(Reuters) – After nearly four months of phone calls and emails to GameStop Corp complaining about slow delivery of an order, New Jersey professor Steven Titus received a late-night call in early March from a board director. from the video game store.
Along the lines was Ryan Cohen, the billionaire co-founder and former CEO of online pet supplies retailer Chewy, who is now leading GameStop’s push toward e-commerce. Cohen was responding to an email Titus had sent 12 hours earlier to more than two dozen GameStop executives and board members.
“NO ONE has attempted to answer except a garbled voicemail without a distinguishable callback number or extension. E-commerce requires a responsive customer service team and processes, ”Titus wrote.
“I just received your email, I am very sorry this happened. Let me get to the bottom of this, ”Cohen told Titus.
Cohen then asked GameStop’s new head of customer service, Kelli Durkin, who spearheaded initiatives at Chewy that included personal notes written for customers, to look into the matter. Titus was refunded for his purchase, even though he had not requested a refund and was only complaining about the lateness of his order.
The anecdote, described by experts at Titus and GameStop, is representative of the intensity that Cohen has brought to the Grapevine, Texas-based company as it pursues an against all odds transformation from traditional retailer into e-commerce company. which can take on big retailers like Target Corp and Walmart Inc and tech 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, reaching out to customers late into the night for feedback, and has made an effort to update the site. The company’s website and online ordering system, eight people who work with or know Cohen said in interviews. Cohen aims to make GameStop the “game chew” with lower prices, better selection and faster delivery times, the sources said, most of them speaking on condition of anonymity.
Wall Street analysts doubt that Cohen, a college dropout who says he learned the ins and outs of business from his late father, who was a glass importer, can win back GameStop customers who have become accustomed to streaming video games. Some are struggling to understand why the creator of the world’s most valuable online pet supply store would take over a dying video game retailer as a recovery project.
Sources said Cohen’s efforts are driven by the belief that video game lovers will turn to a dedicated internet store just as pet lovers will turn to Chewy.
“He has the courage of conviction and that muscle memory to have done this before,” said Jay Park, a former Chewy investor who founded Prysm Capital.
Cohen declined to comment through a spokesperson.
His attempt at change would have been minor in the public eye if GameStop hadn’t captured the imagination in January of an army of hobbyist merchants on the social networking site Reddit who helped drive the company’s market value to a peak of $. 33.7 billion at the end of that month. from $ 1.4 billion days before. It is now worth around $ 14 billion. A year ago, GameStop’s market capitalization was $ 250 million.
Cohen invested in GameStop last year before the action became a social media sensation. His 13% stake in the company, on which he spent approximately $ 75 million, is now worth about $ 1.8 billion.
Wall Street is watching your every move. The removal of GameStop’s chief financial officer last month, which Cohen pushed, was enough to reignite a rally in its shares. Investors monitor Cohen’s every tweet, trying to make sense of what seemingly unrelated memes like frogs and ice cream cones mean to GameStop.
Many of Cohen’s investment plans for the company require more capital. Unlike Chewy, GameStop can’t trust California’s Silicon Valley fundraiser, but it could raise hundreds of millions of dollars by taking advantage of its high share price to sell shares. GameStop will be legally allowed to do that once it reports its fourth-quarter results, which are scheduled to be released on Tuesday.
None of the sources close to Cohen would comment on whether GameStop would seek to raise capital soon. GameStop declined to comment on the matter.
THE CHEWABLE RECIPE
Cohen founded Chewy in 2011 with Michael Day, who dropped out of college to join the construction of the startup that they sold to retail giant PetSmart for $ 3.35 billion six years later. Chewy is now a publicly traded company with a market value of $ 34 billion.
There are similarities between GameStop and Chewy that give Cohen fans the confidence that he can repeat his success. GameStop has been dismissed by many industry insiders as the next Blockbuster, the now-defunct video game and movie rental chain. Chewy was also shunned by much of Silicon Valley as a Pets.com copycat who would be crushed by Amazon.com Inc.
But there are also key differences. Chewy investors forgave their losses, fueled by Cohen’s heavy spending on customer service and marketing, because it generated soaring revenue growth.
GameStop, on the other hand, is not a hot startup. Following its roots in 1984, it has reported year-on-year revenue declines for the past 10 quarters, with Wall Street analysts projecting a 66% decline in quarterly revenue on Tuesday, according to data compiled by Refinitiv.
Cohen warned GameStop insiders that there is no guarantee of success and that progress could take time, while vowing that the company will change its financial results quickly this year and 2022 as new video game systems such as the PlayStation are released. Sony or Microsoft’s Xbox, according to sources. saying. He’s focused on recruiting top talent, including a new CFO, the sources said.
Volition Capital co-founder Larry Cheng, the first investor to back Chewy after 100 others rejected him early on, said Cohen’s relentless focus could benefit GameStop.
“I certainly wouldn’t bet against Ryan. He has a knack for solving things, ”Cheng said.
Report from Svea Herbst-Bayliss in Boston; Editing by Greg Roumeliotis and Paul Simao