some people, how much does it really mean if Amazon can essentially do the same thing with all its friction-free shopping glory running in the background? 

Probably not much. 

Want more proof that there is something to this idea? 

History has a penchant for repeating itself. Amazon did the same thing back in the 2000s when it created a Toys “R” Us site on Amazon.com. 

But, the world already knows how that bankrupt story turned out.