KB teams with Buy.com for online exclusive

DSN Retailing Today, Nov 24, 2003 by Doug Desjardins

PITTSFIELD, MASS. -- KB Toys continued to expand its brand into new areas this month when it became the exclusive toy provider for e-tailer Buy.com. The deal puts both companies in a better position to cash in on a projected $17 billion in online sales during the 2003 holiday season.

Buy.com began selling toys under the KB Toys banner in early November and has already seen results. "We saw our sales increase 10% as soon as we launched toys on our site," said Doug Marrs, vp of sales and merchandising, entertainment/ leisure for Buy.com. "I don't know if we can attribute all of that increase to toys but it obviously was a big part of it."

This is the first foray into toys for the six-year-old e-commerce site that has more than five million customers. The company specializes in computer hardware and software, consumer electronics, music and DVD sales.

For KB Toys, the partnership gives its brand exposure on a popular e-commerce site that attracts a different type of consumer than its toy stores. "The typical KB Toys customer is a woman aged 30 to 45, so we'll definitely be dealing with a different demographic on Buy.com,' said Michael Wagner, senior vp and coo of KBtoys.com.

Terms of the deal were not disclosed, but Wagner said it's based on a plan in which both companies share the profits. Buy.com will handle the orders and KB Toys will handle shipments of the 3,000 unique products being sold on the Web site.

The deal with Buy.com is part of a plan KB Toys is pursuing to increase sales outside of the holiday season and gets its brand name into new venues. The retailer recently expanded its store-within-a-store program with Sears to 600 locations for the holidays and is also the exclusive toy provider for Sears.com.

Online sales of toys and other products are expected to take another sharp hike this year, according to a report from Jupiter Research. The research firm forecasts holiday sales of $17 billion for November and December, a 21% increase over the $13.8 billion consumers spent last year shopping online.

Jupiter based its findings on a consumer survey conducted in October that found 40% of online users plan to do some or all their holiday shopping online, an 18% increase over last year. Jupiter said the influx of new shoppers and increased spending by established customers should propel holiday sales online to another record high.