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The year of the e-piggyback

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CIOL Bureau
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Just before Halloween, KB Toys kicked off the fourth quarter in an appropriately

spooky way: It raised eToys from the dead. After KB bought most of the bankrupt

dot com’s assets for $15 million last spring, the 1,300-store chain relaunched

the site in October.

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By offering such popular eToys features as a gift registry and sophisticated

search engine, KB hopes to attract previous eToys customers who liked the Web

site but didn’t know it went bust. What’s more, it got a state-of-the-art

warehouse and the right to send promotional e-mail to three million former eToys

customers. At the same time, KB is keeping its own Web site so it can hang on to

its original customers. Now, KB expects to double its online sales this year, to

$80 million. "EToys was a first-class operation," says KB’s CEO

Michael Glazer. "We expect a lot of its customers to show up again."

This Christmas, traditional retailers are taking the lead online, but not all

by themselves. They’re riding on the backs of dot coms–dead and alive.

Blending in assets they bought for peanuts from failed e-tailers is only part of

it. Many others are forming alliances with surviving dot coms that would have

been unthinkable a year ago. After losing $29 million a year online, Borders

Group linked up with rival Amazon.com to handle Borders’ online sales through

a co-branded site–which turned profitable almost instantly after it was

launched in August. Other retailers such as Kmart have outsourced much of their

online inventory and customer service operations to Web fulfillment companies.

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