GameStop investor believes they have a plan to make it competitive with Amazon #amazon #Gamestop

 

#ryancohen #competition #blockbuster #chewy

Ryan Cohen is the owner of e-commerce company "Chewy", which was sold to PetSmart in 2017 for 3.35 billion dollar

In 2011, at the age of 25, Ryan Cohen founded Chewy under her original name MrChewy.

Cohen says his inspiration for choosing the pet class came from his experience shopping for his dog, Tylee.

He cites his father Ted, who ran a glassware import company, as a mentor.

In need of capital, Cohen says, he originally approached more than 100 companies for venture capital and turned it down all of them.

In 2013 Cohen secured the company's first overseas investment from Volition Capital for $ 15 million.

By 2016, he had raised capital from investors including BlackRock and T. Rowe Price New Horizons Fund. That year, the company achieved $ 900 million in sales and became the # 1 online pet retailer.

By 2017, Cohen had raised $ 350 million and was preparing for the IPO.

In April 2017, PetSmart bought Chewy for $ 3.35 billion in its largest e-commerce acquisition ever.

That year, Fortune ranked Cohen one of its "40 Under 40" and Vox ranked him on the Recode 100 list.

Cohen remained the CEO after the acquisition and has largely managed the business as a separate unit of PetSmart.

In March 2018, he resigned as CEO to pursue his personal goals and spend time with his family. In June 2019, Chewy went public for $ 8.7 billion.

Ryan Cohen now proposes GameStop Corp. with a lofty goal: to become a true competitor to Amazon.com Inc., According to a person familiar with the matter.

Shares of Grapevine-based video game retailer jumped as much as 28% in trading Tuesday after Bloomberg News reported Cohen's plans late Monday. This is the highest stock level since March 2019.

After acquiring nearly 10% of GameStop's shares - making him the company's largest single investor - Cohen revealed Monday that he is in talks with management and several board members. Cohen, RC Ventures, has expressed its willingness to engage more with the company in order to "achieve the best results for all shareholders," according to one of the documents.

Cohen's vision, which has yet to be announced, is to expand GameStop selection online and compete for face-to-face with some of the biggest e-commerce companies, according to the person. Instead of just offering video games and a few games, clothes, and accessories, the GameStop website will sell a wide range of merchandise and ship them to customers more quickly - one of Amazon's main strengths.

Of course, challenging Amazon directly will be an uphill battle. Despite intense competition from traditional retailers and startups, Amazon has increased its share in the e-commerce industry, and this trend is expected to continue, according to EMarketer Inc.

Amazon's marketplace is worth about $ 1.5 trillion, compared to GameStop's $ 570 million.

"I find it difficult to anticipate how GameStop can turn into a reliable competitor to Amazon," said Anthony Chukumba, an analyst at Loop Capital. "There are a lot of companies that have much deeper pockets than GameStop that have had a lot of difficulties competing with Amazon, and some are barely competing with Amazon - Walmart, for example."

Cohen has a strong track record. He co-founded and acted as CEO of Chewy, then sold it in 2017 to PetSmart Inc. .. Choosing its products is one of the e-commerce site's selling points: Chewy offers items ranging from dog pyjamas to parrot popcorn to horse saddles.

The investor wants the same kind of diversity on GameStop, according to the person who requested anonymity because the shows are private. He also wants the company to improve customer service and build the infrastructure needed to deliver thousands of items and services.

Part of Cohen's plan, the person said, would be to offer more services online. For example, clients should be able to trade vintage video games online rather than just in stores. And GameStop may offer more game streaming subscriptions.

The hope is to avoid the fate of Blockbuster Video, which was pushed by Netflix Inc. To be forgotten and become an online destination for everything from tech games to tennis rackets. The physical stores will be less focused, although profitable locations will still be open.

It is not clear if GameStop will implement Cohen's suggestions. The retailer did not respond to requests for comment. RC Ventures declined to comment.

The company is already closing hundreds of its stores, but it's still a huge brick and mortar chain. As of last quarter, GameStop had 5,122 locations in 10 countries. Sales in the last fiscal year were down 22% to $ 6.47 billion.

The good news for GameStop, and investors like Cohen, is that the company has a rare tailwind right now: the console upgrade cycle. New releases of Microsoft Corp.'s Xbox and PlayStation devices will be released. This year, this has pushed stocks up in 2020 after six consecutive years of decline. GameStop shares are up 44% this year through Monday

Do you think cohen can compete with Amazon?