(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 an evening call in early March, a director of the video game retailer’s board.
On the line was Ryan Cohen, the billionaire co-founder and former CEO of online pet supplies distributor Chewy, who now leads GameStop’s drive 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 respond except for a confused voice message without any distinguishable callback number or extension. E-commerce requires a customer service team and responsive processes,” Titus wrote.
“I just received your email, I’m sorry it happened. Let me get to the bottom of it, ”Cohen told Titus.
Cohen asked GameStop’s new head of customer service, Kelli Durkin, who led initiatives at Chewy that included personal notes written to customers, to discuss the issue. Tito was reimbursed for his purchase, although 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 Cohen has brought to the Grapevine, Texas-based company as it pursues a transformation against the odds of the brick-and-mortar retailer into an e-commerce business. which can occupy large retail stores such as Target Corp. and Walmart Inc. and technology companies such as Microsoft Corp. and Sony Corp.
Since Cohen joined GameStop’s board of directors in January, the 35-year-old has been obsessed with customer service, contacting customers until late at night to order comments and has made a push to update the company’s website and online ordering system, eight people who work or know Cohen said in interviews. Cohen aims to turn GameStop into the “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 college dropout who claims he learned the business from his late father, who was a glass importer, can recover GameStop customers who have become accustomed to streaming video games . Some struggle to understand why the creator of the world’s most valuable online pet supply store would take on a dying video game retailer as an investment project.
Sources said Cohen’s efforts are motivated by the belief that video game lovers will turn to a dedicated online store in the same way that pet lovers turned to Chewy.
“He has the courage of conviction and that muscular memory to do it sooner,” said Jay Park, a former Chewy investor who founded Prysm Capital.
Cohen declined to comment through a spokesman.
His investment attempt would have been less in the public eye if GameStop had not captured the imagination of a January of Reddit amateur marketers who helped boost the company’s market value to a maximum of $ 33.7 billion at the end of this month. from $ 1.4 billion days earlier. 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. His 13% stake in the company, in which he spent about $ 75 million, is now worth about $ 1.8 billion.
Wall Street is watching its every move. The expulsion of GameStop chief financial officer last month, which Cohen pushed for, was enough to revive a rebound in his shares. Investors monitor all of Cohen’s tweets, 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 rely on Silicon Valley fundraising in California, though it could raise hundreds of millions of dollars by leveraging its high stock price to sell shares. GameStop will have legal permission to do so 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 try to raise capital soon. GameStop declined to comment on the matter.
THE MALTA RECIPE
Cohen founded Chewy in 2011 with Michael Day, who dropped out of college to join the creation of the startup they sold to retail giant PetSmart for $ 3.35 million 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 confidence so he can repeat his success. GameStop has been canceled by many industry professionals such as the upcoming Blockbuster, the movie rental video game chain and gone. Chewy was also wasted by much of Silicon Valley as a Pets.com copier that would be shredded by Amazon.com Inc.
But there are also key differences. Cheerful investors forgave their losses, driven by Cohen’s high spending on customer service and marketing, as it generated dizzying revenue growth.
GameStop, on the other hand, is not a hot start-up. Following its roots until 1984, it has reported year-on-year revenue falls over the past ten quarters and, according to Wall Street analysts, on Tuesday reported a 66% drop in quarterly revenue, according to data compiled by Refinitiv.
Cohen has warned GameStop experts that there are no guarantees of success and that progress may take a while, promising that the company will turn its financial results around quickly this year and in 2022 as new systems are released. video games like Sony’s PlayStation or Microsoft’s Xbox. dit. It focuses on attracting top-tier talent, including a new CFO, sources said.
Volition Capital co-founder Larry Cheng, the first investor to back Chewy after about 100 others wasted it at first, said Cohen’s relentless focus could pay off in GameStop.
“I certainly wouldn’t bet on Ryan. He has the skills to figure things out, ”Cheng said.
Svea Herbst-Bayliss to Boston Reports; Edited by Greg Roumeliotis and Paul Simao