Allegedly

Over the past few months, we have written fairly extensively about Amazon’s new way of working with distributors, whereby the online giant appears to have made them the primary scapegoat for the (perceived) lack of margin from the toy channel. Of course, it’s far easier to ‘have a go’ at distributors than it is to pick on major global toy companies – even computer algorithms aren’t that stupid. But in doing so, is Amazon about to shoot itself in the foot?

According to a few distributors I have spoken to recently, the common sense work-round that had been proposed – that distributors simply needed to provide reasonable proof that they had been appointed as the exclusive distributor by the brand owner – is apparently not working in practice. One distributor who only a matter of years ago was a platinum supplier to Amazon received a terse, impersonal ‘termination of business relationship’ email, despite providing supporting documentation to show it was the only authorised seller of the products in question in the UK. Apparently, despite accepting the veracity of the submission, the company and products in question were deemed not to “meet Amazon’s financial requirements.” Even offering a 45% discount off the retail price was adjudged insufficient, suggesting that the computer’s mind was firmly made up and it wasn’t open to any form of negotiation. From platinum supplier to zero orders …no wonder distributors are perplexed. It is as if Amazon has declared war on an entire business model, irrespective of the number of companies across the globe who feel that it makes business sense to use this approach. Essentially, the response equates to: “Sure, we accept that you are the official distributor. But so what? We don’t care.” I wonder what happened to the pragmatism and common sense that Amazon was allegedly going to apply in this situation…

I gather that the grand total of two UK retailers made the trip to LA last month – one allegedly sent two representatives (a lot fewer than the number of team members who go west in September) and the other was a grocery account with US connections. So, not exactly the full might of the UK retail spectrum – maybe talk of LA laying waste to numerous other buying trips and events is just a tad premature? Of course, it’s early days, and September very much remains the main LA event – the April trip may grow in years to come, but I wouldn’t write off all the other established alternatives just yet. That said, they do need to realise they are very much in a battle for survival…

A few senior people are on the move: I gather that Schleich UK country manager Thomas Randrup left the company at the end of last month after five years at the helm, following former Schleich marketing manager Paul Dearlove – who departed last month – in seeking new opportunities. In addition, Rubie’s MD Mike O’Connell announced on LinkedIn a few weeks ago that he would be stepping down from the role. I understand that Pete Warton from Rubie’s Australia will be taking over the position on an interim basis…

Buried deep within the recent Sainsbury’s results was the news that Argos sales rose by 9.3% last year. There is no individual category breakdown, so no-one knows whether that increase applied to toys, but if nothing else, it offers some vindication for Argos’s current strategy. Whether that will be enough to make all toy suppliers feel more positive towards Argos is another matter, but internally, this performance will certainly give the team confidence over the direction of travel.

The news that Mattel and Hasbro will be collaborating by creating new ranges based on each other's iconic IP raised a few eyebrows in the toy community, as it is the first time the two companies have worked together in this way. Some people even wondered whether this historic agreement was the precursor to something far bigger – namely a merger or acquisition between the two parties. I guess you can never say never where corporate America is concerned, but personally, I just don't see that happening any time soon. Of course, I may be completely wrong about that (there are never any guarantees where shareholders are concerned), but I have spoken at length to senior people from both organisations in recent months and it feels like they each have solid courses to follow and there is definitely a belief that better times are ahead. Mattel is confident that the Barbie movie will give a massive boost to the brand, while Hasbro’s Blueprint 2.0 strategy is very much underway, a plan which company leaders strongly believe will transform the company’s fortunes in the coming years. Instead, I see this new licensing arrangement more as a sign that the bloodymindedness of the past is giving way to a more pragmatic, common sense approach, as new management teams take the helm at both companies. The animosity between the two companies was real in the past – who can forget the badge of Action Man throttling Barbie which was worn by Hasbro staff when a merger was on the cards previously. However, it could equally be said it was a kind of confected rivalry that became blown out of all proportion (US execs not talking to each other in social settings for example). The UK arms of these companies haven't behaved like that for many years – they work together in perfect harmony on the BTHA, TIE, and various toy safety, charity and media committees. Anyway, there are way more than just two big global toy companies these days (Lego, MGA, Spin Master, Moose, Jazwares etc), so their competition is far broader than it used to be, and I think this tie-up makes perfect sense for both parties. It is good to see the invisible barriers of the past being broken down and from where I am sitting, I see no reason why this can't be developed even further going forward. Why would you not sign the best licences for your brands, or agree licensing deals with the best partners – wouldn’t that just be cutting your nose off to spite your face?