Tag Archives: u.s.a. toy market

The U.S.A.: How To Enter The Biggest Toy Market In The World

The U.S.A: How To Enter The Biggest Toy Market In The World

The U.S. toy market is unlike any other. Aside from the fact that it is by far the biggest market in the world for toys & games, it is also home to two of the worlds biggest toy & game retailers, as well as thousands of independent ‘Mom & Pop’ specialty stores. Any international company looking to grow export sales has to have a plan of attack for the U.S. toy market, because it is by fear the biggest opportunity they have.

There are many challenges though. Let’s take a look at some of these before we look at solutions:

  1. Geographic size – the U.S. is not just huge as a market, it is also physically huge, making logistics a major challenge – both in terms of internal transit time, but most importantly in terms of cost.
  2. Inaccessible mass market retail – major retailers like Walmart & Target are not keen on adding new suppliers, their metrics are driven by reducing suppliers normally, not adding more.
  3. Legal & tax framework – it is usual to have to adapt to local laws, company structures and tax regimes in entering new markets. The U.S. has some very rigid laws and regulations.
  4. Finding 3rd party distribution can be difficult – there are several reasons for this, but basically there are fewer distributors than in other markets. In many markets it does not make economic sense to tool up toy products for just the home market, so from the very start most non-U.S. companies are thinking about selling for export. In the U.S. however, the size of the market means that product development just for the ‘local’ market is obviously viable – therefore it is easier to justify product development, and so most companies would develop their own products to make much higher margins. As a result, whereas many international companies develop some of their own products & distribute a lot more for other overseas companies, in the U.S. this is less prevalent.

There are more challenges of course, but there are enough listed above for consideration.

The question then is how to get to market in this massive but challenging market? When we look at distribution options there are actually a limited number. Here they are (listed in order of least risk/least work):

  1. Distributor model – while there are fewer distributors in the U.S. than in many other markets, there are still a few really good (and some very average) distributors. The obvious advantages of the distributor model are that they take the stock risk, and pretty much do all the work. The primary risk is that they do a bad job with your products and sully the biggest market for you going forward.

 

  1. Sales rep model – due to the size of the U.S. landmass, the sales rep model is most common. Often reps will cover a couple of states, and so a network of sales reps, or a national sales rep company can give you access to an ongoing raft of purchase orders from retail with minimal leg work & staff overheads on your behalf. The challenge is that some reps are better than others, and if you have a product which is not an easy sell, they are likely to push harder on easier to sell products as they don’t get paid unless they sell something. And of course you still have to process and fulfil the orders, take responsibility for marketing and anything else not involved in the sales process.

 

  1. Direct to retail – some companies resent paying rep commissions and seek to sell direct from the start. This is a hard but perhaps ultimately rewarding path. For most companies we would not necessarily recommend this due to the time needed to set up distribution this way versus instantly accessing existing sales relationships via sales reps.

 

  1. Direct to consumer – this model is not new – mail order and TV shopping have been around for a long time, but the internet has allowed direct to consumer sales models to ramp up considerably. Arguably Amazon as one of the biggest and fastest growing major retailers is as much a direct to consumer selling platform as it is a true retailer in the traditional sense. We see a lot of start up companies or Chinese factories trying to use Amazon but not getting much success – Amazon is a system based on algorithms, and so to be successful you need to know how to best manage the algorithms.

 

So, there are many ways to sell to the U.S. toy market, but each comes with challenges, opportunities and risks. Prudent analysis, and above all choosing the right distribution model is required to achieve sustainable success.

 

Do you need help to grow sales for your toy company? We help people from all around the world to sell more toys, both in their home markets and into export markets. For more information on how we do this, check out our services here: www.KidsBrandInsight.com/services

 

Have you listened to our Playing At Business podcast? We talk about selling toys & games, interview successful people from across the toy business & we look at key trends in the toy & game business: https://playingatbusiness.libsyn.com/