This blog was updated on March 6, 2024.
There is a lot of talk of volatility in the toy industry lately. In 2023, toy sales in the U.S. reached $28 billion, an 8% drop from the previous year. Despite this decline, Statista forecasts the toy industry to bounce back, reaching $40 billion by the end of 2024. At any rate, toy brands need to pay close attention to how the market is evolving. In particular, Amazon has significantly transformed the toy industry in several ways:
- Market Dominance: Amazon’s position as the largest online retailer has given it significant influence over the toy market. Its vast customer base and global reach make it a key player in the industry, shaping consumer preferences and market trends.
- Increased Accessibility: Amazon has made toys more accessible to consumers by offering a vast selection of products at competitive prices. This accessibility has democratized the toy market, allowing small and niche brands to reach a wide audience without the need for extensive marketing budgets or distribution networks.
- Convenience: Amazon’s user-friendly interface, fast shipping options, and hassle-free return policy have made it a convenient destination for toy shopping. Consumers can browse and purchase toys from the comfort of their homes, with the option for fast delivery in as little as one or two days.
- Data-Driven Insights: Amazon leverages data analytics to gain insights into consumer behavior, preferences, and trends. This data-driven approach allows the company to optimize its product offerings, marketing strategies, and inventory management to better serve its customers and drive sales.
- Innovation and Disruption: Amazon’s entry into the toy market has spurred innovation and disruption, encouraging traditional retailers to adapt to the changing landscape of online commerce. The company’s emphasis on customer-centricity and continuous improvement has raised the bar for the entire industry, driving competition and pushing other retailers to innovate.
- Platform for Third-Party Sellers: Amazon provides a platform for third-party sellers, including both established brands and independent sellers, to reach a global audience. This has created opportunities for smaller toy manufacturers to compete with larger brands and gain visibility in the market.
- Branding and Marketing: Amazon’s platform offers various branding and marketing opportunities for toy brands, including sponsored product listings, targeted advertising, and customer reviews. These tools help brands increase their visibility, attract more customers, and build brand loyalty.
Overall, Amazon has played a pivotal role in reshaping the toy industry by increasing accessibility, convenience, and innovation while providing a platform for both established and emerging toy brands to thrive in the digital age.
Understanding New Challenges for Toy Brands
- Greater Variety of Options – Over two-thirds of toy shoppers now make their purchases online, according to a Kantar custom toy shopper study. Ecommerce offers customers more selection than brick-and-mortar stores, which means product discoverability is more important than ever.
- Adapting to Shifting Customer Behaviors – As toy shoppers increasingly move to online marketplaces, adults are less likely to make impulse buys driven by child requests. Brands need to find new ways to engage shoppers, such as driving purchase intent through telling your brand and product story.
- Thinking Beyond the Holiday Season – Customers purchase toys throughout the entire year, not just during the holidays. Brands need to keep their products top of mind when year-round gift-giving opportunities arise.
Insights for Marketing and Advertising Toys and Games
- 44% of toy shoppers say they research their purchase on Amazon, regardless of where they make their purchase (Kantar).
- A toy purchase on Amazon is three times more likely to be a gift than the average Amazon purchase (Kantar).
- 97% of global ecommerce sessions end without a purchase. It’s essential to treat each touchpoint as an opportunity to build a relationship rather than drive an immediate sale (Statista).
- A recent Amazon Advertising analysis found that brands who combined display advertising with sponsored ads for their toy advertising achieved a 33% uplift in conversion, compared to toy brands that only ran sponsored ads.
