Sustainability In Toys: What Happens Next? Part 1, Plastic

Sustainability In Toys: What Happens Next? Part 1, Plastic

COP 26 has been and gone. (Most) of the world’s leaders have agreed that urgent action is needed on environmental matters, not least of which is addressing CO2 output and global warming. While some of the solutions to global warming are beyond the ability of the toy business to resolve, there are clearly some actions we can all take which will help.

As we head towards another year it is perhaps a good time to take a look at where we are at on sustainability in the toy business. In the first article in this series we take a look at plastic:

Clearly the majority of toy products on sale are either mostly made from plastic or contain some plastic. Plastic being derived from oil and causing significant ocean pollution and other challenges has been very much in the public dialogue in recent years. Toy companies are increasingly aware of this. The low hanging fruit has been excess plastic in packaging, because plastic is cheap comparatively it has always been a large component of toy packaging (including the ties and fittings used to secure product during transit in pack). Much of that type of needless plastic has already been removed, but there is more still to do on that front. Solutions include clever packaging engineering to remove or at least reduce plastic usage, using sustainable materials such as cardboard and removing unnecessary shrink wrap on some products.

Looking forward, there is of course a potential long-term successor to plastic derived from plastic – that is ‘plastic’ produced from sustainable materials. This ‘bio-plastic’ is already available and being used by some companies in products. Lego has made large strides in this area, and is committed to going much, much further. In 2015 Lego announced a $150m investment in formulating a biobased alternative to oil-based plastic bricks, and their pledge is to switch all Lego bricks produced from 2030 onwards (that’s some 60 billion bricks p.a.!) to bio plastics.

Without getting too far into material science, we do know that there are some drawbacks with bioplastics, at least currently. Firstly, they are not proven to be as durable or to hold their shape as long as oil-based plastics, but perhaps that can be addressed with science/technological advancements over time. We also know that bio plastics are considerably more expensive – from talking to people in the business, we have heard costs to be c. 30% higher. At this stage it is not clear whether this is a price variance which can be reduced over time with volumes of scale, but it is clear that consumers are going to need to be willing to pay more for a greener product, and that retailers are going to need to support that also to get mass adoption of toys made from bio plastics.

We predict big change ahead in this space – plastic is so clearly in the environmental firing line, that bioplastics are an inevitability. As always, some companies will lead the charge, and others will lag, following far behind, but over the next decade we predict a mass transition from fossil fuel-based plastics to bio plastics in the toy business.

Stay tuned for the next instalment of this series of articles on Sustainability in toys.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

X Is For X-Men, Xbox and X-Shot

X Is For X-Men, X Box and X-Shot

X-Men

X-Men is the eighth highest grossing film series of all time with staggering total box office gross receipts topping $6billion. Superheroes like Wolverine have been a strong presence in the toy aisle since the original movie trilogy released between 2000 and 2006. At the time of writing there is speculation/reports of a reinvention Movie coming out of Marvel Studios…we’ll be watching with high anticipation for that if it happens!

 

Xbox

Microsoft’s Xbox was a massive disruptor when the first iteration launched way back in 2001. We’re now into the fourth ‘generation’ of this iconic video games console, with total console sales in excess of 160million over time. The impact Microsoft has thus had on the video game space is therefore massive. Aside from cannibalising toy sales due to kids putting Xbox consoles high up on their wish lists for Christmas, Xbox and Microsoft also own some key video gaming IP which has driven huge toy sales – not least of which would be Minecraft, acquired by Xbox in 2014, which has moved large quantities of toys off shelves in recent years.

 

X-Shot

X-Shot is the toy blaster brand owned by Zuru, a toy company originating from New Zealand with owned manufacturing facilities in China. “The brand website states the brand mission as offering value to our fans worldwide”, while delivering design excellence and market leading quality. In most toy retailers, where they have toy blasters, they tend to have two brands primarily – X-Shot & Nerf. Nerf’s massive global success is hard to compete with, but X-Shot manages to be a credible player with a broad range in a lot of retailers, despite the strength of the biggest brand in the category.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

5 TIPS – FINDING INTERNATIONAL TOY & GAME DISTRIBUTORS

HOW TO FIND INTERNATIONAL TOY DISTRIBUTORS & SECURE DISTRIBUTION DEALS – 5 TIPS

The question we get asked the most often in our Consultancy business is how to find distributors internationally and how to secure distribution deals with them. At this stage, we have been working with distributors for more than 20 years, with a fair degree of both success and failure! In the process of working with toy & game distributors across the world there are some recurring realisations we want to share:

 

  1. You need to understand the distributor’s business model.

Let’s start with this – being a distributor is a really tough business. The distributor buys products, warehouses them and ships them to the customer on typically thin margins. Cashflow is a constant strain, and you can’t afford to go big on stock on anything that doesn’t sell. You also don’t have a lot of margin to play with if your retailer needs help to mark products down to clear. In addition, to balance out the risks, prudent distributors will run a fairly broad portfolio of products. Those distributors who are over reliant on one brand or partner tend to be at greatest risk of going bust if those products are taken away from them as quite often happens in this business. As a result, distributors tend to be perhaps surprisingly cautious about taking on new product lines. They also have a massive choice – there are literally hundreds of thousands, if not millions of toy & game products out there for them to choose from. This is one reason why you might find it hard to get them on board to distribute your products.

 

  1. The product is everything!

If you are good buddies with a distributor they will no doubt take a meeting with you at every trade show and be happy to take a look at new product lines you are pushing. However, in the end their business success depends on selecting the right products. A good distributor will not take a commercially unviable product from a friend, as that is just bad business. Whether they like you or not, if it won’t sell it is of no use. We have helped secure distribution across Europe, the USA, Asia & beyond for thousands of products. For some products it was quite easy – either because it was the right type/category of product at the right time or because the product featured a hot license. Occasionally we have secured major distribution deals from the first company we approached – this though had absolutely nothing to do with our selling skill – the product in those instances was so hot it effectively sold itself. On the flip side we have worked on products which are a really, really hard sell. One project we worked on involved us talking to more than 80 distributors before we secured distribution, and again this also wasn’t due to our selling skills, it was just a hard sell!

