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:
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.
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!
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!
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.
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.