Three Reasons Why Toy Brands Need to Promote Their Brand Year-Round
As mentioned, the holiday shopping season is critical to your toy brand’s success. According to an Amazon study, nearly 40% of holiday shoppers plan to give toys as gifts, with 32% purchasing at least one toy during Black Friday and Cyber Monday. By all forecasts, this trend will continue in 2024. However, your marketing strategy should not be limited to the holiday shopping season. Here are three reasons why it’s also important to communicate with toy shoppers throughout the year:
- Toy Shoppers Need Time to Learn About Your Brand
According to The Toy Association, today’s toy shoppers often consider more than just cost and “cool factor” when deciding what to buy. Many want to understand what the brand stands for, its commitment to sustainability, and whether its toys are eco-friendly. Considering these additional factors, toy shoppers need time to learn about your brand if you want to be top of mind when it’s time to buy holiday gifts. - Toys Are a Favorite Gift for Many Occasions
While the holiday season is a key time for toy shopping, it’s not the only time people buy toys. Gift-giving happens year-round. A recent survey of Amazon toy shoppers found that 72% of toy purchases were for birthday gifts or everyday treats. Toy shoppers also said that they like to commemorate certain life events with a new toy, such as moving to a new home or starting a new school year. - Toys Aren’t Just for Kids
Adults are buying toys for themselves, and toy brands are noticing. Movie franchise fans are purchasing the latest licensed toys to add to their collections. Friends are buying board games for virtual game nights. Adults are turning to jigsaw puzzles and building sets for stress relief. Almost 20% of frequent toy shoppers on Amazon say they buy toys for themselves. Those purchases are happening throughout the year.
Take Your Toy Brand to the Next Level of Success
As the most popular ecommerce marketplace in the world, Amazon is a powerful sales channel for toy brands. Unfortunately, many never realize their true sales potential on the platform. After launching their storefront, toy brands often find themselves stuck in a sales plateau. Channel Key’s free Growth & Opportunity Report is designed to identify your brand’s quickest route to greater sales and profitability on Amazon. This customized, in-depth analysis provides an expert second opinion to help you understand the following actionable insights:
- Share of Voice
Discover how your current share of voice on Amazon compares to your competitors, along with specific opportunities to increase your brand awareness. - Category Market Share
Learn your brand’s market share by product and category, and your competitors’ market share to identify realistic growth targets. - Growth Opportunity
Identify specific opportunities to help your brand grow its customer base, increase profitability, and ultimately generate more revenue. - Margin Analysis
Examine your current profitability in relevant categories to discover opportunities for improvement. - Advertising Spend Forecast
Receive a detailed advertising spend forecast to help you understand what it will take to compete in your categories. - Account Audit
Identify risks or vulnerabilities in your account health and ensure overall compliance with Amazon’s terms, policies, and applicable laws. - Content Audit
Review your product listings to find opportunities for improvement that can have an immediate impact on organic traffic and conversions.
Channel Key Takeaway
The U.S. toy industry in 2024 is likely to continue evolving in response to various factors such as consumer preferences, technological advancements, and economic conditions. Here are some potential trends and developments that could shape the toy industry in 2024:
- Ecommerce Dominance: Ecommerce is expected to continue its dominance in the toy market, with online sales accounting for a significant portion of total toy sales. Consumers are likely to increasingly rely on ecommerce platforms like Amazon for convenience, variety, and competitive pricing.
- Tech-Enabled Toys: The demand for tech-enabled toys, including robotics, augmented reality, and AI-powered toys, is expected to grow as technology continues to play a prominent role in children’s play experiences. Toy companies may continue to innovate and integrate technology into their products to capture this demand.
- Sustainability and Ethical Sourcing: There could be a greater emphasis on sustainability and ethical sourcing within the toy industry, with consumers and stakeholders pushing for eco-friendly materials, responsible manufacturing practices, and transparency in supply chains.
- Educational and STEM Toys: Educational and STEM-focused toys are likely to remain popular as parents and educators prioritize toys that promote learning, creativity, and skill development in areas such as science, technology, engineering, and mathematics.
- Inclusive and Diverse Representation: There may be a continued focus on inclusivity and diversity in toy designs and marketing, with toy companies striving to offer a wider range of products that reflect the diverse backgrounds and experiences of children.
- Shifts in Licensing and Entertainment Tie-Ins: The landscape of licensed toys tied to movies, TV shows, and popular franchises may evolve, influenced by changes in entertainment trends and consumer preferences. Toy companies may need to adapt their licensing strategies to align with shifting market dynamics.
- Supply Chain Challenges: The toy industry, like many others, could continue to face supply chain challenges related to factors such as transportation disruptions, raw material shortages, and labor issues. Toy companies may need to implement strategies to mitigate these challenges and ensure continuity in production and distribution.
Overall, the U.S. toy industry in 2024 is likely to be characterized by a combination of technological innovation, evolving consumer preferences, and efforts to address social and environmental concerns. Adaptability and agility will be a key component of Amazon Account Management for toy brands to thrive in this dynamic and competitive market landscape.
