How To Approach Export / International Business In The Toy Industry

How To Approach Export / International Business In The Toy Industry

One of the most enticing areas of opportunity for toy companies is that of export sales i.e. selling products outside your home market/s.  The media so often tells us we are living in a ‘truly global market’ nowadays, that the big bright opportunity outside our homeland often seems like something that should be ours by right.

If only things were that simple! There are a number of complexities/factors which make export business trickier than it might at first glance appear to be, the two most striking factors are:

1.       Cultural and language barriers – even neighbouring companies can have a very different culture, compare Germany and France for example, are so close geographically speaking but miles apart in terms of culture. It’s not that German companies can’t do well in France or vice versa, just that the consumer, retailer and manufacturers are likely to have a very different outlook. It goes even deeper than that though – prevalent design styles, fonts, colour palettes etc. tend to vary from country to country. Packaging that works in one country is not necessarily going to work in another country therefore. Even in product terms we can see that a hit in one country doesn’t necessarily translate – for instance toys which parents perceive to encourage violent or overly aggressive play are not so popular in the  German market as they are in other markets.

2.       Retail chains/distribution channels differ – for instance the two largest toy retailers in North America (Target and Walmart) do not have a strong presence (at least under those brand names) in Europe. Equally, Smyths and Carrefour two of the largest toy retailers in Europe do not have a strong presence in North America. Each retailer has its own culture, systems, merchandising and marketing approach. In my experience retail buyers are not always as influenced as perhaps they should be by the explosive sales figures of a product in a different market from their own.

The other key difference is in terms of distribution channels. If we compare the German market for example with the French market we can see a French market dominated by several strong hypermarché and a toy specialist channel dominated by several chains. In the German market we see much greater market share from independent toy shops and department stores. Because each of these retail channels has its own characteristics i.e. margin/pricing structures, shelf space logistics set up etc. this can significantly affect the export opportunity.

So how do we exploit the opportunity and overcome these complexities/barriers?

Here are some suggested methods for increasing your chances of successfully achieving export sales:

1.       Build over time – I’ve set up distribution directly for numerous toy companies, and unless you happen to have the hottest license/product in the market place, it’s going to take you time to build. For each selling cycle you can expect to make another little step of progress, but as each selling cycle is a year, you can count on this taking you years. Even the established global toy companies who have been in business for decades are still usually in the process of expanding internationally. Start with the mindset of ‘Rome wasn’t built in a day!

2.       Export toy business (as with most sales) depends firmly on strong relationships – often before a company is willing to let you into their distribution chain and put their hard earnt customer relationships at risk, they will need to get to know you and to feel comfortable that you are going to deliver safe, functioning products on time and on spec consistently. Most people in the toy business will tell you about people they have met year after year but are yet to do any business with – this is all part of the process of planting seeds that can grow. Not every seed grows into a fully grown tree, but if you don’t plant any seeds you certainly won’t grow a forest!

3.       Trade shows are essential - you can lay the foundations for a year’s worth of business in just a few days. At events like the Spielwarenmesse in Nuremberg there is literally more opportunity to meet potential customers than any one person has time to fully exploit! There are people I’ve met at Spielwarenmesse or other trade shows who are now top customers for my business.

4.       Take a flexible approach – things don’t work the same way in other countries as they do in your home market. Be willing and able to adapt if you want to make the most of the opportunity.

5.       Piggy back on other people’s relationships – if you can’t build a lifelong friendship overnight, you can at least find a way to access other people’s contacts in one way or another. There is a plethora of reps, consultants and professional middle men operating in the toy industry who will help you out on a professional basis, as well as many people who will offer you good advice for free. Presenting a product is always the best way to learn what the weaknesses of your products/selling story may be, as people in general – whether distributors or retailers are never slow to inform you of shortcomings to address/fix.

Do you need help to find the right mid to senior level people? We can help…we have been helping people from across the world of Toys, Games & Licensing to find new roles since 2011. Our client list reads like a ‘Who’s Who’ in the industry, think of a Toy company and we have worked with them in some way. Along the way we have met thousands of really talented people who could be your next hire.  Get in touch for more information via the ‘CONTACT’ page if you need help to hire new people, or check out www.ToyRecruitment.com 

Canada's Toy Market – A Missed Opportunity or Regulative Nightmare?

