An Ode to Toys R Us

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“I don’t wanna grow up, I’m a Toys R Us kid
they got a million toys at Toys R us that I can play with
I don’t wanna grow up, I’m a Toys R Us kid
they got the best for so much less, it’ll really flip your lid
From bikes to trains to video games
it’s the biggest toy store there is (gee whiz!)
I don’t wanna grow up, cause maybe if I did
I couldn’t be a Toys R Us kid
more games, more toys, oh boy!
I wanna be a Toys R Us kid”

As a kid growing up in the 80s and early 90s, I knew the jingle like many of my friends. The commercials blanketed Saturday morning cartoons, and after trips to the mall (remember when those used to be popular, along with mall arcades?) my parents would take us to Toys R Us.

It was a magical place for an 9 year old. It had basically everything you could ever want. You first walked into a maze of filler (even 9 year olds knew the real toys were in back) and then reached the back aisles. For me and my brother, we would go straight to the Nintendo aisle, which was essentially a bunch of pictures of various nintendo games all the way down the aisle along with a ticket you would have to pick if you wanted to take the front to buy. My brother and I would pool our money. If we had 20 bucks each, we would magically spend $40 on one game. If we had $10, we would get a $19 game, and so on. There were games of many price points for a broke kid to choose. The selections were limitless. Kmart didn’t have it. Walmart didn’t have it. K-B Toys certainly didn’t have it.

When it came to Teenage Mutant Ninja Turtles and G.I. Joe, Toys R Us was the joint. It had to display the largest assortment of action figures and vehicles. It didn’t matter what wave it came in. Searching wasn’t required. It was a one stop toy wonderland.

Sometimes, my budget was only $3.15, only enough to cover a G.I. Joe plus tax (I had the largest collection in my grade). I would browse for 30 minutes all the toys I could never buy from all the commercials I saw. Ghostbusters. M.A.S.K. Thundercats. He-Man. Whatever. I didn’t know what the hype was with Star Wars. To me, I found it strange my friend’s older siblings used to collect them, kept pristine in the packaging. For a 9 year old, this was blasphemy. My toys were always opened during the ride home in the car.

We moved to Germany after elementary school, so I never again visited a Toys R Us until I became a parent. In fact, I don’t think I ever saw a commercial again with the jingle stuck in my mind. My kids watch Netflix. There are no commercial jingles to seep into their consciousness. They certainly know the McDonald arches, but Toys R Us, I don’t think they’ve ever asked. It’s a place they go to see a giraffe sometimes and do a lego demonstration.

This is the inherent problem with their business model. It’s outdated.

Sandwiched between Target and Walmart, which cleaner and newer stores, and online delivery with Amazon, Toys R Us is in a pricing vortex of hell. They simply can’t compete on price while supplying enough cash flow to pay off debt. Some blame Vornado Realty Trust and Bain Capital and KKR and the debt load saddled on Toys R Us. I say perhaps. Take one look at K-Mart, and you can see what happens when you don’t win on price and invest very little into your locations. It’s a branding death spiral.

I’ve been to Toys R Us a few times in the last couple years, and in my opinion, it was clear bankruptcy was inevitable. The parking lots were often crumbling. The facade and paint was worn. When you walk inside, there was the same maze of worthless stuff when you entered, except now, to get to the video games it was usually near the cash wraps. The Lego aisle was always the best of any store (even THE Lego store), the board game section had every expansion known to man, and Star Wars had every variant. The prices always seemed above retail so their promotions would seem like a deal (Buy one get one 50% off isn’t a deal when Walmart already sells it for 40% off all year around). Amazon ships faster and has a larger selection and a return policy where you don’t have to look at an employee to get a refund. Who returns their kid’s toys?

Despite the nostalgia, I was guilty of almost never buying from Toys R Us unless I was exploiting a price mistake or flipping some rare exclusive, despite having the funds to do so. Even for a measly $5, I would simply have my kid wait and buy something online, sometimes right there in the store.

