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Joe, <br><br>
I am surprised that you would wander off to support a business
organization that has devised a business plan to "suck dollars from
the local community" and have no physical presence in the local
community. The fact is KBToys was not a superior business to
WalMart - and it failed to meet the market test. It is now
reorganized, mostly as an LLC - which reduces tax consequences and
provides some legal protection to shareholders.<br><br>
Since WalMart also operates a web commerce division, it will be
interesting to see if the Shaw Group can make a go of it. Shaw has
made a total commitment to e-commerce which will save them considerable
dollars in infrastructure and it is possible that they can obtain enough
market share to survive.<br><br>
<br><br>
Here is a link to what ultimately was the downfall of Kay Bee Toys (this
is a description of the class action lawsuit for unfair and/or deceptive
pricing, 2002) against Kay Bee.<br><br>
<a href="http://www.krislovlaw.com/cnotes_kbtoy.htm" eudora="autourl">
http://www.krislovlaw.com/cnotes_kbtoy.htm<br><br>
</a>Here is what ultimately happened to Kay Bee: (please pay attention to
the italicized red print highlight)<br><br>
<div align="center"><font face="arial black" size=4>D. E. SHAW AFFILIATE
ACQUIRES ONLINE ASSETS OF KB TOYS<br>
</font><i>New Company to be Named eToys Direct, Inc.</i> <br><br>
</div>
<font face="arial" size=2><b>New York, NY and Denver, CO. May 11,
2004</b> - The D. E. Shaw group announced today that one of its
affiliates has completed the acquisition of the online assets of KB Toys,
Inc. The acquired assets include the inventory, equipment, leases, and
proprietary technology of KB Online Holdings LLC as well as eToys
trademarks, URLs, and associated intellectual property. Former members of
KB Online Holdings senior management, including Michael J. Wagner,
supported the transaction and will hold a significant minority equity
stake in the new company, eToys Direct, Inc., formed to own and operate
the acquired assets. Mr. Wagner will be the CEO of eToys Direct, which
will be headquartered in Denver. <br><br>
eToys Direct, Inc. will own and operate the eToys Web site
(<a href="http://www.etoys.com/" eudora="autourl">www.etoys.com</a>) and
a 650,000 square foot state-of-the-art fulfillment facility in Blairs,
Virginia, and will continue to operate the KBtoys.com Web site
(<a href="http://www.kbtoys.com/" eudora="autourl">www.kbtoys.com</a>)
under a long-term licensing agreement with KB Toys. eToys Direct will
also continue to provide merchandise, order fulfillment, and customer
service to other online and catalog retailers through its various retail
alliances. <br><br>
"We're excited at the prospect of growing the eToys Direct business,
especially by expanding alliances with established online and catalog
retailers," said Max Holmes, a managing director of D. E. Shaw &
Co., L.P. and head of the firm's distressed securities group. "In
addition, the acquisition will be an excellent complement to the online
business of FAO Schwarz, which we acquired in January." <br><br>
</font><font face="arial" size=2 color="#FF0000"><b><i>The sale price
includes approximately $7.4 million in cash plus a minimum royalty
payment to KB Toys, Inc. of $500,000 per year for the next three years.
In addition, a wholly owned subsidiary of D. E. Shaw Laminar Portfolios
has agreed to provide a $20 million line of credit to eToys Direct. The
acquisition was approved by Judge Joel B. Rosenthal of the U.S.
Bankruptcy Court, District of Delaware on April 29, 2004. <br><br>
</i></b></font><font face="arial" size=2>eToys Direct, Inc. will operate
as a subsidiary of D. E. Shaw Laminar Portfolios, L.L.C., whose
activities include the deployment of capital in connection with the
restructuring of companies with valuable assets that may currently be
experiencing financial distress. D. E. Shaw Laminar Portfolios is a
member of the D. E. Shaw group, a New York-based investment and
technology development firm with approximately $8 billion in aggregate
capital. <br><br>
<br><br>
</font>Here is how eToys tells the story:<br><br>
<br>
<div align="center"><font face="arial" size=2><b>The eToys Direct, Inc.
