5 minute read
Viewpoint - Asha Bhalsod
Unwrapping Q4 2023 trends in Amazon’s Toys and Games
Throughout the past year, Amazon made the news frequently, talking about new strategies - including only working with approved distributors in 1P - and laying off more staff. These changes affected everyone doing business with Amazon. Distributors who worked with different brands were stuck when orders stopped coming in because they didn't have the necessary approval. Dealing with automated systems instead of talking to people also made matters more complicated. Even with these challenges, Amazon still managed to perform well in the last quarter of 2023.
As we move into 2024, Etopia has been taking a closer look at what's been happening with Amazon's Toys and Games category. We all expect consumers and shoppers to start their Christmas shopping in early October, but one of the standout features of Amazon's Q4 performance in Toys and Games is the staggering increase in weekly sales. In October, the average weekly sales hovered around £44m, but the Black Friday period witnessed an unprecedented spike, reaching an impressive £100m.
Amazon Germany has consistently held a prominent position as a larger market. Recent data indicates that Amazon Germany experienced estimated sales in Q4 of over €1b for Toys and Games, surpassing the figures observed in the UK, where Toy sales peaked in Q4 at around £765m. Lego maintained its market dominance across all regions, securing a leading position in both value and unit sales. Amazon UK witnessed robust sales from other major players, such as Funko and Amscan. In Germany, the dynamics were distinct, with Ravensburger and Playmobil emerging as key drivers of strong sales on Amazon DE. These brands played a pivotal role in capturing the attention and wallets of German consumers, showcasing the importance of understanding regional preferences and tailoring strategies accordingly.
The rest of Europe also saw uplifts in sales from November onwards, as the European markets continue to develop on Amazon, with Amazon Spain Toy sales in Q4 being bigger than Amazon Italy Toy sales.
Top Performing categories in Toys & Games – Amazon UK
The top 3 performing categories (value) in Q4 that make up 38% of total Toy sales on Amazon UK are Pretend Play & Dress Up, Games & Puzzles and Building & Construction Toys. Naturally the spike in dress up was driven by Halloween, but it was interesting to see the strong sales continue into December. Hasbro continued to dominate the Games & Puzzles categories and the brand’s traditional Black Friday deals would have contributed to this success. Arts & Crafts was in the top three categories for Amazon UK Toys in units, selling over 4.5m units across Q4.
Average Selling Price (ASP)
Over the last 12 weeks, the average selling price (ASP) of toys on the UK marketplace stood at £26. This midrange pricing strategy appears to resonate well with consumers, striking a balance between affordability and value. In Germany, the ASP stood at €45. The Building and Construction category was dominated by Lego, however the ASP in this category surpassed any others at £58.
Top search terms and emerging trends:
In November, the top search terms in the toys and games category revealed fascinating insights into consumer preferences. Lego and Barbie maintained their perennial appeal, while searches like "elf," "Squishmallow," "board games," and "Pokémon" gained significant traction. The diversity in search terms highlights the broad interests of consumers, creating opportunities for both traditional and innovative toy manufacturers.
One standout trend that emerged during the peak period was the surge in Plush Toys. Weekly sales in this category jumped from an average of 1.6m to an impressive 4.5m over the peak period. Despite the high demand, the category remains competitive, with the top seller, Squishmallows, holding the strongest share.
Fake Friday the new Black Friday?
We also observed a rising trend known as Fake Friday, occurring on the Friday preceding Black Friday. Fake Friday has gained prominence in the UK over the past few years, serving as the day when deals typically kick off on Amazon. Consumers may perceive it as Black Friday or simply choose to start shopping for deals early. This was notably evident in the UK, where 'Black Friday Deals' became a trending search term at least a week before the main event.
Given the heightened activity on Amazon during the Black Friday period, brands and products run the risk of getting lost amid the multitude of promotions and discounts. Brands that initiate their deal discounts as early as Fake Friday might discover a viable approach to success, considering data indicates a surge in traffic on this day.
What should we expect to see in 2024?
As more brands are compelled to engage in self-service operations on Amazon, without direct access to Amazon representatives, it is crucial to formulate a well-structured strategy for driving profitable growth on the platform, whether operating as a Vendor or Seller.
Given the persistent challenges related to Amazon's profitability, brands involved in 1P transactions with Amazon must adopt a comprehensive perspective of their market share within their respective categories. This understanding becomes instrumental in enabling vendors to grasp the significance of their brands and products to Amazon, proving advantageous during annual negotiations.
A pivotal element for success on Amazon involves investing in Amazon Advertising, coupled with a meticulously planned funnel of activities. Brands that have already implemented cohesive Amazon Advertising strategies and established strong brand awareness are poised for continued success in navigating the platform.
