Navigating minefields
Dave Gerardi -- Playthings, 5/1/2001
With all the horror stories of dot.com failures, at least one site has found a model for success.
"All the sites that spent a lot of money on advertising are feeling the crunch now," says Larry Schwarz, CEO of Rumpus.com. The New York-based children's entertainment company and toymaker does not advertise and relies on grassroots show-and-tell marketing. Rumpus recently acquired Zeeks.com, a children's gaming and community destination for tweens that drew nearly 500,000 users per month at its peak. With revenue based solely on ad sales, Zeeks.com is one of those sites that felt the "crunch." Rumpus will supply original cartoons for the site, which it hopes will help drive sales of its toy line.
Bolstered by a deal with IMG Licensing, which will build the company's brands in areas heretofore closed for all practical purposes ("Monster in My Closet should be on bedsheets," said Schwarz), Rumpus has even begun producing offline entertainment projects.
What stimulated such growth was the company's decision to pull its toys out of stores more than a year ago. "We have bigger margins (and) we're paid before we ship it. It's great not having a buffer between (us and) the customer," Schwarz said. As proof Rumpus is moving in the right direction, he cites retailers that stock more and more private label product.
