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Target Just Made an Amazing Announcement About Toys R Us That Will Make Its Fans Very Happy. (But Oh, the Irony!)

Target Just Made an Amazing Announcement About Toys R Us That Will Make Its Fans Very Happy. (But Oh, the Irony!)

Target announced Monday that it's partnering with the parent company of Toys R Us, TRU Kids, so that it can relaunch ToysRUs.com. This is big

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Target announced Monday that it’s partnering with the parent company of Toys R Us, TRU Kids, so that it can relaunch ToysRUs.com.

This is big news for Toys R Us, which has started to open some small stores under its new, post-bankruptcy model. It means it will have an Internet presence for the holiday season, powered (and fulfilled) by one of the most powerful retail brands in America.

Now, if you’re a fan of Target or Toys R Us — and there are a lot of people who are fans of both — you’re likely to find this to be very good news. 

But if you’re a student of business history, you’re going to find the whole thing incredibly ironic. 

That’s because one of the key differences between Target and Toys R Us today — why Target is arguably thriving and Toys R Us is being reborn after bankruptcy and liquidation — has to do with parallel decisions that both companies made years ago.

And it now seems like history is repeating itself.

Amazon, Target and Toys R Us

The story begins in 2000 and 2001, when both Target and Toys R Us were successful retail brands with stores across the United States. E-commerce was tiny back then; about 1 percent of all retail sales.

And while big brands like Target and Toys R Us realized they probably needed to be on the Internet, lots of smart people thought of it as a small sideshow.

So, both brands — along with other big retailers like Borders (bookstore) and Circuit City (electronics) — outsourced basically their entire online operation to the e-commerce leader: Amazon.

I love writing that because it seems so crazy in retrospect. Even if it made sense at the time, within a few years it was clear that this was a better deal for Amazon than Target (and Toys R Us).

As one former Target executive put it afterward: “They learned a ton on our dime, and we didn’t learn much [in return] and that’s a massive issue.”

History doesn’t repeat, but it rhymes

Both Target and Toys R Us eventually got out of their deals with Amazon, but their roads diverged sharply there. 

Target poured billions into building its own digital products — things that now go way beyond its website. But Toys R Us only announced in 2017 that it was going to put $100 million over three years into its online efforts.

And while $100 million sounds like a lot of money, it was really a paltry investment given the stakes and the scale of the industry they were in.

So, here we are all those years later — and it’s super-ironic that the new Toys R Us is right back where the old one was back in the year 2000, outsourcing its entire digital product to a giant competitor.

For both brands’ sake, here’s hoping it works out — and that Toys R Us (one of the most beloved brands in America, judging by my email inbox every time I write about them), survives its comeback.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

This article is from Inc.com

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