Imagine receiving an email just days before Christmas saying that the toys you ordered for your kids would not be coming in on time. This nightmare was a reality for many Toys “R” Us customers back in 1999.
Toys “R” Us is one of the world’s largest retailers of children’s toys. Founded in 1948, the American-based company has headquarters in New Jersey. They are a children’s mega store with over 1800 locations worldwide. Product offering includes toys (of course!), clothing, and baby products. For anyone that has kids or is shopping for a kid, Toys “R” Us is the ideal location to go. There is a wide range of products to cater to any gender, age, or area of interest.
Just like any other retail store around the holidays, Toys “R” Us sees major spikes in demand. That alone is enough to put pressure on a supply chain. Adding a new online store and a highly successful ad campaign into the mix could cause potentially huge repercussions.
What Went Wrong?
The issues with Toys “R” Us’ online system were occuring well before the apology email was sent out. In November of 1999, they were already having issues dealing with traffic volume on their website. As a result, they had to limit access to the site to keep the servers from crashing. Despite this limit, the orders still continued to pour in. Toys “R” Us invested a lot of marketing efforts into driving customers to their online store.
This is because they wanted to keep pace with eToys, an online toy retailer that averaging 1.9 million visitors a week to their site. As a result of their marketing, Toys “R” Us experienced a massive increase in visits. However their success was overwhelming. The peak in volume was much larger than they were predicting.
After promising Christmas deliveries for any orders placed before December 10th, Toys “R” Us realized it could not deliver. Did they have the inventory to fulfill orders? Yes. But, they did not have the time or workforce to put the orders together. As a result, two days before Christmas the infamous “We’re sorry” emails were sent out to many expectant customers. For this reason, Toys “R” Us experienced a barrel of negative PR and backlash from unhappy customers.
After the December 10th deadline hit, Toys “R’ Us continued to offer the same delivery promise for a price premium on orders placed before the 14th. That of course only increased the number of orders being placed on the Toys “R” Us servers. The volume was overwhelming and they could not meet the demand. Despite other companies having similar eCommerce glitches, Toys “R” Us took a huge reputation hit with the incident.
What Can We Learn from This?
Initially, Toys “R” Us did what they could to mitigate any damage to their reputation. They were apologetic to customers and offered $100 gift certificates as compensation. However, this was not sufficient for many customers, who believed Toys “R” Us’ customer service hit an all time low with minimal communication before December 23rd. A heads up earlier in the game or more efforts put into delivering the orders would have left customers satisfied.
Some customers wished Toys “R” Us had just communicated the issues earlier so they would have had more time to find replacement gifts. Others simply suggested they allow customers to pick up orders in-store from local inventory. There was a lot Toys “R” Us could have done in the moment to mitigate the damage. This is a prime example of how important communication and supply chain visibility is in providing excellent customer service.
Not too long after, Toys “R” Us outsourced their order delivery fulfillment to Amazon. They recognized their weaknesses and knew they had to do something to fill the gaps ASAP. With this decision, Toys “R” Us began to rebounde. Toys “R” Us knew it would take time to regain the trust of loyal customers, but they put the effort in. They took ownership of their mistake and publicly announced their how changes would improve operations. Toys “R” Us was able to see where they needed to improve and recognized that they would need help in making a full comeback showing that outsourcing can benefit a company greatly if the partnership is implemented correctly.
Although Toys “R” Us did experience a slight hiccup in their operations in 1999, they have been running operations in full swing for a while. They recognized where their weaknesses were and put in the efforts to fill the gap. Buckling in for the long-haul of regaining customer trust, their perseverance paid off. They still stand as the “world’s leading dedicated toy and baby products retailer.” Thanks to this retail giant, a lot of happy kids will be getting the toy at the top of their wish list on Christmas morning.
Merry Christmas Everyone.