Story</b> <br><br>
</div>
eToys Direct, Inc. began in the early days of online shopping as a tiny
start-up called Brainplay.com. Our early success caught the attention of
some big retailers. In 1999, we formed a joint venture with Consolidated
Stores, Inc., then the parent company of KB Toys. We launched the new
KBtoys.com web site in June of 1999, and our staff worked non-stop to get
it ready for the holiday rush. That year, Media Metrix, Inc. ranked
KBtoys.com the 12th-most visited site during the season. And the Wall
Street Journal named us the best overall toy retailer. <br><br>
The online retailing landscape changed dramatically during the next year.
In 2001, we acquired most of the assets of our former competitor, eToys,
including its high-tech warehouse. Since that time, we have used the
Blairs, Virginia facility as our primary fulfillment center. <br><br>
In 2002, we partnered with Sears Roebuck & Co. and Kmart,
merchandising and fulfilling toys and video games featured on sears.com,
in the Sears Wish Book® and on Kmart.com. In 2003, we expanded our
relationship with Sears, designing and producing the Wish Book® as part
of a licensing agreement, and providing catalog customer support. QVC.com
joined our growing list of partners in 2003, and we launched a co-branded
toy department on Buy.com. <br><br>
We separated from KB Toys, Inc. in May of 2004, after our management
successfully bid for our company's assets. The following month, eToys
Direct, Inc. acquired most of the assets of the My Twinn Doll Company and
launched the new My Twinn web site in September of 2004. That same year,
we added Amazon.com, FAO Schwarz, Macys.com, Circuitcity.com and
SmartBargains.com to our growing list of partners. <br><br>
In 2005, the company acquired Silvestri, Inc., which specializes in
wholesale giftware, collectibles, accessories and home décor. A wholly
owned subsidiary of eToys Direct, Inc., Silvestri is based in Beverly,
Massachusetts. <br><br>
eToys Direct, Inc. owns and operates the eToys and My Twinn web sites,
owns Silvestri, Inc. and operates KBtoys.com under a long-term licensing
agreement. We look forward to providing our customers and our current and
future partners' customers with an incredible selection of toys, video
games, custom dolls and wholesale gifts, an outstanding shopping
experience, fast, friendly customer service and speedy order fulfillment
as eToys Direct, Inc.<br><br>
<br>
</font>At 07:36 AM 1/27/2006, you wrote:<br><br>
<blockquote type=cite class=cite cite="">Gary, <br><br>
You asked for an example where an inferior business beat out a superior
one and I gave one. You might analyze why KB Toys is no longer in Moscow
differently than I would but the main point is that they are not here any
longer and the average person has fewer choices because of that. What the
example proves is that the free market does not always lead to the best
businesses and the most choices. That claim is nothing but a rhetorical
slogan.<br>
--<br>
Joe Campbell<br><br>
---- "g. crabtree" wrote:<br><br>
=============<br>
Joe, Excellent try but short of the mark I'm afraid. Stand alone toy
stores are struggling everywhere for a variety of reasons, not the least
of them being the internet. Perhaps we should argue against E- commerce?
Almost all of the complaints that you make would apply, plus no local
jobs, no local taxes, and all money made goes out of the area. Moscow
does not have a population large enough to effectively support a toy
store. KB toys was undergoing a certain amount of financial
disorganization at the time the local store closed. The latest trends in
toys tends toward computer/video games which are heavily marketed at
other retail outlets such as Circuit City, Hastings, Costco, Shopko etc.
And last but not least, the fact that you are using a subjective,
anecdotal example. If it were valid then I would think that Hodgins would
have been toast long ago. Wal Mart sells all the products that they do,
(prescriptions, OTC remedies, toys, sundries ) and yet they still exist.