The Canadian Toy Market – A Missed Opportunity or Regulative Nightmare?

Canada has been in the European news lately, with CETA (Comprehensive Economic And Trade Agreement) promising free trade/tariff reduction with Canada after eight years of gruelling negotiations. The more contentious legal aspect which potentially cedes local/national/EU wide legal sovereignty and control over workers’ rights and other highly politicised issues to global corporations has attracted huge publicity & lead to public protests. When you add in the Trump administration’s apparently negative stance on NAFTA (North American Free Trade Organisation, allowing ‘free’ trade between the USA, Canada & Mexico), all the media noise could give the impression that trade with Canada is too difficult. I believe that being deterred by all this ‘noise’ would be a mistake, Canada offers significant opportunity for toy companies regardless of the macro level political/legal framework.

Over the years, I’ve consulted with many toy companies seeking to establish/grow distribution in North America. Most often though, toy companies focus on the biggest wins of all – namely the US toy market. However, Canada is in itself a very significant toy market, and one which can offer significant incremental opportunities.

The Canadian toy market is estimated at between $1.6bn-$2.5bn USD at retail value. This places Canada on a par with many European toy markets. While it may be smaller than the UK, France & Germany it is not that far behind. I am not aware of any other toy market in the world of such a size which is given so little focus by many toy companies.

Practically speaking – toy companies can increase focus & sales in Canada by recruiting a broader rep network, by working with a reputable Canadian distributor/wholesaler or by hiring staff. If you have a rep group covering North America, ensure they are taking Canada seriously/have access to on the ground sales resources either via their own staff or via another (Canadian rep group). If you go with a distributor, you need to ensure they are reputable, as it would be difficult to ensure product is not shipped from Canada to the USA causing issues there (although this is not much different to trading in Europe e.g. France & Belgium). If you want to hire staff, you may be able to begin with one member of staff – a country manager or head of sales who can link together a sales & distribution network for you before you invest any further in the Canadian market.

One practical point – be aware that Canada has two official languages – English & French. Product packaging legally MUST feature all mandatories in both languages. This should not be too difficult for European companies to manage, as typically we are used to working with multiple languages, but we’d suggest not taking chances on this to avoid issues.

While the current political environment is quite turbulent, and trade deals like NAFTA and CETA become political ‘footballs’ for politicians to kick around, there is a significant and likely under exploited opportunity in Canada’s toy market waiting for you.

For more information on the Canadian toy market, the Canadian Toy Association is a good start point: http://www.canadiantoyassociation.ca/index.cfm

Do you need help to find the right mid to senior level people? We can help…we have been helping people from across the world of Toys, Games & Licensing to find new roles since 2011. Our client list reads like a ‘Who’s Who’ in the industry, think of a Toy company and we have worked with them in some way. Along the way we have met thousands of really talented people who could be your next hire.  Get in touch via the'Contact' page for more information if you need help to hire new people, or check out www.ToyRecruitment.com 

5 Key Steps For Starting A Toy Business

5 Key Steps For Starting A Toy Business

Start-up companies keep the toy industry fresh. One of the most rewarding things I have observed is seeing a start-up toy company attend toy fair, and then grow year by year until the company is a fully fledged established toy company. Needless to say though, there are significantly more companies that fall by the wayside than become successful.

There are several key steps in making a successful start-up toy company, not every company follows all of these steps, but this should be a good checklist for those planning to start or in the middle of starting a toy company:

1.       Research

a.       I’m often asked by people wanting to get into the toy business what they should research before they start…and the answer is everything! A really robust research phase is so important. You could argue that many innovators just invented something new or cool, or reworked an existing idea, but you can’t count on hitting the mark with that approach. How can it hurt to understand the retail market place, the current trends, what kids are doing/how they spend their time etc?

