Who started eToys, and what did it sell?
eToys, Inc. was founded in 1997 by Toby Lenk, who had been a corporate vice president at the Walt Disney Company before he left to sell toys over a modem. The site opened later that year from offices in Santa Monica, California.
The pitch was aimed at the parts of toy shopping people hated. No parking lot in December, no line at the register, no aisle where the one thing a kid asked for was sold out. Shoppers could sort by age, by price or by brand, which no physical store could do.
It worked well enough that eToys became the name investors reached for whenever they wanted an example of retail moving onto the web. By the 1999 holidays the company was spending heavily on television advertising and on warehouses it had to build from nothing, because unlike Toys R Us it owned no stores to ship from.
That was the trade eToys made. It carried no rent, no cashiers and no shelves. It also had no existing distribution network, and toys are bulky, seasonal and cheap per box, which is close to the worst possible cargo for a company learning to ship.
How did eToys pass Toys R Us on the stock market?
eToys sold shares to the public at $20 each and started trading on Nasdaq on May 20, 1999. Goldman Sachs led the offering, which had first been floated at $10 to $12 a share.
The stock never traded anywhere near $20. It opened well above the offering price and closed its first day near $76, roughly 280 percent above where the underwriters had priced it. Accounts of that close range from $76 to $77.
At that close the market valued eToys at about $7.8 billion. Toys R Us, the largest toy retailer in the country, was worth about $5.6 billion.
The gap between the two valuations and the two businesses was not subtle. In the fiscal year that ended March 31, 2000, eToys collected $151 million in revenue. Toys R Us was selling billions of dollars of toys a year out of real buildings.
The loss line explained the risk investors were taking. CFO magazine later put the net loss for that fiscal year at about $190 million, more than eToys collected in sales. The company's own preferred figure, which left out certain charges, was a loss of $148.1 million, as E-Commerce Times reported in 2000.
What was Toywar, and why did it embarrass eToys?
A European art group called etoy had registered etoy.com in 1995, two years before eToys opened its store. In late 1999 eToys sued, arguing that shoppers would confuse the two names.
A Los Angeles judge granted a preliminary injunction on November 29, 1999 and ordered etoy off the address. The timing could not have been worse for the retailer, because the order landed in the middle of the holiday shopping season.
The artists and their allies at the activist group RTMark answered by turning the lawsuit into an artwork. A press release RTMark issued on December 12, 1999 described what it had helped build as "a multi-user Internet game whose goal is to damage (or possibly even destroy) the company."
Toywar signed up thousands of players to flood eToys with email, tie up its website and argue the case in public while the company was trying to sell Christmas presents. "The etoy Fund projects are a game the whole world can play," RTMark spokesperson Ernest Lucha told Inter@ctive Week in December 1999.
eToys dropped the suit in January 2000 and agreed to cover part of etoy's legal costs. The artists kept the address, and etoy.com is still theirs.
Why did eToys run out of money in 2001?
The 2000 holiday season finished the company. eToys had built and staffed for a Christmas far bigger than the one it got, and by January 2001 it was telling investors it was running out of cash with no new financing in sight.
The cuts came fast. eToys shut its European operations in January 2001 and eliminated about 700 jobs, roughly 70 percent of a workforce of about 1,000.
The stock went with it. Shares that had closed near $76 on their first day in 1999 spent 30 straight sessions under a dollar, and Nasdaq moved to pull the company off the exchange.
Two things had changed underneath eToys while it was raising and spending. Amazon had widened its catalog into toys, and Toys R Us had given up on building a rival site alone: on August 10, 2000 the two announced a ten-year online partnership that handed Amazon warrants for a 5 percent stake in Toysrus.com. eToys was suddenly the third choice in a two-horse category.
The dot-com crash did the rest. Money that had been free in 1999 was gone by 2001, and a retailer losing nine figures a year had no way to raise more of it. Pets.com hit the same wall in the same stretch of months.
Where did the eToys name go after the bankruptcy?
eToys filed for Chapter 11 in the United States Bankruptcy Court in Wilmington, Delaware on March 7, 2001, and closed the website the next day, saying it would still fill orders already placed. Operations ended that spring.
What was left got sold off in pieces. KB Holdings, parent of the mall chain KB Toys, bought the eToys website, name and logo at a bankruptcy auction in May 2001 for about $3.35 million, the trade magazine Playthings reported that year. The market had valued the same company at about $7.8 billion two years earlier.
KB Toys ran eToys.com as part of its KBkids.com operation. The address then kept changing hands as its operators did: by the mid 2000s it belonged to eToys Direct, which merged into a company called The Parent Company in January 2008.
The Parent Company filed for Chapter 11 in December 2008, which put eToys.com on the auction block for the second time in seven years.
Is eToys still in business in 2026?
No. There is no eToys company and no eToys store. What survives is the address, and a larger retailer holds it.
Toys R Us bought eToys.com in February 2009 along with BabyUniverse.com and ePregnancy.com. Domain Name Wire, which tracked the auction, reported the lot at $2.15 million and identified the winning bidder, registered as Eagle LLC, as Toys R Us; the retailer itself never disclosed the price.
Toys R Us has changed hands since. WHP Global took a controlling stake in Tru Kids, the Toys R Us parent, in March 2021, and runs the brand now. In the United States that means about 40 standalone stores plus Toys R Us shops inside Macy's, with roughly 120 more standalone stores planned for the 2026 holiday season.
None of them is an eToys. The name is an asset on a shelf rather than a shop, kept for the same reason big retailers keep dead brands: it costs almost nothing to hold, and something to lose. The chain eToys briefly passed on the stock market ended up owning the eToys name for less than KB Holdings paid in 2001.
Frequently Asked Questions
Is eToys still in business?
No. eToys, Inc. filed for Chapter 11 bankruptcy on March 7, 2001, closed eToys.com the following day and ended operations that spring. A later company reopened the eToys.com address as an online toy store, but that business went through bankruptcy too, in December 2008, and no eToys store has operated since.
Who owns eToys.com now?
Toys R Us has owned the eToys.com address since February 2009, when it bought the name out of The Parent Company's bankruptcy in a lot Domain Name Wire reported at $2.15 million. Before that the name belonged to KB Holdings, which took it at the original eToys bankruptcy auction in May 2001 for about $3.35 million.
How much was eToys worth at its peak?
eToys was worth about $7.8 billion at the close of its first day of trading on May 20, 1999, when the stock finished near $76 after being priced at $20. That was more than Toys R Us, the largest toy retailer in the country, which was valued at about $5.6 billion at the time.