Might this be attributed to superior service, good product selection
(toys) and an over all commitment to their customers?<br><br>
I am rather fond of Moscow also. We already have a Wal Mart and I'm
fairly sure that it isn't killing us. Plucking out of thin air numbers
like 98% 2% and attaching them to a poison pill arguments is pure
sophistry.<br><br>
Try agin?<br>
Gary<br>
----- Original Message -----<br>
From: joekc@adelphia.net<br>
To: g. crabtree<br>
Cc: Andreas Schou ; vision2020@moscow.com<br>
Sent: Friday, January 27, 2006 5:24 AM<br>
Subject: Wal-Mart - was Doug Jones Says It Clearly<br><br>
<br>
Gary,<br><br>
I didn't think Mr. Schou's analogy blew but here is a real world example
of an inferior business beating out a superior competitor. The mall used
to have a toy store: Kay-Be Toys, or something like that. I went there
frequently when my son was younger and my wife let me spoil him more.
Wal-Mart drove Kay-Bee Toys out of business. Kay-Be Toys had a far
superior selection of toys and was by any set of standards a better toy
store than Wal-Mart. (Neither are as good as Hodgins Drug Store but
that's another issue.) What happened was that kids go to toy stores with
their parents but parents buy other things besides toys, things that are
not sold at Kay-Be Toys. In short, Wal-Mart offers low-cost and
convenience. That is it. It is 'superior' to other stores for these two
reasons only. But that is enough to drive out some businesses. Once those
businsesses leave, the folks in Moscow will have fewer choices, not more
choices.<br><br>
You note that "many communities that are co-existing with the worlds
largest retailer to the betterment of its residents." But many are
not. It was noted in Tom Trail's post that two communities like ours were
"sucked dry" after a Super Wal-Mart moved in. For the sake of
argument suppose that 98 communities like ours were not sucked dry. Would
you take a pill that had only a 2% chance of killing you if you didn't
need it and you were getting along fine without it? I don't think so. I
love Moscow and low-cost and convenience are not enough reason for me to
risk sucking it dry.<br><br>
<br>
--<br>
Joe Campbell<br><br>
<br><br>
---- "g. crabtree" wrote:<br><br>
=============<br>
Mr. Schou, Your analogy blows. It seems clear to me that you have
very<br>
little understanding of how an 'all in" bet works but rather than
educate<br>
you on the finer points of poker allow me to propose an analogy of my
own. A<br>
player comes to the game and bluffs outrageously each and every hand.
Soon,<br>
his fellow gamblers see him for what he is and call him. His weak hands
are<br>
revealed, his resources dwindle and very soon he is out of the
game.<br><br>
This appears to be the tactic of the common garden variety wal-mart<br>
opponent. Exclaim loudly how WM will be the ruination of civilization
and<br>
will bring about the heat death of the universe and so on. When folks
see<br>
that there are many communities that are co-existing with the worlds
largest<br>
retailer to the betterment of its residents our protester is revealed as
at<br>
best, wrong and at worst, a dupe.<br><br>
Getting back to the original heart of the discussion, hows about some
real<br>
world examples of inferior business' beating out superior competitors.
I'll<br>
be waiting, watching the pages of my calendar flit by.<br><br>
gc<br><br>
<br>
----- Original Message -----<br>
From: "Andreas Schou"<br>
To: "g. crabtree"<br>
Cc: ;<br>
Sent: Thursday, January 26, 2006 4:48 PM<br>
Subject: Re: [Vision2020] Doug Jones Says It Clearly<br><br>
<br>
>You are right about my confidence in a free market. Perhaps you could
give<br>
>me a few examples where an inferior business beat out a superior
one.<br><br>
Let me use a poker analogy. If I had a trillion dollars, played
poker<br>
for a living, and won every poker game I played by going "all
in" on<br>
every hand, would I be the best poker player that ever lived? Hint:<br>
no, I would not.<br><br>
This is Wal*Mart's business model: saturate the market, make<br>
monopsonic agreements with suppliers, and run as thin a margin as<br>
possible in new stores until all the other business goes under. Is<br>
this a good business strategy? Yes. Does it contribute to market<br>
efficiency -- which is generally how a "superior business"
is<br>
understood to work? No. It does not.<br><br>
-- ACS<br><br>
<br>
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