2.       Feedback/sense check

a.       One fact I would like to share is that I have been approached by hundreds of new product inventors/wannabee toy companies, and the vast majority of them have already developed a product…and the vast majority of them have missed something fundamental about kids, about the toy business or retail etc. The majority of new products I have seen from such toy industry outsiders are obviously flawed in some way which could easily have been addressed if we had spoken before they developed the product!

b.       The most successful toy people I know above all are great at getting feedback/sense checking their ideas & product concepts before investing their money in a product.

3.       Innovation/Origination

a.       Having given you the boring/sensible research or due diligence advice, now we can look at the fun stuff – product origination! There are many ways to develop ideas & concepts, and there are more qualified people than myself to advise on how to do this, but there are a few keys points I would highlight:

                                                               i.      True originality vs tweaking the formula

1.       If you are trying to invent something nobody has ever seen anything like before, the chances are you are not inventing something likely to be commercially successful. There are certain formulae for concepts, themes, play patterns etc.

2.       The true creatives out there may disagree with me, but a new twist on an established formula is much more likely to succeed.

                                                             ii.      Fun factor

1.       In the end toys are supposed to be fun. Good new concepts enhance the fun factor. Seems like an obvious point, but I have seen hundreds of very clever product concepts which do something beneficial/clever, but are not fun. Children are driven by simpler need states vs adults, the easiest way to make something appeal to kids is to make it fun!

                                                           iii.      In built marketing concept

1.       Often the most successful concepts have an in-built marketing mechanism/word of mouth driver.

4.       Sell, sell, sell

a.       Often new toy companies get really perplexed by all the details of the toy business i.e. manufacturing, safety standards etc. The reality is none of that matters if you don’t ever sell any product.

b.       Everything relies upon the sales process, and while you need to do enough work to have a viable product concept, the reality is that even the biggest toy companies do not fully develop & manufacture products until they have sold it.

c.       There are two realities of the sales process in the toy business:

                                                               i.      Successful companies get highly skilled/effective at selling based on a prototype/mock up.

                                                             ii.      Selling is 1% inspiration and 99% grind. It takes constant grinding effort to achieve any sales in the toy business. The annual selling cycle takes an age, and the progress made per cycle is limited, so to succeed in toys you need to be able to grind away day after day, year after year. If your company doesn’t do that you are very unlikely to succeed. There are very few short cuts, and no magic tricks.

                                                           iii.      Even if you use a distributor model you still need to sell to/recruit the distributors, and they see hundreds or even thousands of products per year.

d.       Realistic timelines are important. I’ve Consulted for dozens of companies who expect everything to happen in a few months or even just one year – it won’t! The minimum time to establish a new toy company in one market would be c. 3 years, even with money to invest & hiring toy industry insiders. If you are an outsider with no experience, why would it be any quicker…?

                                                               i.      I started a new business for a major global toy company, and another for a medium sized global toy company – in both cases it took 3 years to build with all those advantages of money to invest, toy industry contacts, top talent on the team, great product etc.

                                                             ii.      I always advise people not to set themselves up for failure – expect a 3-5 year journey to get anywhere in the toy business!

5.       Nurture & Deliver!

a.       The toy industry is a relatively small industry. Those companies who think they can burn & pillage in order to make a quick buck don’t tend to last very long. You will need to keep selling to the same customers year after year, so your success is completely tied to their success. Don’t for one second make the mistake of thinking therefore that you should give them everything they ask for, but you do need to do enough to ensure they invite you back to pitch your product range for the next selling cycle!

b.       Broader relationships are really important in the toy industry, because you see the same faces year after year, and as you go around each country in the world, there are only so many options for distribution partners or retail in each market. Burning bridges therefore is a silly thing to do!

c.       I first attended toy fair around 1999 or 2000, and I’m still meeting some of the same people I met then today – in our industry above all your contact network and relationships are your own personal equity!

There are of course other factors/areas which are important when seeking to establish a start-up toy company, but these 5 factors are key. If I had to pick one most important factor it would be ‘Sell, Sell, Sell!’ because nothing much happens until you persuade someone to buy from you, and even those successful companies developing really cool ‘must have’ products tend to be just as effective at selling as they are at developing the next big thing.