So above all, develop good products with clear and compelling selling points/benefits which fit commercially viable price points. Instead of falling in love with your product due to your high level of emotional investment, start with making sure you have a commercially viable product and you will be far more likely to succeed!

 

  1. It takes time to build a distributor network around the world

It is usual to take years to build up a global distributor network. Each selling cycle you might bring on a few more partners, but the selling cycle is yearly, so it takes multiple selling cycles and therefore years to get things set up. Sometimes you can be having the same conversation with a distributor in trying to persuade them to take your products over several years. One product we worked on was finally adopted for distribution by the distributor ten years after we first pitched it to them. They were interested from year one but kept having other bigger more attractive products come along just as we were going to nail the deal!

 

  1. Trade shows can be a rapid accelerant for setting up toy & game distributor networks

The toy trade show circuit is long established. (Pre & hopefully post covid) the toy trade circles the world with trade show after trade show getting products in front of retailers and distributors, securing distribution and taking orders. Which shows to attend depends quite a lot on your business and location, but there are often national toy trade shows e.g. the UK or Australia, alongside 3 major global shows – Hong Kong in early January, Spielwarenmesse-Nuremberg in late Jan/early Feb and New York in mid to late Feb. In addition, for toy distributors, Distoy in the UK is growing in importance. Attending these shows costs money, exhibiting costs even more, but there is no surer way of accelerating growth.

 

  1. Marketing matters!

There are typically 2 types of distributors – those who distribute products with TV advertising, and those that don’t. For TV advertising distributors it should hopefully go without saying that you need a really compelling TVC to provide them, they would normally add their own local language voiceovers. Needless to say, it can cost quote a lot of money to TV advertise, so these distributors need to have enough margin and potential profit to merit the investment. Therefore, these TV advertising distributors tend to focus on product lines from major toy companies or hot (easy to sell) licenses. For non-TV advertising distributors, the lack of TV doesn’t mean no marketing…in fact, typically the successful distributors have effective (albeit lower budget) marketing executions. Offering distributors more marketing support in terms of managing pay per click advertising, content and supplying in store merchandising solutions again makes your success more likely.

 

To wrap up, here’s the bottom line: setting up distributor networks takes time, and above all the more commercially compelling your product is the quicker you will find distribution.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

W Is For Weintraub, Wenkstern, Wham-O And Women In Toys, Licensing & Entertainment

W Is For Weintraub, Wenkstern, WWE, Wham-O And Women In Toys, Licensing & Entertainment

LIONEL WEINTRAUB

Lionel Weintraub worked in the toy business for four decades, with a focus on innovation and looking forward he is one of the all-time greats. He is credited with being one of the first toy people to adopt plastic injection moulding, a process which is now ubiquitous in the toy trade, was one of the first executives to embrace the professional inventing community and under his reign at Ideal Toys had one of the first TV advertised toy products in toys. He is also associated with some mightily successful products including Mousetrap, Kerplunk and of course the mighty Rubik’s Cube which his Ideal Toy team launched in the USA.

 

RUSSELL WENKSTERN

Russell Wenkstern was at the helm of Tonka Toys during their original heyday, between 1961 to 1977. Under his reign Tonka became the biggest manufacturer of vehicles globally. The Mighty Tonka line brought to market by Wenkstern and his team became hugely successful, doubling revenues over 4 years.

 

WWE

WWE (once was WWF) has been a major brand in the action figures space for decades. Kids and families often love wrestling for the entertainment factor. Many children love the themes and action of goodies vs baddies, of physical confrontation and argy bargy. They also love action figures which allow them to play out boisterous physical play with the figures. When you look at the biggest brands in action figures this millennium, you’ll find these plastic representations of the latest wrestling stars consistently in the mix!

 

WHAM-O

Founded way back in 1948, Wham-O has been wowing generation after generation of kids and families ever since. They have brought a dazzling array of hit products to market over the years including Frisbee, the Hula Hoop, Silly String and Hacky sack. It’s perhaps no surprise that a company with so many ‘outdoor’ play icons in their stable of brands hails from the sunny climes of California.

 

WOMEN IN TOYS, LICENSING & ENTERTAINMENT

A global community and non-profit organisation that champions and advocates for the advancement of women through leadership, networking and educational opportunities. For more information: https://womenintoys.com/

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

V Is For Vtech, Vehicles, Verrecchia & Video Games – Toy Business A To Z

V Is For Vtech, Vehicles, Verrecchia & Video Games – Toy Business A To Z

VTECH

Vtech is a powerhouse in electronic learning toys, with a strong raft of products which keep coming back year after year with upgraded tech and refreshed versions of classic items like the Kidizoom camera and Kidizoom Watch products which have been top sellers. Originally founded back in 1976 by two entrepreneurs in Hong Kong, the company founded by Allan Wong and Stephen Leung is a global force. In 2016 the company strengthened its market position considerably with the acquisition of major rival Leapfrog.

 

VEHICLES

This is one of the often-forgotten powerhouses of the toy business. From generic toy cars, to Hot Wheels through to licensed products based on movies and TV shows the Vehicles category is a strong pillar of the toy business. The movie franchise ‘Cars’ clearly had a huge fit with the toy vehicles market and as such enjoyed huge success. But the potential for ‘Vehicles’ is huge – Star Wars for instance has such a huge universe of characters and means of transportation that the Vehicle toy options are huge. For children, the appeal is multi-faceted – they like the concept of speed and travelling fast, children also love to role play with objects, tasks and processes they see in everyday life, and kids tend to spend quite a lot of time in cars.

