Closing Time for ToyTime.com

ToyTime.com, a latecomer to the competitive online toy retailing world, has pulled the plug on operations just nine months after its heavily advertised entry into a crowded market.

ToyTime's Web site informs customers that it is no longer accepting orders. While an online message tells visitors to check back often, the site also provides an e-mail link for those interested in bidding on the assets of the Torrance, California-based company.

"ToyTime.com and BabyTime.com would like to thank our customers for your support and patronage," the site says. "We could have never done it without you."

Short Life

ToyTime debuted in September 1999. Due to a extensive advertising campaign and the surge of online shopping ahead of the 1999 holiday season, the company enjoyed several weeks during which its site was one of the most visited on the Web, according to Media Metrix. In fact, the site was listed as one of the fastest-growing Web sites in early December, with a 127 percent increase in daily traffic.

However, the long-range health of the company has been in question for a while, with some analysts citing ToyTime as a likely shakeout candidate months ago. In fact, market research firm eMarketer commented in December that ToyTime faced an uncertain future because it failed to differentiate itself from competitors.

Hard Hit Segment

The failure of ToyTime comes as the Waltham, Massachusetts-based Toysmart.com also prepares to sell off its assets. Toysmart -- whose backers included the Walt Disney Company -- decided to shut down its Web site in May, after investors were reluctant to continue to pump money into the venture. Advertisements seeking bids on Toysmart's Internet infrastructure, domain names and office furniture have started to appear in Boston area newspapers.

Meanwhile, analysts are keeping an eye on Kbkids.com, which has been rattled by executive departures and layoffs in recent weeks. Redrocket, an educational toy site backed by Viacom and linked with the Nickelodeon TV network, has also stopped operations within the last month.

Predictions Come True

That the toy segment would be hit hard and early during the much-predicted e-commerce shakeout is not a surprise. In a widely cited report predicting that more than half of all online retailers would fail by the end of 2001, Forrester Research analyst Joe Sawyer targeted the toy industry -- and ToyTime in particular -- as likely epicenters.

The reason, said Sawyer, is "too many players selling undifferentiated products at razor-thin operating profits of less than three percent."

The failure of ToyTime and Toysmart leaves eToys, Toysrus.com and e-tail giant Amazon leading the online toy businesses.

Additionally, Forrester analyst Seema Williams says that brick-and-mortar retailers Wal-Mart and K-Mart are preparing to recapture much of the market share they lost to pure play online sites during the 1999 holiday season.

"The traditional merchants will be back in force by holiday 2000," Williams said.