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Too dumb or too smart?

By Scott Bradner

A week before Christmas Toys R Us announced that they were not going to be able to deliver all of the toys that had been ordered over the web in time for Christmas morning. The TV news shows played the story for all it was worth (and quite a bit more) giving Toys R Us quite a black eye. But if I put on my conspiracy theory hat this sequence of events makes a lot of sense.

The way the story was painted, Toys R Us was so dumb, or had such a bad software system that they kept accepting orders long after it should have been clear that they were not going to be able to deliver what had been ordered. This was the lead story on most of the local and national news shows and a front page story in many newspapers on the day of the announcement, and popped up from time to time over the next few days. It would have been hard for anyone to avoid hearing about this failure of e-commerce. As penitence, Toys R Us offered $100 coupons, redeemable in Toys R Us stores, to those who got caught up in the mess.

Toys R Us was not alone in accepting orders in excess of their ability to deliver the goods but it was the company that made the biggest splash when they had to admit their inability to produce. The image of Santa not showing up for some little kid is a strong one.

So let's look at this situation through Machiavellian-colored glasses. Toys R Us has a lot of brick-and-mortar stores. These stores pay rent and lots of people work at them. Sales over the net can cannibalize these physical stores. Toys R Us may feel that they can not ignore the 'Net but they must feel in quite a quandary, a sale over the net may just cost them more when the whole corporation is considered than they make in profit off of the sale.

So what better way to slow down the explosive growth in 'Net sales than to make potential users of e-stores nervous that they will not get their goods? What better way to do that then to have a very high profile failure of e-commerce? And, just to complete the conspiracy scenario, what better way to ensure that those nervous customers know where the local Toys R Us store is than to bribe them with a coupon that can only be redeemed in a physical store.

Maybe Toys R Us is not smart enough to do this, but if I were them I'm not sure I would want to admit to the alternative to myself.

disclaimer: I do not know that the Harvard Business School teaches Machiavellian principals so the above scenario is my own.