Learnings From Toy Fair 2009
I had the pleasure of attending the Toy Industry Association's huge toy convention, Toy Fair 2009, in New York City this past week. Toy Fair is THE place to be if you are in the Toy industry. You maybe asking, what does this have to do with E-commerce? Well, toys are a big seller online and the Toy Industry is one of the oldest industry associations in America so their members are definitely tackling the issues of moving their businesses online.
I'm going to give you a quick rundown on the convention. Followed by some of the key trends that I heard and my thoughts on them.
Convention
Let me first just say, this convention was massive and the toy industry did a bang-up job on this convention. Over two full floors at the Jarvis Center on the Hudson, over 350,000 square feet for over 1200 exhibitors, and hundreds of thousands of toys for the 20,000+ attendees and media that we're cruising the floors for 4 days. I think I walked every inch of that floor, talking with toy manufacturers, distributors and exhibitors. Some were showing their first "toy", some their 500th toy.
If you are attending conventions this year, your first question is probably "how was attendance"? I asked almost everybody I talked to whether attendance was up or down over last year. With absolutely no scientific tracking, and having never attended previously, think attendance was probably flat and they may have had about the same number of exhibitors. Given the state of the economy, that was an immense accomplishment from the TIA team.
While traffic may have been flat or slightly up (again, I have no history with the convention), there were definitely mixed reviews on the value of the traffic. Some of the Toy companies that were exhibiting were reporting that they felt that the show was well worth their time and they found quite a few business contacts with larger retailers and distributors. Some of the more seasoned brands seemed to be hoping for more distributors and larger retail contacts; however, I don't think I've ever been to a show where people didn't say that on their way out the door. Overall, I thought it was worth anybody's time who is in the Toy Industry.
3 Business and Logistics Trends From Toy Fair
I tried to keep my ear to the model toy track and listen to what the attendees were concerned with while I was there. I came up with a short hit list of trends that I will look at from a fulfillment and shipping perspective over the next few paragraphs.
The first couple trends involved retailers and some distributors pushing the risk of inventory back onto the manufactures and toy makers. Trend one, retailers may be buying inventory; but, they are buying less of it. Trend two, many retailers are wanting the toy manufacturers to be able to "drop ship" merchandise as orders are completed online. Again, I bundle both these trends together under the general rubric of retailers not wanting to take on the risk of inventory given the current economic environment. Trend three,was that some toy makers and manufacturers were looking at ways to selling direct to end-buyers. Maybe trend three was a counter-balance to the first two trends; I can't help but think that some of the more enterprising toy makers that were struggling to attract distribution saying, "weak distribution, no problem...let's go direct."
It is no surprise why retailers, small and large toy shops, are buying lighter this year, especially early in the year - they are having trouble judging demand. Nobody wants to get stuck holding inventory that they can't move. The retailers wanted to buy smaller quantities, judge demand and get smaller restocking quantities throughout the year. In my conversations with toy companies, we talked about the impact of smaller retail orders and how to get suppliers to package products properly so that is easier to ship minimum order quantities to retailers. How your manufacturer packages product can really impact how easy it is to fulfill repeat smaller retail orders or sell direct to consumer in the future. Consider what the minimum order quantity is and make sure that you can easily send a box of that amount out to a retailer. I had many conversations about the impact of outsourced warehousing and order fulfillment in this picture as well. The general rule of thumb is that warehouse charge by the box being moved; in most cases a box of 10, 12 or 24 can cost the same as a single product box. So think about packaging if your retailer resupply quantity (minimum re-order) is lower in the future.
Some other helpful questions to get you thinking about packaging:
- Are you selling individual units online?
- Can you fit multiple "resupply quantities" into a larger box (box of boxes) called a "Master Carton"?
- Will your packaging allow you to adjust minimum orders for overseas retailers or distributors?
It is also no surprise why retailers that sell online want toy makers to drop ship (also called direct ship) products to buyers. Drop ship fulfillment is the epitome of "just-in-time" inventory. The retailer does not keep any merchandise in stock. Instead, buyer orders are send directly to the manufacturer or wholesalers who then ships the item to the buyer. drop shipping is pretty common among e-tailers, catalogers or mail order businesses that offer a very large product catalog without an inventory investment. At Toy Con I found that the heavier the product or the larger the price point, the more often that the toy maker was going to be asked to drop ship. There are a few drop ship software programs out there; and I welcome comments on your favorite drop ship automation software. I would like to do a separate blog post on the best software programs to manage drop shipping soon. [At this point, I hope you will excuse a selfish plug for a new integration that I'm really excited about. Shipwire and Doba just joined forces to power manufacturer drop ship for no cost to product suppliers, manufactures and wholesalers. www.shipwire.com/doba]
Trend three, what I call "No distributor, no problem", was something that I was seeing more and more. It was more of an undercurrent that I was starting to see. In markets where a toy maker did not have a strong distributor, the toy maker was going to sell small wholesale lots to retailers or sell directly to end buyers via their Web store or marketplaces such as Amazon or eBay. This was a viable option for only some toys: Some brand following; had obvious keywords for Google Adwords buying; or, had strong customer bases that were driving product demand. In many cases these markets were overseas, so please see my previous posts on International Order Fulfillment.
I look forward to your comments.
Nate Gilmore I work for Shipwire order fulfillment service. Learn more about manufacturer drop ship fulfillment.
This post is filed under Tools, Tips and Suggestions and has the following keyword tags: drop shipping, how to drop ship, drop ship fulfillment, master carton, Toy Fair 2009, fulfillment, shipping, product packaging.