The only hope was store exclusives (which got destroyed by resellers simply clearing the shelf and adding it to Amazon’s inventory) and a better customer experience (toy demonstrations and the giraffe (which will be missed). As for more knowledgeable customer service, I would admit, Walmart toy people are really shelf stockers who can’t tell you anything about anything and seemed angry to be there. Target toy people are really teenage employees in the electronics section spending their time hitting on their coworkers. Amazon, well, you’ll get a customer service rep from India. Toys R Us actually had knowledgeable people in most of the store, and some are downright kids that took the song to heart. One time, I bought a video game at 9pm and didn’t leave until 9:20pm because the guy who rang me up talked about the upcoming Nintendo Switch launch and said he stayed up all night to watch the launch and spouted off all the advantages and reasons why it would be huge. This compares to a visit at Game Stop the same month, where a customer came in, and I heard the guru behind the counter saying the switch would fail like the PS Vita (If you are under 28 and working at Gamestop, you don’t realize the purchasing power of the Nintendo generation). Clearly, my sample size is small, but generally speaking, Gamestop hires assholes paid to lowball people on trade-ins and Toys R Us hires people spending their day in a toy store where a lot of children come in (exception: Toys R Us Managers always tended to be assholes for just about any issue).

What did we lose? Really nothing I suppose. The business model is long broken. The only thing that can’t be replaced is customer experience and having a place ours kids can go if they get good grades on a report card. Everything else, parents can fill in for. We can actually play with our kids and show excitement with the toy, not just forking over cash in the store. We can take them to a Lego convention instead of seeing the Giraffe to build 50 cents worth of legos to a “Batman car.” We can pick up another controller and play with them the video game they want. For experts, we can read blogs and watch youtube  toy reviews. One nostalgic experience can be replaced with something newer, and hopefully better for the next generation.

And we can all still pay the lowest damn price possible. May the best retailer win.

I sold $110K on Amazon in December

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Why is retail imploding before our eyes? The statistics of brick and mortar bankruptcies are alarming. Compounded with the launch of Amazon Go with a cashierless experience and an entry into pharmaceuticals, there is major displacement on the horizon.

Or is this just pie-in-the-sky thinking for people who don’t truly understand the mechanics behind Amazon’s success with their FBA (fulfillment by Amazon) program.

To sum it up, Amazon essentially was fighting in the low margin inventory discount business for the first ten or so years. They had buyers of all background scouring inventory channels to keep them stocked on a losing game of “demand prediction.” They were competing against the well funded rise of big box empires of any niche category. Toys. Pet supplies. Office supplies. Books. Food. Movies. Whatever you want. Instead of ma and pa shops imploding through an invasion of big box stores, a revenge is now happening.

As they entered the web services business, they understood the scale and profitability of becoming a services company. The technology would be the strength. Now, Netflix goes through Amazon to stream and store all their catalog of content, despite being a direct competitor.

For the retail portion, Amazon outsourced inventory risk to individual sellers. At first, this caused some price spikes with shortages in supply, especially at key times of the year like Black Friday. After a few years, competition has become so fierce, there is massive discounting that happens from inexperienced sellers as the gold rush to join the program continues. Now, over 60% of what is sold on Amazon is sold via FBA. Our products are shipped and stored and ordered from an Amazon warehouse. Many small sellers, with no business acumen or credit, get slaughtered in their first deep Q4.

The fees are high. In all, about three times as high as Ebay.

We pay to have items shipped to an Amazon warehouse. We eat the returns and pay for storage in the warehouse. Then, Amazon takes a hefty fee on top of that.

FBA has essentially paid for the massive warehouse expansion the last 8 years. Sellers are getting more savvy. We scour price disparities between vendors and arbitrage the difference. We hunt for clearances and buy in bulk. Many, who want scale, go for private label dreams and search on Alibaba and AliExpress for cheap products to “brand” and ship to the US.

This is a gold rush and it is killing brick and mortar. Call it the uberization of retail and nationwide clearances.

