Why don't Toy Companies Just Sell Product Direct?

[00:00:00] Speaker 1: hey welcome back to the spectra creative channel where my big goal for this channel is to clarify questions people have about the toy industry and hopefully my time working in the industry can do that and likewise i get lots of questions from subscribers on the comment section or directly through my website and so i got recently got a email from adam who asked why toy companies don't just sell product directly to customers obviously this would have huge appeal especially for adult collectors who are often having to track things down and you know buy from multiple places why can't we just you know hand a toy company all of our money and they'll just send us product so there's kind of a yes and a no to this let's kind of cover the yes first there's some low-hanging fruit like the fact that some toy companies like mattel have publicly available toy stores at their large corporate headquarters places like east aurora new york and el segundo california and while these are open to the public they're obviously not accessible by people who don't live in east aurora or el segundo well i guess you know you could live in santa monica and drive to el segundo but you get the point is it's uh not a national chain these are just locations and they're really used as depositories of unsellable product or overstock product that retailers maybe canceled orders for was produced in too high of a quota so it's kind of more of a dumping ground as a solution if you will versus a place to find kind of the latest hot releases usually in fact you actually do wind up finding unique things though that don't show up at retail namely because this is where product is dumped when you can't sell it into retail and nobody wants to have inventory we're going to get into that because that's a big thing too so yeah i mean it's definitely worth tracking these kind of stores because you can find cool stuff that doesn't show up at retail for various reasons that winds up being collectible or you know very uh friendly for the adult collector audience but for the most part yeah you're dealing with last year's toys and things that are overrun or need to be dumped because retailer won't take it another example is the airport stores that mattel had it's actually something i worked on at the very tail end of my time there and you know honestly i don't even know if they have these anymore um but it was a big thing 10 years ago and it was more really just meant as a branding opportunity it really wasn't meant to sell huge amounts of product for busy travelers who need a gift on the go maybe you're visiting a child maybe you are a child and need to be quieted then of course there's things like hasbro pulse very similar to mattel creations or maddie collector where they both do items that are bill to order as well as exclusive product that you can't get at retail that complements retail items and items that you can absolutely pick up at retail and pre-order if you do so really adam the subscriber asking the question originally so this is probably the most direct way of buying product from a toy company but likewise you could buy this same exact product on other companies like amazon or entertainment or big bad toy store etc etc so really i think the question is if they do this with some why not more why limit it to only a few skews that are sold on things like hasbro pulse.com why not make the entire catalog of a company like spinmaster jacks mattel hasbro etc etc well really this comes down to the functionality of the business so a company like hasbro or mattel you know they have very large corporate towers corporate headquarters and they have a specific business plan and that is not to make toys a lot of people think that that's what these toy companies do that they make toys and they get them to kids there's a big difference between making a toy and designing a toy so that's what happens these are toy designers not manufacturers or producers toys are actually produced as most people though overseas usually in china vietnam they're always looking for new areas because the cost to produce product especially with labor costs going up with the demand for more complicated product so yes toy product is actually produced put together assembled usually in china and then sent by boat or gosh if you had to airship that's like the last thing you want to do i'll get into that in another video but yes this is these are actually the toy makers who anyone was going to be said to be the uh source of product in the chain of uh i guess you know retail store distribution which is represented here think of that uh tractor in the top left being the actual manufacturer and then behind the tractor is the toy company who has the idea of how to how to make the product so you can see how far a company is from the retail end of the distribution model like sometimes they may not even be on the chart because they're not even making the product you may also ask well what about companies like walmart that have their own line of toy product aren't they just selling directly yes and no it's kind of a fuzzy line there this is more that a company like walmart or target toys r us used to have this as well called an in-house brand sort of a non-branded toy and you'll see this for common things like play sets dolls vehicles this is more the company in this case walmart just footing the bill for production they didn't design these they didn't uh that you know produce them they just paid a vendor to make them and sell them exclusively to walmart or target so that's what you're seeing here if you know again looking for an example of a toy company selling directly walmart isn't really a toy company much like they have their own generic brand of cereal and you know cleaning products they also have their own generic version of toys so that is actually then why you're not seeing toy companies selling more is because they're not a retailer they don't have things like the place to stock and store all of the complicated and additional steps it takes to produce a product and sell directly to a customer and outside of etsy you really don't see this it's not a model that thrives in the business world i mean outside of farms selling product on the side of a road seeing someone who actually physically makes a product and then selling it it doesn't really work in the chain of kind of product development and retail distribution you can't be a jack of all trades and do everything you have to sort of choose what part of the business model you're going to be part of and do that best and for a company like mattel or hasbro what they do best is design toys they have partners who then make them and partners who sell them when you try to do everything you wind up being a well a jack of all trades and a master of none to quote the song and that's more or less why toy companies don't sell product and run retail stores because they choose to be really good toy designers not spreading themselves too thin and trying to do everything i hope this video clarified adam i hope it answered your question let me know other questions people have i love to answer them in videos i can do on this channel and thank you for sharing watching and supporting all right see you guys in the next video [00:07:37] Speaker ?: you