Toys is a major product group for Amazon, pulling in an estimated $4.5 billion in US sales during 2017, a increase of 12% compared to 2016. By Amazon’s standards, 12% growth is relatively low, but this occurred in a year when total US toy sales stagnated. Major brick-and-mortar retail chains declared bankruptcy while Amazon’s market share kept growing and is now responsible for roughly 1 out of every 6 dollars spent on toys in America.
In Europe, Amazon’s sway is even more pronounced. In Germany, where total toy sales flatlined in 2017, Amazon’s sales grew by 42%. In France, where total toy sales actually declined last year, Toys on Amazon grew by a whopping 78%. For brands, the message is loud and clear: if you want growth, you’ll find it on Amazon.
Now let’s look at what’s driving this growth.
The major trend on everyone’s mind is robotics. In 2017, the Robotic Toys category grew by 32%. Though it remains a relatively small category with only $50 million in estimated sales, last year’s two bestselling toys were both intelligent robots for kids: Cozmo by Anki and LEGO Mindstorms EV3.
Yet, for as much as Robotic Toys is said to be a new and exciting category, it’s surprisingly stagnant. Both of the top Toys have been bestsellers for multiple years now; Cozmo was the #1 Toy in 2016 and Mindstorms was #2 in 2015. There are other brands on the market such as Wonder Workshop, but for the most part the category’s sales are overwhelmingly concentrated on just two items.
Interest in them is beginning to wane. Sales of Anki’s Cozmo began to trail off before Christmas and it has now disappeared from the bestsellers list. LEGO Boost, a newer robotic toy from the maker of Mindstorms, ranked as the #4 Toy during December. This suggests an opportunity for brands to compete in this space; there is consumer interest in new robotic toys, but there are too few options available.
A surprising contender took over from Robotic Toys during the 2017 holiday season: Nerf. The nearly-50-year-old brand managed to beat both Anki and LEGO and take the top two bestsellers spots in December. The #1 item (N-Strike Elite Strongarm Blaster) ranked as the 3rd-bestselling Toy of last year – up from #209 – and the #2 item (Lazer Tag Pheonix 2-pack) maintained its #2 position during January 2018.
This is consistent with an overall trend toward active play. The fastest-growing Toy category of 2017 was Outdoor & Sports Toys with 46% growth led by the Nerf gun and the Little Tikes Jump ‘n Slide Bouncer (#4 Toy of 2017). This is the countertrend to the touchscreen technologies that have begun to dominate the toy industry, and suggests that parents are making an effort to encourage more physical activity.
Though the Anki Cozmo also ranks as the #1 item in the UK and France, LEGO is a much more dominant brand in Europe – especially in Germany where Cozmo doesn’t rank and each of the three bestselling Toys come from LEGO’s Technic line of mechanic construction toys. LEGO’s leading robotic toy, Mindstorms EV3, ranks highly in all three countries but is consistently beat by the LEGO Technic Porsche. The brand’s winning strategy is to provide toys geared to every age group, from baby blocks to Boost (recommended ages 7-12) to the Bucket Wheel Excavator (recommended ages 12-16) to the Porche 911 GT3, a complex, 2700-piece scale model marketed to ages 16+.
Many brands, including LEGO, are finding a success in Europe with play-and-learn toys and toys designed to encourage creativity. VTech earned two top spots in the UK with pink and blue versions of their KidiZoom Camera, which claims to “turn your child into the family photographer.” The only non-LEGO top 5 item in Germany teaches kids the alphabet. The #4 Toy in France is an interactive device which guides kids as they create their own fantasy story.
Recognising this consumer demand, Amazon has partnered with British Science Week to re-launch the ‘STEAM’ store, a dedicated online marketplace for Science, Technology, Engineering, Arts & Mathematics tools marketed to children. This is a unique opportunity for brands to populate Amazon’s latest dedicated marketplace with their products and reach a new audience.
Looking beyond 2017, Toy sales during January on Amazon.com point to a surprising trend: the return of traditional toys. The latest craze is a new take on a traditional doll. The L.O.L Surprise! is a small doll that comes in a seven-layered egg, with each layer containing an accessory for the doll. The Big version – which is really a giant egg containing 50 “surprises” – was released on September 29th and ranks as the #1 Toy of January 2018, helping to drive 23% growth in Dolls/Girls Toys in 2017.
This is joined by other “analog” toys such as Exploding Kittens, a family-oriented card game by the makers of the webcomic The Oatmeal, and Dust! Sweep! Mop! from Melissa & Doug’s Let’s Play House line of toys, which encourage young children to role-play basic household chores. Of the top five Toys on Amazon in January, four are strictly non-digital and none involve robotics or touchscreen technologies.
Whether this signals a major shift in the Toys market or is just a temporary lull in the dominance of robotics and screens is yet to be determined. But it does demonstrate a strong consumer market for many different kinds of toys and that brands in any category can reach an audience and find success on Amazon.
Finally, in 2017 Infant/Preschool climbed from #3 to become Amazon’s largest Toy category with $650 million in estimated sales. This is easily explained: the oldest millennials are in their late thirties and the youngest are graduating college, so Amazon’s core demographic is now having children in record numbers. This generation prefers shopping online, and in 2017 44% of all online sales in the US took place on Amazon. So, with a booming infant population and parents who love Amazon, the result is strong sales in the Infant/Preschool category.
In 2018, there are several key opportunities for toy brands. Robotic Toys attract a great deal of consumer interest and there are few significant competitors in that space. Toys that encourage learning and creativity are becoming much more important to today’s parents. Healthier alternatives to screens, such as outdoor activities and “traditional” toys, are experiencing a revival. And with millennials as today’s major consumer group, brands that invest in Amazon can find a huge audience waiting for them.
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