In my first full year of Amazon, I learned a ton. As a business major, I’d say more is learned in the first year of a startup operating under your own capital than business school. Application always trumps theory.

There are so many mistakes a I made through the year, so even though I sold $110K in just one month, I felt like I didn’t do enough. I could have scaled so much bigger. On Facebook reseller groups, there are people doing ten times the amount every month, which creates a followership cycle of business envy. It’s almost like Reseller Porn. “Hey, look at my sales!” We all have secret tricks. Amazon has gated so many categories and brands that there is an actual economic moat for many small sellers.

How can a brick and mortar store compete against an army of small business with extremely motivated and savvy sourcers who look for the smallest of price disparities on Jungle Scout? How can it fight whispers of special nationwide deals on social media? It can take six weeks for a department store to source a T-shirt in a rush. Now, a teenager in their basement can be the largest t-shirt designer in their state by uploading a design to Merch by Amazon. They don’t have to take on any inventory. They get paid a royalty when it sells.

This is sort of the concept behind self publishing. Anyone can do it. There is no barrier to entry.

There are a few safe places. Large items in particular are insulated. So furniture stores are okay for now. As Tesla knows, there is a dealership network that makes it difficult to do direct sales in the auto market. Walmart remains the only colossus that stands in Amazon’s way to win the last mile.

2018 is here. I’m still sourcing part time, on top of a full time job and other projects. I already have a list of SKUs to go deep on for next christmas season to 10X my sales. Do you?

 

 

 

Travel Blog (Vegas Adventure Part 6)


What happens in Vegas, stays in Vegas is the old adage. This is true when you are visiting America’s playpen. If you live in Vegas, this is where dreams go to die. 

Today, as I was checking on some rental property stuff, I stopped by Walmart (America’s China shop) on the way back to the strip and saw an example of what locals go through.

Two people got run-the-fuck over in the Walmart parking lot. Groceries were everywhere on the street. The pedestrians were alive and well I believe, acting as if a train hit them in the ass instead of a beat up 1995 sedan going 5mph. 

It was quite a site to see. The pedestrians, with no blood or any sign of impact were both on the pavement on their backs, breathing with their arms over their heads (did they confuse a car impact with fainting?) and some good Samaritans attempting to triage the disaster.

I know, call me an asshole for saying this was staged.

But riddle me this, why was this in front of a Walmart? And how did a sedan hit not one, but two people walking in an area where people look around? (What accurate aim?) And why did neither of them grab their leg where there would have been impact? 

I walked by and took a picture because I have seen this many times before when I lived in Vegas. You see, there is a reason why pawnshops thrive here. I have seen some wierd stuff here and I’ll try to tell some stories as the week goes on.

People get desperate as hell here. They will do anything. Even this.

The driver of the car was desperately trying to take pictures of the scene and the acting going on, however in an ironic twist, the good Samaritans were threatening him to stop. It is hard to tell sometimes if the “do gooders” were in on it or not, or just new residents, but they were assholes to the driver, a man who was just probably trying to go to Walmart to score some 88 cent bread or a new OP t-shirt for $6.88.

Instead, he saw some acting. 

I bought a new phone charger that I lost at the Venetian plus some Pringles and walked out and the police had arrived (like 15 of them) along with a firetruck. None of them looked concerned. The driver was calmly trying to explain his predicament and the officers were pretty friendly to him, more so than the Good Samaritans. 

They see this all the time. 

Gamer Reviews: Elder Scrolls IV OBLIVION (XBOX 360)

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This was the first game I ever purchased when I bought the XBOX 360. I had skipped the first XBOX so this was my first foray into what Microsoft could do. I still remember my visit to gamestop around two weeks after launch.

ME: Do you have any Xbox 360s?

GAMESTOP EMPLOYEE: *eyebrow raised* Uh … yeah man. We got lots of them.

ME: *Feeling foolish for misreading system launch hype* Ah ok. I’ll take one.

GAMESTOP EMPLOYEE: Okay man. Cool. Is that all?