 

VERRECCHIA, AL

Al Verrecchia had a massive positive effect on Hasbro. Having worked for Hasbro for decades, he moved from CFO to CEO back in 2003 to steady the ship after the failure of Hasbro Interactive and expensive licensing deals caused concerns with the profitability of the company. His reign at Hasbro won’t go down in history as the most dynamic or most exciting, but his ‘Core brand’ focused strategy effectively and efficiently reset the company’s financials and laid the foundations for the more expansive and visionary strategy of the following CEO – Brian Goldner (RIP).

 

VIDEO GAMES

Today the Video Games industry is significantly bigger than the Toy business but looking back to the start of the Video game era, the start was alongside the toy industry. Back when technology was simpler, barriers to entry were not so huge, toy companies dabbled (and usually failed) in the world of gaming consoles. Both Mattel and Hasbro got major bloody noses from playing in this space – Hasbro Interactive had a run of success in the mid to late 1990s, but closed doors with major losses not too long later. Mattel lost a lot of money with The Learning Company at a similar time. Today the Video Games business is regularly spawning brands which are licensed to toy companies creating best sellers i.e. Minecraft, Fortnight & others. Additionally, Video Games historically have had a major impact on the Toy business when a new console launches, with the new consoles topping the ‘Wish lists’ of kids and therefore cannibalising some toy business. In recent times this negative impact of new console launches seems to have lessened, but either way, the Video Games business has a significant impact on the toy business.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

Toys R Us To Return To The UK – Good News, But It Won’t Be Easy

Toys R Us To Return To The UK – Good News, But It Won’t Be Easy

Most toy people welcomed the recent news that Toys R Us will return to the U.K. The Toys R Us brand is still known, trusted and even loved by UK consumers based on conversations we have had. While there will inevitably be some negative baggage around based on the way TRU went out of business and approach to suppliers as the business unravelled, having more toy retail would normally only be regarded as a good thing.

It won’t be easy though for the new iteration of Toys R Us in the UK for a number of reasons:

Firstly, the UK has two of the healthiest and most successful toy specialist chains in the UK already in Smyths Toys & The Entertainer. These two chains had already benefited in some ways from the death of Woolworths in the UK back in the late noughties, and another primary beneficiary of the demise of Woolworths was B & M the clearance/bargain store chain which has taken over quite a few of the old Woolworths stores in prime spots on UK high streets. Between these three major players in the UK toy market, and the other key players then, there is less of an obvious gap for the return of Toys R Us in the UK then there would be in the USA for instance.

Another key point is that the UK return is reported to be including both a physical and online business. The online business has not got any easier either since Toys R Us went into administration in the UK back in 2018. Amazon has a gargantuan online share and are not easy to compete with, Argos has moved much more towards an online model either with delivery or click & collect. And again, back to the incumbent specialist chains in the market – both Smyths & The Entertainer have successful online operations also. Additionally, the sometimes under valued but critical UK independent retail sector has also seen a pivot towards online sales, use of social media for local promotions and events with product demonstration.

More toy retail should be welcomed, as normally the more retail outlets there are, the greater the total sales, even if this costs some market share to existing players, the overall sales numbers usually go up or down to some degree dependent on store count & active participation via e-commerce. Also, to reiterate, there is significant consumer goodwill to the Toys R Us brand in the UK. But there return won’t be easy, and there business model and management will need to be sharper than sharp to succeed. We wish them all the best of fortunes!

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

 

Paw Patrol Movie Helps Spin Master Deliver A Stellar Q3

Paw Patrol Movie Helps Spin Master Deliver A Stellar Q3

Spin Master have just reported fantastic Q3 & YTD numbers to the markets. Revenues rose by 25% year on year for Q3, and YTD to end of September the company reported an increase in revenues of nearly 32% (!).

We don’t have to look far to see what has caused these stellar results, with the company’s first feature film – the Paw Patrol movie enjoying significant box office success, with ticket sales in movie theatres racking up nearly $130m globally at the time of writing – a good performance for a movie of this type.

Accompanying this successful performance, the company also made two key announcements recently: firstly, and least surprisingly the company announced that they have greenlit another Paw Patrol movie to hit cinemas in October 2023. This move clearly makes sense after the success of the first movie, and in addition with the continued placement of the TV cartoon around the world. It looks like Spin Master has a successful entertainment franchise established here, which they should be able to milk for years to come.

The second recent announcement from Spin Master was that they have formed ‘Spin Master Ventures’ in order to invest in start-ups and entrepreneurs working in areas of strategic importance for the company. This move is a real marker for the company, because even the bigger corporate toy companies don’t normally commit to a general strategy of investing in other companies this way, instead being more likely to make an outright acquisition of an established market player in an area where they want to enter or ramp up.

Our analysis suggested a few years back (as we wrote at the time) that Spin Master should be heading for a golden period due to their size, success and structure. They can make acquisitions which would be too small for Hasbro or Mattel, yet they have the financial clout and resources that come with being stock market listed. We see good things ahead for Spin Master.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

Our Managing Director, Steve Reece, works with a limited number of companies as a non-executive director, independent board director and as a board advised. If you are interested in finding out more about this, check out the link to our service above.

 

U Is For Unicorns, Upwords, Uncle Milton & Uno – Toy Business A To Z

U Is For Unicorns, Upwords, Uncle Milton & Uno – Toy Business A To Z

UNICORNS

The same perennial themes for toys have been resurfacing time after time for decades in the toy business. Unicorns is one of those perennial themes. After all, what is a unicorn but a super cutesy magical pony, and we all know how popular they are when turned into toys!

 

UPWORDS

Upwords has been a very successful board game since it first came on the scene in the early 1980s. By adding a 3d dimension to a Scrabble-esque word game, renowned games inventor Elliot Rudel brought a whole new twist to playing word games.

