Tag Archives: toy distributors

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.

How Toy Markets Differ – The Difference Between Baseball And Cricket Explains All!

How Toy Markets Differ – The Difference Between Baseball And Cricket Explains It!

Regular readers of my blog posts will know of my near obsession with the importance of understanding market by market differences in order to maximise export sales potential. However, such theoretical rantings don’t always register as well as a more colloquial explanation…so here goes!

Firstly a brief bit of dry theory – the USA and UK appear to have much in common – very similiar language, cultural influences, mass market license driven toy markets etc. Yet we can see distinct and large differences between the two – while the Hollywood machine dominates kid targeted movies, the UK has it’s own distinct brand of kid targeted TV and the hugely influential BBC, the retail structure and chains are fairly different and certain product types work better in one market or the other. Now when we consider the huge historical and cultural links between these two nations, and when we add in the more or less common language, we can see that still the toy markets in the UK & USA are different…so when you change the language, the culture, the retail structure, the regulatory frameworks, the hstory and more, we can see why for instance so few UK or US toy companies manage to sell in Japan, China or Brazil for example.

Now that may all be a little dry and remote for some, or you may have stopped listening to my point on this market difference, so here’s an analogy I like to use – let’s compare cricket and baseball:

For a start, I imagine there are many people reading this who don’t know what cricket is. There will be some that don’t know what baseball is. So let me briefly explain – both are sports where one person propels a hard ball towards their opponent, and whereby the opponent must try to hit the ball far enough to allow him/his team mates to score ‘runs’ i.e. to run to certain points. With me so far? Good! The interesting part though is just how different the format and process of both games is when compared to the other, despite the overall idea being very similar…for instance, baseball scoring is driven by running between bases set out in a diamond shape, in cricket players run in straight lines back and forth. In baseball, the ‘pitcher’ throws the ball without bouncing it through a set space which is deemed hittable, in cricket the bowler runs in, and using a strictly straight armed motion (i.e. not throwing, no whip or bending of the elbow allowed) propels the ball towards three wooden ‘stumps’ with 2 wooden ‘bails’ on top. In baseball you can be out via: 3 strikes, caught or run out, in cricket you can be out bowled, caught, run out, lbw (leg before wicket when the ball hits your legs), because you hit your own wicket, because you took too long to get to the wicket etc.

Hopefully you’re still awake at this juncture…because the point is not to talk about these two venerable games, the point is how two nations can take the same idea i.e. one player propelling a ball at the other and the other trying to hit it with a bat, and create such a different execution?

The reality is that the same similarity of overall purpose can still be executed in a very different way i.e. even within the same category product formats can change – action figures in Germany for instance are more likely to be high quality fixed animal figurines than the traditional movie driven action figures we might find in the UK or USA, a Chinese board game may be very different to an American game etc.

And this doesn’t just apply to product, it also applies to retail – for instance, only the UK has ‘Argos’ – the biggest toy retailer in the UK for as long as I have worked in toys at least – imagine a catalogue driven retailer which prints over 20 million catalogues (one for each UK household roughly) as the leading toy retaiiler…it’s a bit different from Walmart, or Carrefour etc. In Germany, we have thousands of independent toy retailers, and no single dominant retailer, it’s a very fragmented market in terms of retail…whereas the mighty Walmart & Target in the USA hold a hefty market share and therefore have a much greater impact/power base with suppliers. Furthermore, while Toys R Us may offer a mostly homogenous approach to toy specialist retail on a global basis, each market tends to have its own specialist chains with different characteristics – from The Entertainer in the UK to La Grand Recre in France, things are similar but different in the same way as baseball is different from cricket!

The bottom line is this – you will often get away with selling some of the same stuff in multiple markets, but actually you will be better placed in the long term if you first take steps to understand, and then exploit market by market differences.

We work with companies in countries around the world to help them grow their export/international business, and the major finding from our experience is that companies usually need help with ‘tweaking’ their product line and changing product direction to account for the global opportunity…in actual fact in many cases where companies have struggled to establish significant international sales, it’s often because their product lines/approach is the issue. Clearly it helps if you know the right people/companies in each market (our database holds nearly 5,000 toy companies for instance, and we are regular contact with around 100-150…clearly this is advantageous), but actually most often a good product which fits the needs of a particular market will sell itself.

In terms of benchmarks, bearing in mind that the USA accounts for around a quarter of the global toy market, US companies who have domestic sales of $50m for instance should have export sales of at least $5m-10m. For European companies, a good rule of thumb would be that export sales should be at least the same as domestic sales, albeit with a different margin structure.

So if your export sales aren’t hitting these standards, perhaps it’s time you thought about the difference between baseball and cricket, and whether it’s your selling efforts which are holding you back, your product or your lack of knowledge about market by market difference

P.S. More ridiculous analogies will feature in future articles – watch this space!

 

by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com,  a leading Consultancy to toy, game and kids entertainment companies around the world, which helps companies find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world.