eToys.com

Worth more than Toys R Us, for about a year

Shut down
19902026

eToys went public in January 1999 and closed its first day worth more than Toys "R" Us, a chain with 1,500 shops. Two years later it was bankrupt. Along the way it tried to take a domain from a Swiss art collective and lost the argument so badly that the case is still taught.

Timeline [edit]

  1. 1997
  2. 3 November 1997 Launch
    eToys opens

    An Idealab company selling toys online.

  3. 1999
  4. 4 January 1999 Funding
    IPO at $20, closes at $76

    The first day leaves it worth more than Toys "R" Us.

  5. 15 December 1999 Legal
    eToys drops the etoy lawsuit

    A public campaign over the domain forces a retreat.

  6. 2000
  7. December 2000 Decline
    A weak Christmas

    The one season that matters fails, with no funding left to raise.

  8. 2001
  9. 7 March 2001 Shutdown announced
    Chapter 11 in Delaware

    KB Toys takes the bulk of the assets for about $5 million.

  10. 1 April 2001 Shutdown
    The site closes

    The domain passes through several hands, reaching Toys "R" Us in 2009.

The site through time

Browse etoys.com as it was, via the Internet Archive's Wayback Machine:

1997 1998 1999 2000 2001 Full archive →

Ownership [edit]

eToys Inc. (Idealab) 1997–2001 Founded Launched as an Idealab company
KB Toys 2001–2001 Bankruptcy sale Bought the remaining assets and the website at auction

Key figures [edit]

MetricValueAs ofConfidence
Valuation (USD) ▲ 7.8 billion 4 January 1999 Reported Market value at the close of the first day of trading

Confirmed official figures · Reported media, cites a source · Estimated analyst or our estimate

Why it shut down [edit]

Official line: Filed for Chapter 11 bankruptcy in Delaware in March 2001 and closed the website. KB Toys bought the remaining assets, and the domain has belonged to Toys "R" Us since February 2009.

Our analysis: eToys was valued on the assumption that online toy sales would take the category quickly. They did not, and a toy retailer with one selling season a year cannot survive a bad Christmas, which is exactly what 2000 delivered.

History [edit]

The benchmark

eToys launched on 3 November 1997 out of Bill Gross's Idealab. It sold toys, it sold them well, and for a moment it was the company every other online retailer was measured against. When it went public on 4 January 1999 the shares were issued at $20 and closed the first day at $76, valuing a two-year-old website at more than Toys "R" Us, which had 1,500 physical shops and made actual money.

eToys versus etoy

In late 1999 eToys sued etoy, a Swiss art collective that had registered etoy.com two years before eToys existed, arguing the domain was confusingly similar. It won an injunction.

What followed was one of the first genuine internet backlashes. Artists, activists and journalists mounted a campaign called Toywar, drove the share price down, and made the company a symbol of corporate bullying online. eToys dropped the case in December 1999. The episode is now a standard example of how quickly online reputation can turn.

One Christmas

Toy retail is seasonal to a degree few businesses are. Almost everything is sold in six weeks, so a weak Christmas cannot be recovered from. Christmas 2000 was weak, the Nasdaq had already broken, and there was no more money to raise.

eToys filed for Chapter 11 in Delaware in March 2001 and closed the website. On 7 March the Wall Street Journal reported that KB Toys had taken the bulk of the remaining assets for about $5 million. The domain drifted through several owners and has belonged to Toys "R" Us since February 2009, which is a quiet ending for a company that was once worth more than they were.

Similar projects

Pets.com The sock puppet outlived the company 1998–2000 Jet.com Walmart paid $3 billion, then switched it off 2015–2020 Webvan Right idea, twenty years early, at a billion dollars a mistake 1999–2001 Kozmo.com A video in an hour, free, by bicycle 1998–2001 Half.com It once bought a whole town for its name 1999–2017 Boo.com $135 million in eighteen months, on a site nobody could load 1999–2000

Sources [edit]

  1. Internet toy retailer eToys files for bankruptcy, closes Web site Deseret News 8 March 2001 [archived]
  2. eToys Relents, Won't Press Suit Wired 15 December 1999 [archived]

Last verified: 13 August 2026. Spotted an error? Suggest an edit (corrections with sources are reviewed and applied).