News recently broke that the internet behemoth that is Amazon is looking at potentially acquiring Toys ‘R’ Us. Which was really interesting news considering recent Amazon plays. Why does Toys ‘R’ Us make sense for Amazon, though?
Toys ‘R’ Us made three really big mistakes that lead to their downfall. One of them, they can thank Amazon for. They signed a 10 year contract with Amazon to be the exclusive vendor of toys on THEIR e-commerce platform, instead of building their own. Their second big mistake was they didn’t focus enough on innovation. They failed to continue to innovate and test out new theories, ideas, and products for their retail locations. By the time they realized their grave mistake, it was too late – similar to the first. The third big mistakes was that they over-leverages their company. That leverage forced them into an awful position, scared away investments into the company, and consumed their finances as they had to pay awful interest payments.
So with these mistakes that doomed Toys ‘R’ US, why would Amazon want to touch them? Amazon has recently expanded into several other industries, a notable one was their purchase of Whole Foods. With these store locations, Amazon will be able to roll out products to you at a much more efficient and rapid process. The stores will provide them the ability to roll-out checkout free retail locations. They will also have prime brick and mortar locations throughout the country that will provide them with key locations to showcase the latest Amazon technology and innovations.
The once small online platform where you could purchase books has morphed into the most successful internet business model of all-time and is ever expanding into all areas of your life.