Ecommerce Blog

Toys R Us have officially responded to the widespread criticism received from affiliates for their recent blanket 0% commission levels on all games consoles - announced just in time for the Christmas rush. You can read the thread here, below is their response:

Thanks to everyone who has commented on this.

Many consoles, not just Wii, will be in short supply this Xmas and we are doing everything we can with suppliers to secure as much stock as possible. We sell many of the consoles we receive within minutes in the case of Wii, and hours in the case of most of the others particularly NDS. Video Games has always been a low margin area for us, but this year has been the most challenging yet, so much so that when we looked at the numbers after commissions and costs, margins are indeed eroded. We don’t buy in $ either as one affiliates comment implies. While in previous years we may have been able to level out overall, that has not been the case this year and that is how we have come to the difficult decision on console commission. Our overall commission is again what we can afford as a business – margins are extremely tight.

I would have loved to have contacted you all personally but this was not physically possible. I did however contact a couple of affiliates who have given us the most console sales to explain the situation. Everyone (although obviously disappointed) understood why Toys R Us felt we needed to follow other retailers in this decision this year. We have relied on our network to help and advise us on the best way of handling this situation but it still seems that between us we should have done more to explain the situation to you and an understanding of a suitable time period.

There is another issue I should comment on here too. The reason I raise this is just to show an example of where we need to work together. We have had 2 very successful affiliates who have been running a stock check on Wii consoles. We obviously congratulate them on their ingenuity to set up such great customer service tools but they have caused us challenges. Last time we were in stock of Wii consoles these stock checks caused such high visitor volumes in the space of a few minutes that the site had serious problems (as it coincides with the Christmas peak period) and this does obviously not benefit any of the affiliates, us or our customers when this happens.

We clearly need to work much smarter together to get the best from the scheme. We understand your comments and appreciate your constructive feedback and will continue to look at ways to improve our proposition.

We have many topics for review for 2008. We currently only have one commission on everything except consoles which is very limiting for you and us so we are not able to counteract commission in another product area. We are also currently one of the merchants who has a budget set at the beginning of the year and has to work hard to prove the case for more in this budget year on year – this has a knock on effect of not being able to currently offer PPC. This makes the scheme from our side difficult to control, we want to build, but we need to build within budget. I’d like to use this as an opportunity for us to get feedback from you of what other things we could do with our scheme – please email me at truweb@toysrus.com with a subject line of Toys R Us Affiliate Scheme and I will review these. I obviously can’t promise on what we will be able to deliver but we will be open to all your views.

Lastly, to clarify, we will honour all 30 day cookie based commissions on consoles/bundles prior to our cut off period and apologies for promoting a DS Lite deal the day before our decision. This was purely circumstance that the following day we had to make this decision.

Larissa Gallagher
eCommerce Head of Marketing & Product Strategy

Now whilst I praise Toys R Us on opening the lines of communication to affiliates I’m still left with a bitter taste in my mouth due to their dropping commissions on a popular product set right before Christmas

So…are you listening Toys R Us? Here is how you can fix your relationships with affiliates. Its easy really:

Increase your commission on all other toys to something in line with other toy retailers.

Yes its that easy. At the moment your program offers 3% commission on sales (excluding the 0% on consoles, obviously). Here’s what your competitors offer:

Urchin - 8%
TheToyShop - 7%
Yellow Moon - 7% to 8%
Big Red Warehouse - 5%
Early Learning Centre - 4%
Mail Order Express - 5% to 7.5%
Hamleys - 5%
Letterbox - 10%

And that’s just some of them to be honest. There are a lot of gadget sites too that sell a wide range of toys and offer an average of 10% commission. And don’t forget that these are just the published commission levels, we all know that high volume drivers can command secret “hidden tiers” not published.

So what do you say Toys R Us? It’s not too late to increase your commissions to say 5% in time for Christmas. I’d promote you again then and I’m sure a lot of other affiliates would too. Come on, I know you have some Christmas Spirit in there somewhere!

What I’m listening to right now: Emily King - “East Side Story”

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Original post by Kieron

This entry was posted on Monday, December 3rd, 2007 at 5:09 pm and is filed under affiliate marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.