ME: *Remembering as a kid, new systems came with games* Uh, does it come with any games?

GAMESTOP EMPLOYEE: Naw man. You gotta buy the games.

ME: Cool. Yeah. I know. Um. What’s out that’s good.

GAMESTOP EMPLOYEE: *Thinking a true moron was in front of him* Well … people have been liking Oblivion, but we only got one copy left. It’s the big box special edition.

ME: What does that mean?

GAMESTOP EMPLOYEE: A bunch of extra features. A map. A documentary.

ME: Ok. I’ll take it.

GAMESTOP EMPLOYEE: Cool man, check it, why don’t you wait here a sec while I grab the console from the back.

I stood there three minutes then browsed the limited selection of games and picked up Perfect Dark on top of Oblivion. I went to check out and another Gamestop employee walked out from the back as the receipt for $440 dollars was handed to me.

GAMESTOP EMPLOYEE #2: Hey dude, you got my copy. Good on you!

ME: Wuh?

GAMESTOP EMPLOYEE #2: Yeah, that was my copy. I just traded it in today.

ME: Why?

GAMESTOP EMPLOYEE #2: Just wasn’t my thing.

Me: *Fuck* (in my head)

Shit. So I had been baited to buy the Oblivion. It had probably been some Gamestop challenge to try and sell the game within 2 hours for free pizza or something. Undaunted, I went home and hooked up the XBOX 360 and did all those stupid updates and set up a gamer profile and then popped in the Oblivion disc. I laid the system flat because I didn’t quite understand how the XBOX 360 was meant to stand straight up.

After a short intro and Patrick Stewart’s voiceover, I was immersed in the game. I was stuck in the sewers with nothing. I literally began my XBOX 360 experience punch rats with my fist. From there, I learned how to game all over again. I added all sorts of weapons and armor and potions and conquered many quests. It took me at least 7 hours to learn that I could hyper jump from checkpoint to checkpoint. I must have ran on foot in those hills getting attacked by raiders for like 80% of the first day.

Was the game good?

I think I didn’t turn it off till 4am, so yeah, it was good.

What were the highlights? I think learning about the arena and being able to fight as a gladiator was a major surprise. When I found out I could gamble on myself, I was happy with glee because I was one invincible motherfucker in the arena. My next favorite highlight was walking in the citadel and fighting the city guards, who would whoop my ass until I beat the game and got the best armor and shit. Then, around 20 hours in, I discovered if I just dropped all my heavy shit and just ran through the little hell levels, I could beat it in like 3 minutes, plus, I didn’t need to complete all the quests for the final battle. (Hindsight, it would have been cooler to go through the story and get all the support from the side characters and battle with them alongside me, but I got the gist with half the cast)

It was a game that told me what gaming had become since my college days. It was epic storytelling and immersive and took me around 40 hours of my life and I thank Bethesda Softworks for it.

Gamer Rating: 10/10 Scrolls

GAMER INTERVIEW: GREG THE GAMESTOP EMPLOYEE

Yeah man, I remember him. The store was empty because we were located right across from a Walmart that sold the XBOX 360 for a lower price than us, plus they have a real cool concept where a shopper can eat McDonalds while shopping. We surely don’t have a McDonalds in here, but if we did, I would totally be eating fries all day. But this guy, he had this real elitist stink to him, almost like he expected the store to be filled with Board games but then was trying to play it off like he wasn’t. He then asked me where all the Super Nintendo games were, and I’m not gonna lie, I just kind of thought I had the stupidest customer in the world in front of me. I then told him we didn’t carry that in stock anymore, but we had a new system, an XBOX 360. He took the bait. So check it, this is what we did, I had my friend Jack print out a new price that was $15 higher than the special we were running that week, and he snuck it over and put Oblivion on the shelf when this schlub wasn’t looking. We charged him the extra $15 and went over and got us some tasty McDonalds. 

NOW CHECK OUT MY COMMENTARY REVIEW OF THE GREATEST FIGHTING GAME OF ALL TIME