 

UNCLE MILTON

Uncle Milton toys is perhaps best known for their original ant farm toy product which was a massive hit back in the 1950s and 1960s. The company is also credited with introducing the spud gun to the market. The company has had a long influence on the toy business, and in 2017 the assets were purchased by The Bridge Direct & Tech 4 Kids. One other notable thing to note is that co-founder E. Joseph Cossman later wrote a best-selling book entitled ‘How I Made $1,000,000 Via Mail Order & You Can Too’.

 

UNO

UNO is a best-selling classic card game, which has been on sale since the early 1970s and has sold more than 150 million copies worldwide. The game was invented by a Barber from Ohio called Merle Robbins, who fairly quickly sold his rights to International Games in return for $50,000 and a royalty on each game sold.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

 

GROWING YOUR TOY BUSINESS ON AMAZON WITH ASHA BHALSOD – PLAYING AT BUSINESS PODCAST – EPISODE 17

GROWING YOUR TOY BUSINESS ON AMAZON WITH ASHA BHALSOD

PLAYING AT BUSINESS PODCAST – EPISODE 17

The following a transcript of our interview with Asha Bhalsod of Etopia Consultancy, in which we discuss all things Amazon & Toys. If you prefer to listen to the podcast episode, you can do so here: https://playingatbusiness.libsyn.com/growing-your-toy-business-on-amazon-with-asha-bhalsod

 

Steve Reece: Hello and welcome to Episode 17 Playing at Business Podcast, I’m your host, Steve Reece, and today we’re talking to Asha Bhalsod of the Etopia Consultancy. Now Asha is an expert in managing toy sales on Amazon and in this episode, she shares some great insights into how Amazon works how you can better manage it, and suggest several opportunities to enhance your Amazon game. Before we speak to Asha though, a couple of things which might be interesting for you to take a look at, so we’re you can get news analysis and insights by our twins game trade block sites, www.toyindustryjournal.com, which is all about the toy business and www.boardgamebiz.com, which is all about the ball game business. So please do go ahead, visit those sites and also sign up for our free email newsletter on there, which is sent out most Fridays with links to all our latest published content across various platforms including notification of new podcast episodes.

 

If you find any of our content, interesting, please do share it with your friends and colleagues in the industry because the larger our audience is, the more content we can produce, the more resources we can put into it. And if you need to help to grow your target in business, you can check out our consultancy services. We’ve worked with more than a hundred companies to date delivering tens of millions of dollars in revenue growth and making more than $10 million in manufacturing cost savings for our customers. So to find out more about that and how we work, please check out www.kidsbrandinsight.com/services  and that’s the upfront bit out of the way and now we’re going to move on to our interview with Asha Bhalsod of Etopia Consultancy. Hey Asha, how’s it going?

 

Asha Bhalsod: Good, thanks Steve, how are you?

 

Steve Reece: Very good, thank you. So, thanks for doing this, I guess I’ll start with something fairly straightforward, so we’re recording this in late December 2020. So a few things have happened this year, how’s it all been for you?

 

Asha Bhalsod: It’s been quite a crazy year, to say the least; it’s been crazy but a very good year. Who knew that launching a business ahead of a pandemic in e-commerce was going to be the best thing I could have done.

 

Steve Reece: That’s one of the weird things about this whole time is it has affected some people in our industry but quite a lot of our industry has done well out there and I guess you’re probably in that position yourself, hopefully.

 

Asha Bhalsod: And the best way to describe this is I’ve always said there are three very distinct types of profiles when it comes to an e-commerce customer; one is you’re very mature that has been trading with Amazon and when we talk about e-commerce, we know that Amazon is the biggest retailer of them. So I talk about Amazon more here but we say that you’ve got a very mature type of customer, which is been trading with Amazon for many years may have pan-European agreements and/or global agreements. And then you have an existing type of business that may be only in one or two markets that are doing well and then the third type of client or the business I like to say is your newcomer brand which is very much still deciding whether they want to launch through vendor central or seller central deciding whether they want to go down to the different marketplace options. How do they launch a new brand in e-commerce and these three clients as I call them have got a wealth of opportunity ahead of them in this new retail landscape, which is driven predominantly by e-commerce at the moment?

 

Steve Reece: It’s interesting isn’t it? So personally speaking I used to work directly with Amazon, but probably must be10 years since I’ve done it, so an awful lot has changed in that time. So just let me ask you some random questions that are on my mind, so for instance, as an average selling item in an average toy category nowadays with Amazon in the UK, what would be a normal selling volume for an item today?

 

Asha Bhalsod: I think I could have answered that question about five years ago, I would say that the pandemic outset has changed. I don’t like items less than sub 99 item price points simply because of the cost of shipping and it makes it a little bit unprofitable for them. Having said that, I have worked with clients that do have items that are around 7.99, 8.99 and are doing fantastically well, and there are methods in the way you can still sell those items through the e-commerce channel as well.

 

Steve Reece: Interesting, so and then from your perspective, let’s take a step back, let me act like a real interviewer for once. So can you tell us more about your story? How did you get into doing what you do now? And why toys? I always like to ask people.

 

Asha Bhalsod: Well I used to work for Amazon many years ago back in the saloon days in those Patriot Court offices. Well, I worked with Amazon for over four years and I had a little girl and decided that I couldn’t continue my journey with Amazon they were relocating to London at that time. So I then went to work for Tony UK, which was the real start of my love relationship with the toy industry; four fantastic years at Tony UK and I used to work in the sales team looking after Amazon for them.

 

Steve Reece: Fantastic.

