Many online toy merchants who made significant investments on advertising campaigns to acquire new customers during the 1999 holiday season learned the hard way that their money couldhave been better spent. While online toy merchants' sales might have spiked during the holiday season, six months later most customers still have not returned to their sites to buy again.

"The holiday shopper is the most dangerous consumer to online toy merchants," said Jim Williamson, senior research analyst with IDC's Consumere Commerce: Consumer Goods program. "Driven by the need to simplify holiday purchasing, these customers rarely use the Internet for shopping during the rest of the year, and for online toy merchants, the key to success is repeat buyers."

To attract repeat buyers, IDC recommends instead of a big advertising blitz during the holiday season, online toy merchants develop quarterly marketing strategies. They should also work harder to attract repeat business from parents. So far, they are not doing a very good job of this. IDC suggests online toy merchants target new parents with early childhood-type products to get them used to online purchasing from the beginning of their child's life.

The decision online toy merchants will have to make is which groups to target. "It's critical to realize that there are many types of toy buyers,"Williamson said. "What makes them different from each other is the way they approach the Internet, the types of products they seek, and whether they fit into an ideal demographic profile."

Not surprisingly, attractive demographics for online toy stores include women between the ages of 20 and 39 who live in households with more than two people. Convenience shoppers - those who use the Internet to find better products cheaper - are the most attractive type of Internet users to target. Casual purchasers are the worst bet.

"Toy etailing has every potential to be a difficult and unprofitable pursuit. Customer-acquisition costs are high, buying is heavily skewed to a few months of the year, and most products offer only moderate margins," Williamson said. "Despite these obstacles, a compelling addressable market does exist for the brave. Savvy marketing directed at the right consumers can yield positive results."

IDC recently published Online Toy Stores: Focus to Succeed.This report looks at the demographic segments that are buying toys online and examines how online toy merchants should target various market segments to increase repeat purchases and lifetime customer values. The report measures online toy merchants' reach. It also makes predictions about how the online toy store will evolve and includes recommendations for vendors competing in this market.

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community.

IDC is a division of IDG, the world's leading IT media, research andexposition company.

All product and company names may be trademarks or registered trademarks of their respective holders.

Source: IDC

Head on over to the Toy Buzz, RTM's online message board, and let us know what your thoughts and feelings are on online toy shopping. Have you bought toys online? Who have you purchased from and what was your experience like? How could online toy merchants better suit your, the customer's, needs?

[Posted 6/23/2000]