*Relaunched FAO.com Joins Big Kids in Online Toy Retail Play

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Upscale toy retailer FAO Schwarz Co. last week put more fun in its online play by unveiling the relaunch of FAO.com, which last year was the company's third-largest revenue generator behind its catalog and flagship store on New York's Fifth Avenue.


With this upgrade, the New York-based retailer hopes to catch early holiday shoppers looking for FAO's variety of trendy toys, games and collectibles, almost 70 percent of which are either unique or exclusive to the company.


Internet software and technology companies such as marchFIRST, Allair Corp. and Pulse Entertainment were commissioned to tweak the 5-year-old site, which the company admits runs on a tight budget.


"It's a privately held company and we do not have very deep pockets, obviously, in terms of resources to put behind a Web site and private funding and all that," said Alan Marcus, spokesman at FAO.


The 138-year-old FAO still is clear that its priorities lie first with the 43 retail stores, followed by the catalog and the Web site. But with this redesign, it hopes to raise FAO.com's profile and imbue the site with the store's lively personality.


For instance, when FAO redesigned the site for last year's holiday season, it witnessed a 159 percent jump in online sales and a 151 percent increase in page views. It would not disclose dollar figures.


This time, the changes are meant to be more intuitive for the online shopper. The beefed-up navigation has easy-to-access menus, shortcuts and listings, all itemized by brand, category, character or exclusive boutique.


Advanced searches now allow users to hunt down items by keyword, toy category, character, brand, age, gender, price and products sold only at FAO. Consumers also can buy products listed in the company's Ultimate Toy Catalogue, which has a tab on the site.


Consumers also can track inventory in real time to see if the product is in stock. Besides the new function of "shopping bags" -- where selections can be saved for purchase later -- users can track order shipments online through a unique order number assigned to them.


Amidst all these bells and whistles, kids still remain the focus. A new Virtual Playroom allows visitors to test and experience the product from 360-degree angles. Consumers download a Pulse plug-in player from the site to their desktop, and once a toy is selected, it comes to life and performs actions.


To keep the FAO brand top of mind, the site offers free downloads of a screensaver. A visual of how a consumer might feel as he approaches the actual FAO store with its famed clock tower in view, the screensaver has animated characters and keeps the time and date.


But paucity of funds has kept FAO from going all out in marketing the revamped site.


"Unfortunately … our marketing budgets are really kind of tight, so in terms of what are we doing to help market the site, a lot of it is through PR and media coverage, through word of mouth and a lot of in-store promotions to our customers for the Web site, things like point-of-purchase displays and shopping bags," Marcus said.


The FAO.com Web address also features in the 6 million catalogs mailed out each year to customers, closing the loop in cross-channel promotions.


The threadbare marketing for FAO.com does not surprise Seema Williams, senior analyst at Forrester Research, Cambridge, MA. Williams, who covers online toy retailers, said it just might work in the short run.


"Should they be doing marketing? Yes," Williams said. "But they can probably get away without it for the time being, but not for very long, unfortunately, because they've got other competition that's pretty aggressive against them."


Although FAO.com is a niche player by virtue of its exclusive and more upscale offerings, it operates in an online market comprising eToys.com, Toysrus.com, ZanyBrainy.com and SmarterKids.com, among others. Lacking FAO's advantage, most of these brands sell toys that are commonly available across competition.


It should not stint so much on Web spending or marketing that other retailers are tempted to move into FAO's territory, Forrester's Williams warned. She said FAO should ideally tie up with fellow high-end retailers Neiman Marcus or Nordstrom to develop toy stores on their Web sites. These retailers share almost the same customer demographics.


"Now the opportunity for FAO is to be the toy department at Neiman Marcus [online]," Williams said. "The brand is well-aligned, and that's one of the biggest challenges: How do you pick brands that are going to be well-aligned or complementary to what you're already doing, but at the same time be noncompetitive?"


"They need to be careful they're not completely sidelined by the Internet," she added, "because one of the scary things that will happen online is that other retailers that target the same customers that FAO targets will realize that, "Wow, we've got this consumer coming to our Web site, we know they're buying, like, children's clothes. What a funny thing -- I think we can sell them toys.' "
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