(Reuters) – After nearly four months of calls and emails to GameStop Corp complaining about the slow delivery of an order, New Jersey teacher Steven Titus received a call in early March – from a director in the advice of the video game dealer.
On the line was Ryan Cohen, the billionaire co-founder and former CEO of online retailer Chewy for pets, which is now GameStop’s lead in e-commerce. Cohen responded to an email Titus sent 12 hours earlier to more than two dozen GameStop executives and board members.
‘NO ONE has attempted to respond except to a confused voicemail with no distinguishable callback number or extension. E-commerce requires a customer support team and responsive processes, ‘Titus wrote.
‘I just got your email, I’m sorry it happened. Let me get on with this, ”Cohen told Titus.
Cohen then asked GameStop’s new customer service manager, Kelli Durkin, who had to investigate the leading initiatives at Chewy, which includes written personal notes to customers. Titus was compensated for his purchase, although he did not ask for a refund and only complained about the slowness of his order.
The anecdotes, described by the insiders of Titus and GameStop, are representative of the intensity that Cohen brought to the Grapevine business in Texas while undergoing an against-the-odds transformation of the brick-and-mortar retailer in ‘ pursue an e-commerce business. which can take on retailers like Target Corp and Walmart Inc. and technology companies like Microsoft Corp and Sony Corp.
Since Cohen joined GameStop’s board in January, the 35-year-old entrepreneur has been obsessed with customer service and has been in touch with customers until late at night to get feedback and has made an effort to improve the company’s upgrade website and online ordering system. work with or know Cohen said in interviews. Cohen intends to turn GameStop into the ‘Chewy of gaming’ with lower prices, better choice and faster delivery times, the sources said, most of whom speak on condition of anonymity.
Wall Street analysts doubt whether Cohen – a colleague who says he learned to do business with his late father, who was a glass importer – can win back GameStop customers who have become accustomed to video games. Some struggle to understand why the creator of the world’s most valuable online pet supply store would approach a dying video game retailer as a turnaround project.
According to the sources, Cohen’s efforts are driven by the belief that video game lovers will turn to a dedicated online store just as pet lovers have turned to Chewy.
“He has the courage of conviction and the muscle memory to do it before,” said Jay Park, a former investor who founded Prysm Capital.
Cohen declined to comment for comment.
His attempt to turn around would have been less in the public eye if GameStop had not captured the imagination of an army of amateur traders on the social media site Reddit in January, which at the end of that month helped bring the company’s market value up to ‘ to reach a peak of $ 33.7 billion. of $ 1.4 billion days before. It’s now worth about $ 14 billion. A year ago, GameStop’s market capitalization was $ 250 million.
Cohen invested in GameStop last year before the stock became a social media sensation. His 13% stake in the company, to which he spent about $ 75 million, is now worth about $ 1.8 billion.
Wall Street monitors every move. The dismissal of the chief financial officer of GameStop last month, for which Cohen campaigned, was enough to revive a boom in his shares. Investors are watching every tweet from Cohen and trying to make sense of what seemingly unrelated memes like frogs and ice cream cones mean for GameStop.
Many of Cohen’s investment plans for the company require more capital. Unlike Chewy, GameStop cannot rely on fundraising from Silicon Valley, California, but it can raise hundreds of millions of dollars by using the increased share price to sell shares. GameStop will be legally allowed to do so as soon as it reports its results in the fourth quarter, which will be announced on Tuesday.
None of the sources close to Cohen want to comment on whether GameStop wants to raise capital soon. GameStop declined to comment on the matter.
THE TASTE RECIPE
Cohen co-founded Chewy in 2011 with Michael Day, who left the university to sell to retail giant PetSmart for $ 3.35 billion six years later. Chewy is now a $ 34 billion listed company with a market capitalization.
There are similarities between GameStop and Chewy that give Cohen’s fans confidence that he can repeat his success. GameStop has been written off by many industry insiders as the next Blockbuster, the now-defunct movie rental and video game chain. Chewy has also been cut by a large amount of Silicon Valley as a Pets.com copier owned by Amazon.com Inc.
But there are also important differences. Soft investors forgave the losses, driven by Cohen’s huge spending on customer service and marketing, because it delivered incredible revenue growth.
GameStop, on the other hand, is no red-hot startup. According to information compiled by Refinitiv, Wall Street analysts reported a 66% drop in annual revenue for the past ten quarters, according to Tuesday.
Cohen warned GameStop that there is no guarantee of success and that progress can take time, promising that the company will reverse its financial results quickly and in 2022, as new video games such as Sony’s PlayStation or Microsoft’s Xbox are announced. be made. said. He is focused on recruiting top talent, including a new chief financial officer, the sources said.
Larry Cheng, co-founder of Volition Capital, the first investor to support Chewy after about 100 others knocked it off early, said Cohen’s relentless focus could bear fruit for GameStop.
‘I will definitely not bet against Ryan. He has the ability to think things through, “said Cheng.
Reporting by Svea Herbst-Bayliss in Boston; Edited by Greg Roumeliotis and Paul Simao