How To Find & Secure Effective Distributors For Toys & Games

How To Find & Secure Effective Distributors For Toys & Games

The area where we are asked for help most often from toy & game companies is to help them speak to & close distribution deals with toy & game distributors in more markets outside their home markets. Over time we have developed several ways of increasing the chances of success for our clients in finding productive and mutually beneficial relationships with distributors:

1. Trade Show attendance is the best & biggest way to meet new distributors

Virtual connections can lead to good results, but you can never meet face to face meeting. For this trade shows are a critical part of the process of finding and building relationships with toy distributors or board game distributors. Clearly this approach is not as viable during the Covid pandemic, but nevertheless the moment it is viable again it will come back to the fore as a primary method of meeting and recruiting new distributors.

2. Understand the business model of the distributor

Being a distributor is a tough business. Distributors take significant inventory risk to run their business, and a few bad product line selections can seriously constrain cashflow, therefore distributors are equally if not more risk averse than the retailers they sell to. In order to reduce the risk of anyone product line failing, they tend to have a broad and diversified product line, and that brings in the biggest challenges with using distributors to get your product to market – FOCUS, if they put little focus into selling and pushing your product line your sales will disappoint. It is really important to understand this, because having a distributor and having a focused and effective distributor for your product line can be different things.

3. Understand the marketplace

There are two elements of this: firstly, there is the local market situation in terms of retail structure, product culture, consumer preferences and other localised operating parameters. For instance, Germany has a very decentralised retail market, whereas France has a comparatively centralised retail buying structure. Therefore, you need to understand the differences to appreciate which distributor is going to have the best chance of being successful in the market.

Secondly, it is important to be aware of the general situation in the marketplace. In particular, product proliferation is a considerable challenge in trying to secure distribution for toys and board games. There are literally millions of products out there for distributors to chose from, and because they only have so much capacity, so much cashflow to fund stock purchases and so much time in front of each buyer, they will typically turn away many more product lines than they chose to distribute. This changes the balance of power somewhat in terms of negotiating and finalising a deal. In effect, it is a buyers’ market for distributors, they have considerable choice, and therefore the sales process and relationships should not be taken lightly.

4. Build relationships with people

Building relationships with all your contacts at every distributor you want to work with can only assist your efforts. Aside from it being a source of great pleasure and warmth to build friendships around the world over time (and often over a beer or two!), in work terms it helps if you have god relationships with people you are working with. Sometimes difficult situations arise, and it is usually easier to work through challenges with people you already know and like.

But also, the better your relationship with your distributors the more they will share the details and challenges of selling your product in your market, which should lead to both of you having a better chance of success in each market.

5. Distribute your distributors product into your home country

One really effective way to bind yourself closer to your distributors is to help them to sell their products into your own market. Most distributors will have at least a few product lines that they themselves have developed or have exclusive distribution for. By helping them to sell more of their products, you quite often build a stronger relationship and then their focus on your products tends to become stronger because they will feel a reciprocal obligation.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

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How The World’s Biggest Toy Companies Grew Their Distribution

How The World’s Biggest Toy Companies Grew Their Distribution

The world’s biggest toy companies are $multi-billion corporate behemoths with subsidiaries and employees all around the world. They didn’t necessarily get there quickly though. In fact, the one word which could best be used to describe how these massive toy companies grew distribution in terms of a global footprint would be SLOWLY.

It takes years to build up distribution around the world via sales agents and distributors. And then it typically takes decades for toy companies to set up subsidiaries even in the major toy markets in the world.

There are several reasons why distribution growth is seemingly so slow. The first factor to consider is that we work in an industry with an annual selling cycle, so whatever momentum you can create through the course of the selling cycle can only be built on for the following year. Bearing in mind that many (most!) toy product launches flop or at least fail to succeed well enough to come back the following year, we can see why it takes time to build a compelling must list portfolio of toy products.

Aside from the slow and laborious selling cycle, the process of finding premises for a new office and hiring staff to run them is innately risky and time consuming. For this reason, many toy companies seeking to grow enter new markets via acquisition. By buying an established company with good reputation in the country they seek to enter, with existing and strong relationships with buyers and with a good understanding of the market many years of costly trial and error can be avoided. Needless to say though, while acquisition is usually less risky as you are buying an established business you do have to pay a hefty price, and sometimes things still don’t work out. And to find good companies acquire at a realistic cost is also not easy – this also takes times, often years.

So, the reality is that even the biggest toy companies in the toy business today took decades to grow their distribution capability and capacity to the current levels. Therefore, for toy companies which are far less mature, you have to expect it to take time, and that time is measured in years. There are ways to accelerate distribution growth via sales agents or consultants for instance. This can take years off the process, but even then it will still take time!

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: https://www.kidsbrandinsight.com/blog/toy-co-growth-booster-program/

How Many Of This Year’s Big Toy Launches Will Make It To Year 2?

How Many Of This Year’s Big Toy Launches Will Make It To Year 2?

The toy business is a very wasteful business. We have this huge churn of products each year and an annual massive product development effort which sees ongoing yearly investments in tooling, marketing materials, marketing media and manufacturing costs all spent before the product launches.

The holy grail of the toy business is to acquire or build perennial (i.e. selling every year on an ongoing basis) products and brands. These well-known products are easier to get listed by retailers, they are more likely to be bought by consumers and they are far more profitable as they need less marketing investment and far less development investment versus new products.

The challenge is that these products are not easy to come by. There are only so many established brands out there like Rubik’s Cube, Monopoly, Barbie, & Lego. Moreover, most toy companies who try to build their own brands fail to build meaningful brands with genuine consumer recognition. Those who find some degree of success in terms of evergreen products tend to have strong product formulas to keep on driving sales every year versus mass consumer brand awareness, but at least they have some element of recurring busines each year which can only be a good thing. The fact that it is hard to build massive brands or even just established perennial products shouldn’t stop us from trying.

After the investment of $billions in 2022’s toy product line, the global toy business will have to replace at least 60-70% of the product line again for 2023, which is both wasteful and imprudent if there is an opportunity to invest in new products with a better chance of hitting year 2 and beyond.

If we take a mid to long term view, over 5 to 10 years a reasonably sized toy company should be able to launch at least 1 or 2 potential perennial brands each year, and in doing so, over the course of a few years is fairly likely to find something which sticks and comes back again year after year. Then again this takes effort and commitment to creating solid foundations under your business despite the fact it’s a gruelling process.

The choice is yours – chase the quick easy wins each year and stick with the standard hamster wheel approach to the toy business or work really hard to create something permanent and recurring.

We run a Consultancy business for toy companies. We work with major toy companies through to start ups and one person bands. For more information on how we help toy companies grow their distribution around the world: www.KidsBrandInsight.com/services

For more articles & insights on the toy and games business, sign up here for our free e-newsletter sent straight to your inbox: https://forms.aweber.com/form/54/1325077854.htm