An online toy retailer backed by deep-pocketed Disney Co. appears to have shut its doors this week, marking the latest in a series of recent e-commerce casualties.
On Monday, callers to Toysmart's customer-service line were told that the company's website was no longer operating.
Disney issued a brief statement saying that the online toy retailing industry was "an incredibly strong business that has some very strong players."
It said that after reviewing all its options it decided over the weekend that closing the site altogether was the best course of action.
A notice posted on Toysmart's home page Monday said the site was closed for inventory.
The Waltham, Massachusetts-based company ranked among the 10 most-visited toy retail sites in the last holiday season, according to Media Metrix. Disney acquired a controlling stake in the company in August, incorporating the company in its Go.com Internet business.
Toysmart isn't the only online toy retailer to fall upon hard luck of late. A protracted downturn in stocks of most online retailers has dealt a blow to Toysmart's publicly traded competitors. Private companies have also faced difficulty raising money and moving ahead with plans for expansion.
"There's a lot of turmoil in the industry right now, but it's not something that's going to go away," said Reyne Rice, director of the toy services division at the market research firm NPD Group.
Although online toy sales continue to grow -- NPD predicts revenues will reach $1.2 billion in 2000, nearly double last year's sales -- competition will become increasingly fierce.
KBkids.com, the Internet site backed by retail chain K*B Toys, owned by Consolidated Stores, sacked nearly a third of its staff earlier this month following the departure of its chief executive officer. The company announced in January that it was planning an initial stock offering, but postponed an IPO in April, citing market conditions.
Another toy site, Nickelodeon-backed Red Rocket, shut down on May 5 for reasons it did not disclose on its now-defunct site.
Meanwhile, eToys, a popular stock among investors following its IPO last year, has also been struggling in recent months. The company's stock is trading at $6, down from a year-long high of $86.
And that might just be the beginning.
"I think even by this Christmas there's going to be more of a shakeout in terms of more consolidation and sites that just may not be able to make it," Rice said.
