eToys was established in 1997 to provide a simplified shopping experience for toys and other children's merchandise—one that would eliminate annoyances like the long lines and loud kids found in typical toy stores. At eToys shoppers would not have to contend with packed parking lots and lack of sales support. The company's Web site, eToys.com, launched in October 1997 and let consumers browse for products based on age group and price range. Customers also could access detailed product descriptions, including lists of safety features, which were unavailable to shoppers at toy stores. As eToys founder Edward "Toby" Lenk, former vice president of corporate strategic planning at Walt Disney Co., told Inc., "We take two days of shopping and compress it into 15 minutes. That must be worth something."
For four holiday shopping seasons eToys was indeed worth something. In the end, however, the company ran out of money and had to close its online doors. At the eleventh hour, however, KB Holdings acquired the eToys Web site at a bankruptcy auction in May 2001 for about $3.35 million. Later in that year the eToys Website went live as a unit of KB's subsdiary, KBKids.com. Several factors contributed to its demise, especially the dot.com shakeout of 2000 that severely limited the company's access to capital. Hardly alone in its plummet, several other online toy retailers also went out of business in 2000. Perhaps the final nail in eToys's coffin came when Amazon.com and Toys 'R' Us teamed up to create the number one online Web site for toys, which cut into eToys' holiday revenue at a crucial time in 2000. Nonetheless, as the first online toy retailer, eToys was an important e-commerce player.
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