 

Asha Bhalsod: And then I had the fortunate opportunity to go and work for Melissa & Doug, which is a brand very close to my heart because of its principles and what it stands for. And as a mother of two, it did educate me about the impact of screen time on children and the power of play as I like to say a role play. And I had two and half fantastic years of working with them and built e-commerce for them in Europe, then I saw the need that there were many brands out there, many businesses out there in those three types of clients that I specifically spoke about a little while ago that need support with Amazon. But my piece on building my consultancy business stems from strategy and that’s the underlying trait I’d call for Etopia. There are a lot of Amazon agencies out there, I wanted to distinguish myself from what I offer and Etopia is about helping businesses build their strategy in e-commerce and then showing them how to execute it. And more recently, what we’ve established is because of the pandemic, it’s very hard for businesses to navigate around Amazon which I believe also requires several different skillsets internally. And therefore I have also started offering Amazon account management in-house, so Etopia can not only just build your strategy, help you execute that strategy, train you and upskill staff, we can also bring Amazon account management in-house if that’s the preferred option

 

Steve Reece: Fantastic. So let me ask you, this is going to sound like an ignorant question and I may be a link out how little I know her by asking this. But what would be strategic choices you could make with regards to Amazon? Why is strategy something you need to think about?

 

Asha Bhalsod: Well, let’s start with the biggest question in this which is; what is the size of the price? And that’s a question that I get asked so many times. I’m doing X on Amazon, is that correct? A lot of toy brands will have Amazon as their number one customer but they look at that and they sometimes get a little bit scared saying, should Amazon be this much, so that starts with strategy. So what is your company strategy? Where is your brand going? What is the correct channel? Now we know that the independent channel is declining, so therefore we know then the e-commerce channel is growing. And if we look at the state of retail with bricks and mortar at the moment, it’s very difficult to find good bricks and mortar stores to have good retail relationships with.

 

So we have a growing channel and we talk about Amazon predominantly this growing channel. So the first question starts with what should this channel be worth for me? And so that to me starts with strategy, and then it’s about products, what are the right products for that channel, what’s the right pricing strategy, what is the correct marketing? Now, Amazon is a huge marketing platform, as well as a sales account and I like to educate my clients about this which is; Amazon should also be part of your marketing strategy and although it has its separate P&L, there are huge benefits with putting in budgets for driving brand awareness through Amazon as well. There are a couple of ideas about where I go with the strategy of it.

 

Steve Reece: Interesting, like many things related to technology I guess the DP goes, the more you find. I think one of my experiences is I spend quite a lot of time helping people find distribution across different markets and one of the biggest things that happen nowadays is at least half the conversation is about Amazon, especially in Europe, the treaty of Rome, and everything else has free movement of goods. So I’m interested to get a European perspective from you on Amazon and let’s say for instance, normally if I try and sell something to a distributor in Italy, he wants to know who’s the distributor in Germany because then he’ll know just by reputation, how they manage Amazon to make sure all the products don’t end up in his market cheaper.

 

Asha Bhalsod: See, it’s a real tough question about how do businesses manage their Amazon channel when they’ve got distributors and this is a question that is posed to me quite a lot. The truth is Amazon is moving to handle European agreements and as Amazon moves into a pan-European agreement, they will ask the market that has the strongest sales to manage that. And if you have several distributors across Europe, that’s very hard to manage which is probably why an agency model or somebody managing Amazon and is the expert in, I would offer as the white advice. So what you then have is you would get an Amazon distributor coming in looking after Amazon, the good thing about this is having an expert in this field that is managing the Amazon channel for you. I would also say that adds value to your distributors because they will be doing it correctly and effectively trying to grow brand awareness through Amazon’s marketing platform too, which ultimately leads to failure and awareness in the market as well.

 

Steve Reece: Interesting, so I guess another question I have is like if you go back in time to get a product up to a good volume per market, you needed to structure several retailers, maybe you could do the number one, number two in the market, you could do an exclusive, but nowadays to what degree do you think it’s possible to have a viable toy company or games company if you were to only sell on Amazon, is that possible? Can people do that?

 

Asha Bhalsod: Absolutely, and I’ve got several clients that do that; so viable, you’ve got to look at just the shared traffic that Amazon generates. Now, arguably you could say and I was having this conversation with a former client of mine yesterday that what’s happened through the pandemic is with bricks and mortars closing. They haven’t seen the strong correlation of sales replicated in Amazon and my answer to that is twofold. One is there is that experiential piece when you do go to, I don’t know, somewhere like TESCO as an example in the UK and you have your children with you and you’re browsing through the aisle and they say mommy/daddy this is what we want. You have that experiential piece there where the child is choosing, or you’ve seen what you want.

 

And nine out of 10 times people will probably open Amazon, check the price even if it’s the same price, buy it from TESCO or add to the basket from TESCO, from Amazon I’m sorry. Now that piece has been completely removed with the pandemic and what we’re going through at the moment. So arguably it’s very hard for brands that are only on Amazon to grow, I would say but the flip side of it is looking at the shared traffic, look at the performance, marketing opportunity that you have got ahead of you in performance, in search, in the display, in the video, in brand stores, to drive and capture some of that traffic that is on Amazon.

 

Steve Reece: Interesting, it’s such a fascinating topic. So I guess another area that’s a little bit of a mystery to me is the data and the metrics. So is it true to say that you would not necessarily be wrong to look at Amazon and to think about it in the same way you might do SEO on a search engine? Like if you take any product category, I don’t know how many, let’s say ball games, there might be what 20,000, 30,000 ball games on there, so then to have probably more here, I am just booking numbers so I’d like to have a chance of anyone finding you, I guess, is its entire world of magic and mystery in itself.

 

Asha Bhalsod: Data analytics is another topic very close to my heart and I think this is the biggest opportunity for any business, which is to tap into that Amazon’s analytics. There was so much information there, there’s so much that you can learn about people’s browsing histories and how they engage with your brand and your products. So yes, an answer to your question; Amazon should be treated like an SEO, and which is why I think Amazon is a whole business unit in itself because we’ve already spoken about marketing functions here, we’ve already started speaking about strategy and we are now talking about data analytics; that’s three huge roles in any organization that we’ve now said Amazon is entitled to have all three roles individually laid out for a brand.

