If there’s one thing people will always have an appetite for, it’s entertainment. 2020 saw that appetite grow even stronger as COVID-19 forced millions to adapt to virtual learning, remote work, and social distancing.
Whether it was to alleviate boredom, reduce anxiety, or just have fun, the Toys & Games category on Amazon boomed in the historic year. Nearly every major Toys & Games brand also experienced notable growth in 2020, including Lego, Hasbro, and Mattel. In 2021, the global Toys & Games industry is expected to surpass $330 billion in revenue.
It wasn’t just multibillion-dollar brands that grew either. Kaspien partners with hundreds of Toys & Games brands of all sizes. In 2020, we saw Amazon sales increase 30% year-over-year. Ad costs were also down, with our advertising cost of sale (ACOS) decreasing 29% year-over-year.
As we move through 2021, the Toys & Games category continues to enjoy strong performance. Comparing January through April 2021 to 2020, Kaspien’s partners in the Toys & Games have grown Amazon sales by 18%, on average. Even with Amazon’s strong category presence and the ubiquity of the top toy brands, the constant desire for fresh entertainment means new opportunities for growth continue to emerge for brands of all sizes.
One of the Largest Categories
Amazon has one of the largest selections of toys in the world, making it a popular destination for shoppers and sellers alike. As a result, brands operating in the Toys & Games category face tough competition, including household name brands like Lego, Hasbro, and Mattel. To succeed in this space, brands need dedicated Amazon expertise, whether they hire for that internally or acquire it through a partnership.
High Competition, but Niches Create Opportunity
While Toys & Games as a whole is a saturated category, there are dozens of subcategories and niches that offer ample opportunity. Toys & Games can differ immensely by factors such as price, complexity, target age range, target gender, genre, trends, type, and more. Products and marketing aren’t competing with each other at a category level, but on a niche level.
Amazon Retail (1P) has a Strong Presence
Speaking of larger brands, Amazon Retail (Amazon first party or 1P) partners with many of the biggest players in this space. According to documents provided by Amazon to the U.S. Congress, Amazon Retail holds 9% of toy listings on Amazon while capturing 42% of toy sales on the marketplace. Over 99% of Amazon Retail’s toy sales come from brands sold through Amazon Retail, rather than Amazon’s private label brands.
Toys represents Amazon’s second largest category presence by share of listings, coming in after books. Toys also represent Amazon’s third largest category presence by share of sales, coming in after books and consumer electronics.
Amazon’s large presence in this space can make it challenging to capture top placements when selling in the same subcategory. If you are considering launching a new product in the Toys & Games category, it’s worth researching if you’ll be competing with Amazon Retail.
An Abundance of Digitally Native Brands
The Toys & Games category is also home to many digitally native brands. Over 26,000 games have been funded through Kickstarter, raising over $233.8 million. The success of digitally native brands in this space can be at least partially attributed to shoppers’ hunger for new experiences. While some games endure literal centuries, such as the Game of Life (whose origins date back to 1860) or Monopoly (tracing back to 1903), they are the exceptions to the norm, especially in an age of near instantaneous global communication.
For brands in this industry, this reality is both a blessing and a curse. New opportunities constantly present themselves, but so too do new competitors.
Copycats & Counterfeits Abound
Just as the hunger for something new makes Toys & Games fertile ground for digitally native brands, it also makes it prime hunting territory for copycats. It’s easy to metaphorically (or literally) slap a new coat of paint on a toy or game, then market it as something new. This also makes the category vulnerable to counterfeits. The Department of Homeland Security’s 2020 report on counterfeits listed Toys as the 9th most common counterfeit product seized in 2018.
COVID-19 Impact on Toys & Games
On the consumer side, COVID-19 led more shoppers to invest in at-home entertainment. Many children shifted to online school while some parents also shifted to working remotely. Having both child and parent at home during the work week quickly highlighted the need for having entertainment options that didn’t require adult assistance.
On the seller side, nearly every brand faced delays in manufacturing and supply shortages, especially those dependent on supplies and production from overseas. In the Toys & Games industry, that represents a significant portion of the field, as China dominates production for this industry. In 2019, China led global toy exports, exporting nearly $63 billion worth of toys, including 80% of US imports.
Rules & Regulations
Along with the Baby and Health & Personal Care categories, Toys & Games is one of the most regulated categories on Amazon. At Kaspien, we highly recommend working with a specialist to help when launching new products in this space, as failing to prepare the required documents in advance or submitting information incorrectly can delay or interrupt sales for weeks to months.
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Shoppers Search by Many Variables
Toys & Games is an incredibly diverse product category. To make it easier to find the products for the end user, shoppers often narrow their search by multiple factors, including but not limited to:
- Product type
- Material quality / durability
- Game duration
- Number of players
Low Brand Loyalty
When it comes to games, shoppers demonstrate little brand loyalty. By the time they go to Amazon, they are interested in buying either a particular game or a particular type of game. Who the creator is matters less than finding something with the right combination of age range, gender, duration, genre, number of players, and price. The exception to this rule is when shoppers seek expansion packs to games they already own.
For example, one of our partners runs Sponsored Brand Ads. Over the ads’ lifetime, 86.5% of attributable orders have been new-to-brand. Now, Sponsored Brand Ads are known to attract new-to-brand customers, but even so, the metric is indicative of the low brand loyalty seen among board game shoppers.
Toys, on the other hand, are a mixed bag. Many toy brands create product lines of complimentary toys to boost brand loyalty. For example, a line of superhero toys is incomplete without buying each hero. The same is true of any movie, show, or comic that features multiple characters. In this case, shoppers care less about the brand selling the toy and more about the product line the toy is part of. For sellers, this affects their marketing strategies.
The general exception to the rule of low brand loyalty is when safety or education is involved. Since children (and adults, for that matter) learn in different ways, parents may be more apt to buy from the same game company if they find an educational game that works well for their child. Likewise, in the case of outdoors toys that could risk a serious injury if misused or broken, parents may pay more mind to the brands they patronize.
Gifts for Friends and Family
Many shoppers in this category are purchasing gifts for their children, their children’s friends, family members, and so on. The gift should demonstrate their care for the recipient, so these shoppers care greatly about the product’s safety and quality. This assessment is most often made by reading other customer reviews. If the product has few reviews or low ratings, shoppers are far less likely to take the risk of getting an unsafe or low-quality product.
Children Make Wish Lists Too
Adults aren’t the only ones adding products to Amazon wish lists. It is becoming increasingly common for children to browse Amazon and add products to their Amazon list, especially in preparation for birthdays and holidays. When optimizing listing content, sellers should keep in mind that they are marketing to two audiences.
Online & In Store are Equally Important
According to Statista, 29% of consumers state they prefer to buy toys entirely or mainly online. Another 40% of consumers stated they are equally willing to buy toys online as they are in stores. That puts the percentage of shoppers who prefer to buy online at roughly the same size as those who prefer to buy in stores, meaning that Toys & Games brands cannot afford to ignore either sales channel.
This is only a small taste of what our eBook has to offer. Download the free eBook to learn how to actionize this information about the category landscape and shopper psychographics.
Kaspien is a proven expert in this field. Since 2008, we ‘ve served over 400 Toys & Games brands. In 2020, we delivered the following results for our partners in this category:
- 42% avg. increase in orders YOY
- 4.5% avg. ACOS
- 29% avg. decrease in ACOS YOY
- 50% increase in ad sales YOY
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