Har Har Har! Shiver me timbers, Matey! Pirates are no laughing matter, and they cost us all $$$. The cost of piracy to global shipping is estimated to be as high as $8 billion a year according to a recent Wall Street Journal article.
Did you know that shipping a container of toys from China costs about $3000? On top of that, shippers such as Maersk have to add additional charges of up to $500 per container on those that are shipped through pirate-infested waters.
If your 40’ container holds 3000 units of product, that is $1.00 hard cost per item, which translates to $5.00 at retail. If the product passes through risky waters the number is higher still.
But it doesn't end there. Your product needs to have a package to protect it and display it to its best advantage, and the cost of packaging can easily exceed $1.50 – $2.00, which translates to $7.50 – $10.00 of the product's retail price. Shipping and packaging together account for perhaps $15.00 or more at retail.
TV promotion is added on top of that, and the cost of labor. Chinese factory wages are continuing to rise, predicted by one manager at a major toy factory to be going up 80% in the next five years.
By the time all the costs are added in, there is no money to put into the actual toy itself. What will this mean for toys? Higher and higher retail prices? Smaller toys, smaller packaging, fewer features? New innovations and technologies that enable more function for less money?
The price of toys is already shocking. One of our team commented recently that a small Thomas the Tank wooden engine costs $24, while two aisles over an actual plug-in upright vacuum cleaner retails for $35. What’s wrong with this picture? How can it be that a small wooden toy can cost nearly as much as a plug in electric vacuum cleaner? Certainly labor and material prices are up dramatically, but wouldn't that be the case for vacuum cleaners as well?
New safety testing requirements surely add to to the cost of toys. That would not be the case for a consumer product like a vacuum cleaner. Then promotion and licensing fees of the toy would add cost as well. But it doesn’t add up in the consumer's mind. In the current economy, high prices affect sales and the consumer's attitude toward the value of toys. We do not want the value of toys diminished in the eye of the consumer when they compare to the cost and value of other consumer goods.