 

Steve Reece: I mean, I guess, and you would know better than I would, but like, medium to large to companies nowadays, like how many of them will have all those people that you might recommend and how many of them are still catching up.

 

Asha Bhalsod: A lot, I would say are catching up. This is why I guess it was very attractive for me to launch Etopia, which is the strategy and the opportunities that I see in the market. I think people are playing catch up, but they might find it hard to navigate around those challenges. So skill sets are another topic that is very close to my heart because with the pandemic everybody wants Amazon skills in their business. There’s also that e-commerce might have accelerated by 10 years, but the skills in the market have not accelerated by 10 years. There are still many traditional national account manager skills in the market and it’s very hard for them to transfer over to managing Amazon because Amazon is not like managing Car four or Smiths or HESCO, it is not the same account. It does require different skill sets in marketing, analytics, in strategy and so it’s tough to find that those skills out there to be very honest and which is why Etopia does also offer upskilling in those areas.

 

Steve Reece: Fascinating, isn’t it? I guess when the world changes one thing I’ve often found is that the world will change, but people’s minds don’t move as quickly. So their behavior may, but their minds sometimes don’t so, another thing my observation would be about what you’ve done is like, I’ve often seen a trend and moved far too early and therefore it’s not, nothing’s worked, but like timing machine, because aside from the fact that we’re, 20 years into, thereabouts like Amazon’s, like mass-market rise. But also just with the pandemic and everything, I guess people almost had to switch to this, and some of those people who still were not fully using this as a habitual thing, I mean, so many more of those people must have been converted it’s amazing actually.

 

Asha Bhalsod: Yes. It’s real love, hate relationship in the market with people, and Amazon it’s the beast, that’s how people refer it to them as, my God. Amazon is taking all my sales, my God doing with pricing my God. Look at Amazon, and then you sometimes say can it just take a step, and what is the right strategy for your business? Where do you want to grow and how do you want to grow and how do we make sure that Amazon drives profitable growth.

 

Steve Reece: Yes, interesting. So what’s going to ask you next was, yes. So, I think you mentioned some of the retailers it’s not like working with them. So I guess traditionally, a mass-market retailer in Argos, a Walmart, a Car for the bigger they are, the more it’s about helping to manage their processes, but also fundamentally it’s about relationships. So, where do relationships play in your role with Amazon, or is it more about your work with the interface?

 

Asha Bhalsod: I’m chuckling a little bit Steve because this is another one of those questions that I get asked a lot and there’s a lot of frustrations actually in this question. So, the truth is Amazon has a phrase in the market that they throw out a lot, which is hands off the wheel and Amazon is moving towards a very much a hands-off wheel system. So, we already know the last few years Amazon’s ordering system s been completely automated. There is no human person that you can bring up and say, Hey, look, this I’m about to go on TV. Can you order some products? Does it work like that, unfortunately? Amazon is becoming very limited with human interaction and therefore you do need to know how to navigate through their systems and that also presents itself with lots of challenges, when ultimately you do want to have human contact with people to be able to say, these are the kind of strategies. This is the time I’m going on TV, here are five of my new product launches. What can you do? There is that now vendor managers do very much exist I’m not saying that they don’t, they do exist but you do have to be doing a certain level of turnover to warrant, have a vendor manager. And more recently, those vendor managers are now managing pan European agreements, so you may have a very small market and you may want to try and drive strong growth in that very small market, but the vendor manager will very much be focused on as well, the bigger markets and trying to drive growth in those markets.

 

Sometimes the objectives are a little bit different and that can be a bit hard to manage. So, knowing how to use the systems, understanding the Amazon based and the fundamental advice I’d give to any business here. You can get frustrated and I appreciate is very frustrating for anybody. When you say I’ve got X amount of invoices that need sorting out, or I’ve got X amount of chargebacks that need resolving, and I can’t get anybody to help me do it. It’s about how do you understand the Amazon systems? And how do you change your mindset when the computer says no, every single time.

 

Steve Reece: Interesting. One of my observations would be the more something matters, the more attention people pay to it. So like for instance, sourcing is a classic example we do loads of stuff in sourcing and factories in Vietnam and India and help people move whatever. And the thing is, generally people don’t pay as token companies don’t pay that much attention and to that whole area of their business unless there’s a problem. And the moment there’s a problem, they put some focus on energy and they find all kinds of inefficiencies and I guess here, the thing is, maybe 10, 15 years ago when Amazon would’ve been, for most businesses, barely even sort of single-digit percentage market share this would’ve been a huge frustration and they probably would not have engaged with it, but now we’re at the point whereby you can’t afford to understand how to resolve those problems because the sort of the faceless and it is just reality, isn’t it? It’s a bit like when you have a mass-market retailer normally, and their metrics are about having relatively few vendors. And therefore it’s very hard to get in as a new vendor here. You have almost the opposite problem, which is comparatively speaking, it’s relatively easy versus an Argos or a Walmart to get in, but then managing your way through that to grow and is a major challenge.

 

Asha Bhalsod: And Steve, the way I talk about this is there are three pillars in the Amazon business. Its sales, marketing, and operations, and everyone is very heavy in that sales, which is about having the person or the people in your team, managing this, having some loose strategy about what they want to sell and how, and what’s the budget in the business. That pillar gets a lot of focus, it’s sales and that’s what everyone’s partner automatically is to do that. And then the bit that the people then switch up to, or don’t know how to navigate through is the two pillars, which are marketing, operations. If we talk about marketing, you are responsible for driving your sellout on a, you are responsible for the presentation of your brand on Amazon. We talk about in comparison to Walmart or Smyths or any of our largest toy retailers at the moment, you receive an order, you process it, you dispatch it to them, it’s then their responsibility for how it links on the shelf.

