(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 late night call in early March – from a director at advice from a video game retailer.
On the line was Ryan Cohen, the billionaire co-founder and former chief executive of online pet supply retailer Chewy, who now leads GameStop’s advancement in e-commerce. Cohen was responding to an email that Titus had sent 12 hours earlier to more than two dozen GameStop executives and board members.
“NO ONE tried to answer, except a confused voicemail, with no callback number or distinguishable extension. E-commerce requires a customer support team and processes that are responsive, ”wrote Titus.
“I just received your email, I am sorry that this has 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 led initiatives in Chewy that included personal notes written for customers to examine the matter. Tito was refunded for the purchase, although he did not request a refund and only complained about the delay of the order.
The anecdote, described by insiders Titus and GameStop, is representative of the intensity that Cohen brought to the company based in Grapevine, Texas, as it seeks a transformation against the odds of the traditional retailer into an e-commerce company that can target large 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 has been obsessed with customer service, contacting customers late at night to request feedback and made an effort to update the company’s website and system. of online ordering, eight people who work with or meet Cohen said in interviews. Cohen plans to make GameStop the “Chewy of games” with lower prices, better selection and faster delivery times, the sources said, most speaking on condition of anonymity.
Wall Street analysts doubt that Cohen – a student who dropped out of college and says he learned the intricacies of business from his late father, who was a glass importer – could win back GameStop customers who got used 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.
The sources said Cohen’s efforts are driven by the belief that video game lovers will turn to a dedicated Internet store in the same way that animal lovers look for Chewy.
“He has the courage of conviction and that muscular memory to do this before,” said Jay Park, a former Chewy investor who founded Prysm Capital.
Cohen declined to comment via a spokesman.
His recovery attempt would have been less in the public eye if GameStop hadn’t captured the imagination in January of an army of amateur traders on the social media site Reddit that helped boost the company’s market value to a peak of $ 33, 7 billion at the end of that 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 stock 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 your every move. The resignation of GameStop’s chief financial officer last month, which Cohen defended, was enough to revive his actions. Investors monitor every Cohen tweet, trying to understand 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 count on fundraising from Silicon Valley, California, but it can raise hundreds of millions of dollars by taking advantage of the high price of its shares to sell shares. GameStop will be legally allowed 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 commented on whether GameStop would seek to raise capital anytime soon. GameStop declined to comment.
CHEWY’S RECIPE
Cohen founded Chewy in 2011 with Michael Day, who dropped out of college to join the construction of the startup he 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 was considered by many industry experts to be the next Blockbuster, the now defunct movie and video game rental network. Chewy was also despised by much of Silicon Valley as a Pets.com impersonator who would be crushed by Amazon.com Inc.
But there are also important differences. Chewy investors forgave their losses, driven by Cohen’s large customer service and marketing spending, because it generated dramatic revenue growth.
GameStop, on the other hand, is not a hot start-up. Tracing its roots back to 1984, it has reported revenue declines year-over-year over the past 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 warned GameStop insiders that there is no guarantee of success and that progress can take time, while promising that the company will change its financial results quickly this year and in 2022, as new video game systems like Sony’s PlayStation or Sony’s Xbox Microsoft are released, the sources said. He is focused on recruiting the best talent, including a new CFO, the sources said.
Volition Capital co-founder Larry Cheng, the first investor to support Chewy after about 100 others initially rejected it, said Cohen’s relentless focus could yield GameStop.
“I certainly wouldn’t bet against Ryan. He has a knack for finding things out, ”said Cheng.
Reporting by Svea Herbst-Bayliss in Boston; Editing by Greg Roumeliotis and Paul Simao