Pete and his wife, Adrienne, are the founders of one of America's oldest "Doll Only" e-commerce stores: The Pattycake Doll Co. Below is Pete's perspective on the current state of the toy industry.
John Donne wrote "Ask Not For Whom The Bell Tolls." in 1624. The wisdom that no man is an island, and that we are all connected is timeless. To paraphrase and modernize John Donne for today’s Toy Industry:
“No toy company is an island, entire of itself.
Every toy seller is a piece of the industry, a part of the main.
If even a single store should close, the industry is less, as well as if it were a chain or a factory, whether it is yours or mine.
Any loss makes me smaller because I am part of this Industry.
Ask not for whom the bell tolls; it tolls for thee.”
What prompted me to write the above? Amazon.
FAO, KB Toys, Toys R Us, etc., can we blame it all on competing with Amazon? I don’t think so. I’m an American Specialty Online Toy Store, founded in 2002, competing with Amazon and Target and Walmart and doing just fine. But I fear for my industry. I especially fear for my vendors that sell on their ‘Marketplaces.’
Ever read any articles about the industries disrupted by Amazon? Amazon has its own Mattress Brand. Whole Food Stores and Amazon Pantry. Their own Clothing Lines. Their own Music Service. Their own Movie Studios. Their own Diaper Service, Amazon Basics Pet Supplies. Their own Advertising. Their own Electronics, Amazon Business (Office Supplies), and they’ve started in Pharmaceuticals.
If you’re a Toy Manufacturer selling on Amazon, then you should study the history of Toys R Us and Amazon. Especially that disastrous ‘10 year agreement.’ Your sales are great? How are your margins doing? How many times have you won the algorithmic ‘race to the bottom?’ Aren’t Toys a 15% Amazon category fee?
What’s worse is, how could you not have learned the lesson? Who do you think gets the better ‘deal?’ A quote from one of my vendors: “I should have bought them back at that price.”
As far as I know, Amazon does not manufacture or import toys. Yet. They’re probably still studying your sales on their marketplace to figure our industry out. Toys R Us was the canary in the coal mine. I’m afraid for my vendors because I feel “they’re tolling for you.”
I would like to offer one possible solution, it’s called market segmentation. Products for Amazon, Target, Walmart and your own B2C website. Different products for us, the independent toy stores. I get the feeling that Amazon is looking at the toy industry.
So please, for all of our sakes, just ask yourself: “What if he’s right… ?”