 

Of course, you do your support with them with trade marketing, but that trade marketing now needs to be adopted to digital marketing in the Amazon world with performance search display, brand stores, content, a plus content reviews, that’s that marketing pillar, but ultimately the most important part, of these three pillars is operation. It’s making sure that Amazon is in stock a lot of the time and the money that you do spend in that marketing and driving traffic to your brand if you don’t have stock, customers will land on a page where is no stock, which is a bad customer experience. And ultimately what you’re trying to do is you’re trying to build your products up in the search algorithms. And any moment a product is been out of stock, you lose that momentum because the products then go lower down in the search algorithms. So all the money that you’ve just spent on marketing, it’s almost a bit wasted. For any business to succeed with Amazon, they need to know how to navigate around the sales, marketing, and operations three pillars with all levels of importance.

 

Steve Reece: Interesting. So, I guess some other questions I was going to ask you, and by the way, I’m probably just going through the normal tick list of obvious questions people ask you. So, and then I’m going to ask you at the end, did I miss any. So, Amazon’s market shares the toys, I guess is what, probably something between 15 and 30% depending on the market.

 

Asha Bhalsod: Yes, I’d go at the top end of what you’re saying right now.

 

Steve Reece: Right now. Yes, there you go, I’m always out there catching up still. So, is there space for any more growth? Like, is it going to continue? Because I remember using Amazon back in my High School days, as the 10 of the millennium and it was so easy and I so lazy and like, just that everything about it works for me, not having to go around shops and everything. But I was probably likely to be a relatively early adopter, like 20 years on surely there’s no one left who is not already buying in so, is there still future growth, where does that come from? What do you think?

 

Asha Bhalsod: Absolutely, it does. I’ll ask you the question you are almost back to you, which is how much have your buying habits changed through the pandemic? So, if you think about your shopping habits this year versus your shopping habits last year, how much have they changed and then your children, how much have they shopping habits, it’s then changed? So absolutely there is growth and I’ll take a personal example for me, which is I remember when I said to my husband, Amazon does this prime membership and it’s 79 pounds. And he laughed at me he said, “I’m not going to waste 79 pounds or for your next day delivery we don’t need it.” And then Amazon started introducing the wealth of services that they offer in their prime subscription, whether it’s video, whether it’s music, etcetera. And he has been paying for the prime me over the last five years and we actually couldn’t live without it. But also this year, over Christmas, when my children were writing their Santa letters, we typically would have a Smiths or an Argos catalog or might be another industry-related magazine, lying around mommy’s desk, but they would look through it and they’d look at the latest toys in there and they would put them on their list this year.

 

They didn’t have anything like that to do we hadn’t been into any shopping centers, any stores for them to see. So, they went to Amazon and they created lists by looking at Amazon best sellers and then going, we’d like that and that’s how their lists have been created. So, I do think that there is huge growth still in this channel and we talk about Amazon and the majority of this conversation has been about Amazon, but we can’t ignore the fact that there are areas in commerce, other e-commerce customers that are also arguably getting stronger, we can’t ignore Ali express in Europe, which is getting strong, but also Omnichannel, I think Omnichannel being in any Smiths, as an example is an Omnichannel retailer because it has an online presence. And online in general is growing and will continue to grow and has only been accelerated because of the pandemic.

 

Steve Reece: Actually, that was going to be one of my next obvious questions. What do you think the other retailers are likely to do? Because one of the most interesting things joined the sort of the craziness of what I refer to as, like the internet revolution, we had the industrial revolution, I think history will look back and see, this is the internet revolution, just because of how much it’s changed humanity and our lifestyle and way of everything. But like one of the most noticeable things was some retailers invested and jumped on this and some were very slow, obviously some of those that were very slow, no longer with us. How do you think those other retailers are likely to react and do they have any chance going forward to compete in their space against such a mighty beast?

 

Asha Bhalsod: Well, even if you say in comparison to Amazon, I love the Smith’s experience online I think they do a good job and they have been very much ahead of the curve and probably the reason why they’re growing so much in the market. So do think that the retailers do have a huge opportunity, I think Amazon brand stores is huge, reviews are huge and if you can take segments out of what makes Amazon so successful, it’s that trust element, knowing that the customer service is fantastic, that you can read reviews and feel as if they’re authentic. And some of these bits, any retailer adopts would have the ability to drive their e-commerce growth as well.

 

Steve Reece: Yes, interesting. If you were doing like a five or 10-year strategy for any of these retailers now exactly what it would look like, but I mean, you mentioned about catalogs, having a Smiths or Argos catalog, obviously the purely from a UK perspective and we have people listening from all around the world, but for anyone who doesn’t know the UK toy industry has been, I wouldn’t say dominated by it, but heavily influence by the Argos catalog. And Argos printed 20 million of these catalogs, which is roughly one for every household in the UK, my kids would go through it and kind of goes, I have that one or, I’ll have that one. It was like the tick sheet for the Christmas wish list. But yes, even when Argos moves on from such a big thing, we know that the world changed.

 

So actually another, the question I wanted to ask you about was obviously in the USA and the UK, we are like decades into Amazon, but they’re still rolling out. This is one of the most amazing things about how the world works. I often look at the growth of companies like Hasbro and Mattel, I’ve been tracking Hasbro, for 20 plus years since I worked there and since I left, you know, but they were still opening offices, they still have places where they are opening offices, a company like spin mass who are so much newer have a long way to go in terms of all that. From Amazon’s perspective, they’ve got hugely more resources, but they’re almost entering markets where they’re maybe 20 years behind in some cases because they’re new to it. How good a job do you think they do at entering new markets? And is it likely that pretty much every market they go into they’ll win or do they ever get it wrong? What are your thoughts on that?

