I apologise if I tempted fate last week by saying we were all hoping for a more ‘normal’ year. It seems that my old friends at Amazon have decided to do their best to keep everyone on their toes. The eCommerce giant has announced that it will be cutting out distributors and dealing directly with brand owners in the European market, effective almost immediately in some cases. Let’s not forget that Amazon has been operating on a similar basis in the USA since 2019, but the US market is markedly different to the European market when it comes to distribution set-ups.
As ever, the devil is in the detail and it will depend how the new policy is implemented in practice…but if I am reading this right, I foresee significant challenges ahead for some toy companies. One toy retailer summed it up rather succinctly: “That’s a ******* game changer.” Quite.
I have spent the past couple of days trying to get my head around potential implications for the toy community – which, to be frank, isn’t entirely straightforward, as I don’t profess to be an Amazon expert by any stretch of the imagination. It’s a very complex area, and it is entirely plausible that I may have misinterpreted certain consequences of Amazon’s plan – any feedback from toy companies as to how they view the announcement would be greatly appreciated, as I continue to build a picture of what this move might mean for the European toy community.
In the meantime, shall we start by assessing potential positives from the move? I gather some companies are delighted with the news – I guess some large brand owners may see the benefits of a closer working relationship with Amazon, although that will mean increasing resources to manage that. Some brand owners may feel that their brands have suffered from distributors creating inconsistent messaging and pricing, impacting the brand’s image on Amazon – this is their chance to own their brand messaging and pricing strategy outright. And, of course, Amazon will see this is a major opportunity to increase its margin and profit by cutting out the middle man.