5 Top Tips To Boost Your Toy Export Sales
Toy fair season is the time when toy people dust off their passports, open their international contact address books and see if they can improve their international distribution this time round.
The following tips/fundamentals should resonate with all kinds of companies, for the simple reason that they have been tried, tested and proven to work over time by our company, by client companies we have worked with and by many other companies we have observed:
1. Export Sales depend on trusting relationships – it could be argued that all sales depend on this, but actually because retail buyers tend to move around more than international toy company owners, it is even more of a fundamental when trying to build an export sales business. There are people we will meet this toy fair season who we first met over 15 years ago, many of whom have been in business for decades. Some of them we have been actively selling to/buying from for most of that time, some of them we have sporadically traded with and some we have never traded with, but there’s always next time! There is also a small group of people/companies with whom we had negative experiences of some kind, with varying levels of antipathy, resentment and negative baggage both ways.
The critical point is there are only so many distributors out there, and aside from new kids on the block or companies which fell by the wayside, if we looked at the international toy companies we deal with today, around 70-80% of them are the same as 15 years ago. So the bottom line is we need to take a longer term relationship nurturing approach to build a platform for long term commercial success (versus selling anything we can to anyone we can whether it will work for them or not!).
2. Resources & Focus – selling in general as often depends on ‘leg work’, follow up and dogged persistence as it does on persuasive brilliance. Yet we often meet companies who proclaim that export sales is an important area, but who do not assign any significant resources or focus onto the international opportunity. Even smaller companies will happily hire new staff to chase perhaps a new distribution channel in North America, which will offer them a fraction of the global opportunity versus one sales person chasing the huge global opportunity (outside the USA) via export sales.
On the same note, we roll our eyes when companies are ‘very focused’ on selling internationally but never leave North America! For sure, some international companies will visit the U.S. in particular, especially for the New York toy fair every February, but many more won’t. If think you are seriously committed to international sales but have never attended Hong Kong in early January or Nuremberg for Spielwarenmesse in late January, then you have a different definition of committed than we do! It’s easy to cheapskate out of the costs of visiting these shows, but to build enough of the right relationships you really need face to face time with key companies in each major export market, and these shows are the most efficient vehicles you will find towards that end.
3. Understand & embrace the fragmented nature of the export opportunity – the USA and Canada combined make up c. 25% of the global toy market, that leaves a lot more to play for elsewhere! One of the major stumbling blocks for North American companies though is understanding the fragmented nature of the export markets.
When your new export sales person comes into your office excited that they just received an order for 5k units from Holland you may struggle to be excited versus a single purchase order from Walmart for 150k units for example. The reality is though that North American mass retail offers a one of a kind volume opportunity. Everything else is outside that is about putting together a jigsaw puzzle of many pieces, and over time this jigsaw puzzle can grow into a bigger business of many pieces, almost like a Specialty business with Mass upside.
Each partner makes up a smaller part of the business, thus reducing the risk of having your business reliant on just a few 3rd parties. In short piecing together an export jigsaw puzzle of your own allows you to lay strong foundations to partially reduce the roller coaster effect of trading with mass retail domestically.
4. Be aware of local/regional commercial & cultural differences – other countries have their own commercial and cultural frameworks. This can lead to legislative & bureaucratical considerations as well as practical (different!) language issues e.g. some product categories are not popular in other markets i.e. the German market is not strong for toys seen to promote aggressive/violent play, so the action figures category is not strong in Germany versus North America.
Europe, which combined makes up around ¼ of the global toy market is highly fragmented, and while the European Union harmonises things to a degree, there are countries in Europe outside of the EU. Safety standards are different – if you just managed to get to grips with the latest domestic toy safety standards try getting your head around EN71, REACH and WEEE regulations in Europe! Furthermore, European employment law tends to grant the worker significantly more rights versus the USA for example. Away from Europe, Japan and China which make up the No. 2 and No. 3 toy markets in the world, have even more significant cultural, regulatory etc. differences.
The logical way to deal with these challenges is to make it someone else’s i.e. your distributor’s responsibility, and then to over time build your own knowledge of all these factors. While the extra margin of always selling directly to retailers in each country may be appealing, I have seen far too many North American companies wander blindly into doing this, leading to major challenges/issues to resolve from customs/import documentation issues that cost $millions to resolve through to companies hiring sales staff they could not fire without significant payoffs. In the first instance, selling via distributors for lower margin will avoid so much risk, management time loss and other issues.
5. Engage local/expert help – in the same way as you may need to engage a specialist rep to enter a particular distribution channel domestically, so you may want to consider looking at expert help to kickstart your export sales. There are numerous companies offering market entry services and international representation. Again, everything has a price, but we’ve noticed that in our own business we often save companies years of wasted effort and investment via just a little local market knowledge e.g. one client had exhibited at the wrong trade show for 7 years at huge cost, with (unsurprisingly!) very poor results, a move to the right trade shows instantly yielded substantial results. At the very least, speaking to international toy market experts should increase your knowledge base.
In summary, there’s no doubt that the export opportunity can be significant, but it needs to be managed realistically and efficiently!
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