 

Asha Bhalsod: The most interesting market that they’ve entered and that’s when we’ve seen such huge growth in Brazil, and that has taken me as well by surprise. I think the sheer reputation of Amazon, I think almost any market they go into they’re adopting. If we even just take another example of them entering the UAE market by buying out super.com, it’s very smart with what they do and how they’re adapting to it. But what they’re doing is also they’re the millennial population in these countries are embracing it because they can see things from the Western world. They can see things that are happening and one of my recent experiences is of Amazon in India where the family were traveling there but didn’t take nappies because Amazon is servicing in prime there and was able to get nappies delivered to cities there now, history would say that that was a bit of a wow for me, it was like, wow, look at the way India is embracing e-commerce, which is a revolution almost created by an Amazon.

 

Steve Reece: Yes. India, in general, is an interesting country for me, I’ve spent quite a lot of time there. But like you to think about, but in the UK, it’s it tends to be relatively oddly and your dresses are quite clear, but I wouldn’t personally want to be an Amazon delivery driver in some of the areas of India I’ve delivered because the addresses sometimes are a bit fake and like the experience of driving around trying to drop them off would being interesting as well. But anyway, so are running a little bit short time, so I have a couple of final questions. So the first one’s going to be, did I miss any of the normal obvious questions? Is there anything else that people normally ask you’d like to answer?

 

Asha Reece: No, you think we’ve done all the questions that I would’ve asked Steve as well.

 

Steve Reece: Okay, cool. So, then the final two questions one is just from your perspective if people want to talk to you about things I guess, firstly, what type of customers do you want to talk to? And then where can people find out more information or get in touch?

 

Asha Bhalsod: I would like to talk to any type of customer that wants to either continue to grow with Amazon, or wants to know how to trade with Amazon or, e-commerce. And any customer can have a look at our website, which is www.etopiaconsultancy.co at UK or you could find me through LinkedIn and me and my team would very much welcome talking to anybody just to explore the services that we offer, and how we could help.

 

Steve Reece: Fantastic. So, I would hardly recommend anyone have a look and find out more so the final question is if we were to do this again in five years, what do you think would’ve changed?

 

Asha Bhalsod: That’s a tough question, I would’ve got an older Steve, let’s say that I would a lot more gray hairs as well. I would say that. Where we’ll be, I think we’ll be talking about Ali express in the same way we’re talking about Amazon. And actually, we didn’t touch on the fact that e-commerce penetration in the rest of the world is quite low. So actually I do see that e-commerce penetration is going to get a lot higher in the countries credit card payments are going to become more accessible and regular. And therefore I do see Amazon entering more markets there will be another level of prime that will be looking about, and they’ll be maybe more tiered memberships who know. But Amazon has ultimately created this internet revolution for us and I think there’s going to be another one of those in, the next coming few months with the pandemic as well.

 

Steve Reece: Well. Yes, it’s interesting times. Isn’t it? Fantastic. Well Asha, thank you so much for your time that’s been fantastic. Thanks again for doing this and yes, hopefully, we can do this again in five years and find out what’s happened.

 

Asha Bhalsod: Thank you very much, Steve.

 

Steve Reece: Thanks.

 

Steve Reece: Okay. Well then hope you enjoyed our podcast episode interview with Asha Bhalsod Etopia Consultancy discussing Amazon and everything about Amazon. If you did, please give us a good reviewer rating, and please do feel free to share the podcast with your friends, whether it’s this episode or another one. If you’d like to find out more about our consultancy services, which have helped more hundred-time game companies around the world to date and please visit www.kidsbrandinsight.com/services . Yes, and that’s all for now so I’ve been your host, Steve Reece. This has been the Playing at Business Podcast, and we’ll see you next time.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com

HOW HAS Q3 PANNED OUT FOR THE TOY BUSINESS (HAS, MAT & JAKKS EARNINGS ARE IN)

HOW HAS Q3 PANNED OUT FOR THE TOY BUSINESS (HAS, MAT & JAKKS EARNINGS ARE IN)

One of the best ways to find hard facts about what is happening and what has happened in the toy business is to analyse quarterly earnings statements and calls from the stock market listed toy companies. So far, we have had earnings from Hasbro, Mattel & Jakks Pacific – and the results are really good, especially bearing in mind the ongoing supply chain issues this year. Hasbro reported a year-on-year increase in revenues for Q3 of 11%, which is incredible when you consider that last year was also an epic year. Mattel reported revenues up 7% on a constant currency basis. Even Jakks Pacific, who have a bit of a history of disappointing results in recent years are having a good year – although they were down 2% year on year for Q3, they remain up by 9% versus the same period of 2020.

All three companies highlighted in their earnings calls the issues they have experienced with logistics and supply chains this year. Yet all 3 have reported good results and good profitability. Hasbro’s key actions seem to have been earlier stock commitments and utilising their comparative strength to secure shipping capacity. Mattel have some significant advantages because they own a large proportion of their own production, which allows them considerable flexibility on production schedules and everything else. Jakks Pacific has historically (according to Jakk’s CEO Stephen Berman on several earnings calls) been an FOB focused business, with around 50% of their revenues shipping relatively early direct to retailers. Jakks also highlighted one of their key actions to manage the shipping crisis was to move finished stock to bonded warehouses in or near to Shanghai, and to then ship out of less overloaded ports in that region of China.

From a broader industry perspectiveNPD also reported recently that YTD end September the toy business is up 12% in the ‘G13’ countries which includes the USA, UK, France, Germany and other western toy markets.

There is no doubt then that this year will have cost some toy companies dear, and it has certainly been a massive headache for all. BUT yet again the toy business has proven how resilient it is, with sales proving remarkably strong and we should yet again be grateful to work in such a robust business.

 

We run a Consultancy business helping toy & games companies get ahead. For more information, check out www.KidsBrandInsight.com/services

We also run a Strategic Sourcing Consultancy advising toy & game companies around the world on their Sourcing strategies, reviewing their vendor base & suggesting improvements. To date our Sourcing services have saved our clients $tens of millions. For more information on how we can help, just go to: www.ToyTeamAsia.com