Ryan Faist is the Content Marketing Manager for Channel Key, a full-service Amazon and Walmart Marketplace consulting agency. A nationally published and award-winning journalist, Mr. Faist writes about the latest developments in ecommerce, marketplace strategies, changes in consumer shopping trends, retail industry disruptions, and the overall shift toward online shopping. For daily Amazon news and e-commerce updates, follow Channel Key on LinkedIn.
Selling toys on Amazon is big business. The e-commerce giant generated $5.6 billion in toy sales in 2020, making Amazon the top online toy retailer in the U.S. With over 2 billion monthly visitors, it’s no surprise that many of the world’s leading toy brands sell on Amazon, including Fisher-Price, Disney, Nerf, Barbie, and Pokémon. Despite the commanding presence these heavyweights maintain on Amazon, there is but one clear winner in the toy category: Lego.
From September 2020 to August 2021, Lego generated $916 million in revenue on Amazon, according to estimated data from digital intelligence provider SimilarWeb. To put this into perspective, the second-ranking toy brand during this same time period was Funko at $174 million. Coming in third was Melissa & Doug at $135 million.
What puts Lego so far ahead of the competition? Some might argue it’s because Lego is the largest toy manufacturer in the world. The fault in this logic is that it doesn’t explain the disproportionate gap between Lego’s Amazon performance and the rest of the top toy brands when compared to total sales. It is only on Amazon that Lego blows everyone away – and the reason why comes down to three factors.
One of the core essentials to succeeding on Amazon is best-in-class content. Customers can’t inspect products on Amazon the way they can in brick-and-mortar stores. Instead, they have only the information you provide. Lego wins on Amazon because they utilize every opportunity available to display striking, branded content.
For example, below is a screenshot of A+ Content on a Lego product listing for a 790-piece Building Kit. A+ Content enables sellers to enhance their product descriptions by including additional information like a unique brand story, lifestyle images, comparison charts, and text placements. Available only to registered brand owners, A+ content can drive more traffic, improve conversion rates, and increase sales.
Another example of Lego’s exceptional use of branded content is their Amazon Store. This is essentially a website for your business on Amazon where you can display your catalog and tell your brand story. Like A+ Content, Stores are only available to brand owners, and many don’t take advantage of them.
Below is the current homepage for Lego’s Amazon Store. Note how the company incorporates a holiday theme into its digital storefront, including the menu bar, banner images, a branded video, and ideas for holiday gifts. The page is also well-organized to promote shopping. Easy navigation allows customers to browse new releases, best sellers, age groups, or themes. This type of best-in-class branded content helps keep Lego in the top tier of the toy category on Amazon.
Defensive Advertising Strategy
You can’t compete on Amazon without advertising. People often forget that Amazon is more than an e-commerce marketplace. It’s a giant search engine. A 2020 Kantar study found that nearly half of all toy customers research products on Amazon regardless of where they make their final purchase. In other words, shoppers are searching for toys on Amazon. In order to convert them, you need to win the search bar for your products. This requires pay-per-click (PCPC) advertising.
Creating the right advertising strategy will depend on the particulars of your business. Lego has the advantage of worldwide brand awareness. Millions of customers type “Lego” directly into the Amazon search bar each year. A smart competitor could use this as an opportunity to siphon search traffic by bidding on terms that contain the word “Lego.” In theory, this strategy would display these ads at the top of the search results.
Lego works hard to prevent this from happening with a defensive advertising strategy. They know shoppers are searching for their products. Instead of allowing competitors to show up in the available ad space alongside these search results, Lego outbids them and advertises on its own pages. Notice in the screenshot below how the first display ad that appears for the search term “Lego sets” is a Sponsored Brand ad that directs traffic to Lego’s Amazon Store. This type of defensive bidding strategy helps stop their customers from veering off to competitors’ listings – and it works. Lego received 279 million product views from September 2020 to August 2021 (next in line was Funk with 137 million).
Best-In-Class Video Content Strategy
It’s no secret that video ads typically perform better than image-based ads. This is especially true on Amazon. Almost 75% of the ads on the platform are static Sponsored Ads, which means videos stand out. Furthermore, data shows that customers not only consume more video content, but they actually want it. A 2018 HubSpot study found that 54% of shoppers want more video content from a brand they support.
Lego produces world-class video content that tells its brand story. Their videos are short, engaging, and persuasive. More importantly, they are tailored specifically to relevant, high-selling products. See below how Lego uses a Sponsored Brands video to promote a Star Wars Darth Vader Helmet Set. By producing high-quality video ads that highlight the features of individual products for sale on Amazon, Lego increases product views, click-through rates, and conversions.
Lego also uses video content to reach customers outside of Amazon. For example, Amazon DSP (demand-side platform) is a programmatic advertising solution that enables brands like Lego to reach customers on various mediums, including:
- Fire TV
- Freedive (IMDb Streaming)
- Publishing Partners
Amazon DSP also supports multiple ad formats, but video has proven to be the most effective. According to Amazon, video ads that appear in streaming services such as Twitch.tv result in a 90% increase in purchase rate. Lego understands this and takes advantage of it by consistently distributing new video content throughout Amazon’s growing DSP network.
Amazon is an e-commerce powerhouse with a robust suite of tools for brands to reach shoppers. Lego outperforms its competitors on this marketplace because they utilize these opportunities to reach customers in as many places as possible. Searching on Amazon? Check. Streaming videos on Fire TV? Check. Browsing books on Kindle? Check.
Not only is Lego finding shoppers in a variety of mediums, but the company is doing so in a way that reinforces the Lego brand experience. This kind of comprehensive content strategy is a formidable offense that powers itself with its own momentum. The more content is shown, the more shoppers it reaches. The more customers it converts, the more organic searches there are for Lego products. And so on.
This approach alone would most likely be enough to maintain Lego’s top position in the toy category. However, when combined with a defensive bidding strategy designed to prevent other brands from appearing in Lego’s search page results, the Denmark-based company catapults ahead and leaves its competitors in the dust.