(Reuters) – After nearly four months of phone calls and emails to GameStop Corp. complaining about the slow delivery of an order, New Jersey professor Steven Titus received a call late in early March – from a director on the video game vendor’s board.
On the line was Ryan Cohen, the billionaire’s co-founder and former executive director of online pet products retailer Chewy, which now leads GameStop’s momentum in e-commerce. Cohen was responding to an email Titus had sent 12 hours earlier to more than two dozen GameStop directors and board members.
“NO ONE tried to answer, except for a confusing voice message, without a separate call number or extension. E-commerce requires a customer support team and processes that are responsive, ”Titus wrote.
“I just received the e-mail, I’m sorry it happened. Let me get to the bottom of this, “Cohen told Titus.
Cohen then asked Kelli Durkin, GameStop’s new head of customer service, who led the Chewy initiatives, which included personal notes written to customers, to look into the matter. Titus was reimbursed for his purchase, even though he had not requested a refund and was only complaining about the delay in his order.
The anecdote, described by Titus and GameStop insiders, is representative of the intensity that Cohen brought to the company in Grapevine, Texas, while pursuing a counter-chance transformation of the brick and mortar retailer into an e-commerce company. which may consider large retailers such as Target Corp. and Walmart Inc. and technology firms such as Microsoft Corp. and Sony Corp.
Since Cohen joined GameStop’s board in January, the 35-year-old entrepreneur has been obsessed with customer service, contacted customers late at night for feedback, and pressured to update the website. and the online ordering system, eight people working with or you know Cohen said in interviews. Cohen aims to turn GameStop into “Chewy of gaming” with lower prices, better selection and faster delivery times, sources said, most speaking on condition of anonymity.
Wall Street analysts doubt that Cohen – a school dropout who says he learned the business from his 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 most valuable online pet store would take a dying video game retailer as a change project.
Sources said Cohen’s efforts are driven by the belief that video game lovers will head to a dedicated internet store, just as pet lovers have turned to Chewy.
“He has the courage and conviction to do this beforehand,” said Jay Park, a former Chewy investor who founded Prysm Capital.
Cohen declined to comment through a spokesman.
His attempt to change would have been less in the public eye if GameStop had not captured the imagination in January of an army of amateur traders on the social networking site Reddit that helped boost the company’s market value to a peak of 33 , $ 7 billion at the end of that month, up from $ 1.4 billion the day before. It is now worth about $ 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. Its 13% stake in the company, which it spent about $ 75 million, is now worth about $ 1.8 billion.
Wall Street watches every move. The resignation of GameStop’s chief financial officer last month, which Cohen imposed, was enough to revive a rally in his actions. Investors monitor every Cohen tweet, trying to understand what GameStop means seemingly unrelated memes, such as frogs and ice cream cones.
Many of Cohen’s investment plans require more capital. Unlike Chewy, GameStop can’t rely on fundraising in California’s Silicon Valley, yet it could raise hundreds of millions of dollars by grabbing its high stock price to sell shares. GameStop will be legally authorized to do so once it reports its fourth-quarter results, which are scheduled to be released on Tuesday.
None of Cohen’s sources would comment on whether GameStop will try to raise capital soon. GameStop declined to comment.
MACHINE RECIPE
Cohen founded Chewy in 2011 with Michael Day, who dropped out of college to join the construction of the startup 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’s fans confidence that he can repeat his success. GameStop has been canceled by many inside the industry as the next Blockbuster, the movie rental video game chain and now gone. Chewy was also snubed by much of Silicon Valley as a Pets.com copy that would be crushed by Amazon.com Inc.
But there are also key differences. Naughty investors forgave their losses, caused by Cohen’s high spending on customer service and marketing, as they generated a sharp rise in revenue.
GameStop, on the other hand, is not a hot start. Following its roots until 1984, it reported annual revenue declines in the last 10 quarters and is projected by Wall Street analysts to report a 66% decline in quarterly revenue on Tuesday, according to data compiled by Refinitiv.
Cohen has warned GameStop experts that there is no guarantee of success and that progress could take time, swearing that the company will quickly return its financial results this year and in 2022 as new video game systems are launched, such as would be Sony PlayStation or Microsoft Xbox said. He is focused on recruiting top talent, including a new CFO, sources said.
Volition Capital co-founder Larry Cheng, the first investor to support Chewy after 100 other people held him back from the start, said Cohen’s tireless concentration could work for GameStop.
“I certainly wouldn’t bet on Ryan. He has a knack for figuring things out, ”Cheng said.
Report by Svea Herbst-Bayliss to Boston; Edited by Greg Roumeliotis and Paul Simao