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Toy manufacturers cut supply to marketplaces

By Chris Dawson June 25, 2013 - 11:39 pm

BigJigs ToysAbout 18 months ago I found the perfect gift for my nephew, it was a BigJigs wooden railway train with alphabet letters so that I could purchase a train with the carriages spelling his name.

I’d have never found these toys on the high street – I found them on notonthehighstreet.com as I was online looking for a birthday present. No high street retailer lost out because I purchased them online, I’d have bought something else online if I hadn’t seen them.

They’re still available for sale on marketplace, but not for much longer, not because they don’t make a perfect gift but because the manufacturer BigJigs Toys Ltd has decided to cut off retailers who sell on marketplaces.

The company said “Bigjigs Toys have reiterated that they are no longer willing to allow their brand to be devalued by the price wars on these third-party websites and will continue to champion and support their High Street retailers“. The ban came into effect on the 1st of June.

Apparently the company is now monitoring marketplaces and any retailers found to be listing will have their accounts blocked from future purchases.

The Puppet CompanyNow the The Puppet Company has followed BigJigs lead and their ban will come into effect on the 1st of August.

A director of the company says “We have received numerous complaints from customers about our puppets being offered on third party websites such as Amazon and eBay, which is creating problems for many of our accounts both small and large. We also receive regular complaints from shops telling us that customers are checking prices online, standing in their shop using their smart phones and then buying puppets online when the shop cannot price match“.

The Puppet Company say that they’ve already closed Amazon Retail’s account so not even the mighty giant of online retailing will be able to supply their products. They added “Whilst we cannot prevent sales on third party websites such as Amazon, we can choose with whom we wish to trade“.

If more toy manufacturers follow suit it could be a tricky Christmas for parents this year. Whilst the high street might be the traditional place for shopping, for many it’s simply easier and simpler to do the bulk of their Christmas gift hunting online. Out of stocks and endless queues are simply not an attractive option.

What really surprises me is not that two major UK toy companies would cut off discounting retailers, but that neither of them have had the gumption to open their own eBay and Amazon stores and if it’s simply discounting that’s the problem they could sell their products direct to consumers on the marketplaces that their customers love to buy on.

Yes selling direct on marketplaces might still be a conflict and unwelcome competition for their high street retailer clients, but then both companies have websites on which consumers can buy their products at full retail anyway.

What do you think both as a consumer and as a retailer? Do you agree with manufacturers blocking marketplace sales or do you think it’s a mad decision?

Edited to add:

BigJigs have been in touch to tell the story from their side. They have some interesting points, so make sure you also read BigJigs respond to cutting Internet only supply

  • peter stanley
    4 years ago

    Sounds like they are cutting off their nose to spite their face as the saying goes.
    Surely their job as a manufacturer is to sell as much product as possible to make as large a profit as possible, so as long as they are selling their toys wholesale at the price they want why should they care what the retailers / online sellers are doing. High Street stores compete against one another on price also it’s not just online sellers. Crazy.

  • davelovesbay
    4 years ago

    Makes perfect sense. If you have retailers willing to display, demo and provide 1:1 face to face sales with customers. That increses the perception and retail price of your goods and brand. Allowing you to focus on quality and design.

    Why would you want to sell to some ebay reseller gimp who’s only trick is to cut the price by 0.50p a time untill no ones making a profit. Wise move….

  • Weeze
    4 years ago

    Yep, doesn’t surprise me, I know some wholesales who won’t supply people who trade online. Same reason, devalues the brand.

  • Stuart
    4 years ago

    I think it is a good idea and I welcome it, some items on places like Amazon it’s just all about price, well what about service? No one is going to make money when it’s a race to the bottom, not even the wholesaler as it would lose customers and the ones selling it at silly prices are not going to last long.

    With regards to them selling themselves on a retail basis, I have never agreed with this. If you are a wholesaler, you are a wholesaler, if you’re a retailer you’re a retailer I can’t agree with you being both. I have dropped many companies for doing the same thing. We ourselves looked at wholesale on one of our brands, but decided to stick to just retailing instead.

  • 4 years ago

    I think they have got this wrong, but not completely. Amazon and Ebay are such massive marketplaces to sell on that they will lose sales of their product. Unfortunately, the laws in this country limit certain things to do with prices, but MAP is used commonly elsewhere and it is essential that this country allows it’s use.

    If MAP was used then it could be on any marketplace in my opinion.

    At the end of the day if you have a product or brand that is worth wanting for a retailer, then it should only be made available to retailers that commit to stock holding and support the brand – whether this is in store or on-line. Certainly in our industry the manufacturers gave access to the products to too many people and websites become catalogues of thousands of products. I see their point, but I think they could have done it differently.

  • admiralhardinge
    4 years ago

    How much is a brand really worth? Not a lot if you only allow high street resellers, because you are missing out on a huge market that simply won’t go and buy on the high street. High street declines will not be reversed, so clever marketing people are following a strategy that sells to an ever decreasing market. Way to go!

    If I was an investor in one of these companies I think I would now be feeling very nervous about the long term prospects.

    In the end the EU will look at this because it becomes a restriction on trade for internet sellers, and damages a burgeoning part of the European economy.

    You would think by now we would all have learnt from history that any attempt to shore up a dying or declining market is doomed to fail in the long term.

    I’m not unsympathetic to the problems, but competition is competition. If high street isn’t working, get out, and develop your internet capability. It is really no different to some products I sell which are sold on ebay by Chinese and Korean sellers at very attractive prices, with buyers not clearly seeing they may then have to add VAT, duty and handling by Royal Mail to the headline price. I could moan because I can’t compete but it doesn’t help me. I’ve got to either get out of that market or find a way to compete.

    These oversensitive brand value protectors should be thinking the same way.

  • Mark
    4 years ago

    “Bigjigs Toys have reiterated that they are no longer willing to allow their brand to be devalued by the price wars on these third-party websites”

    To have a war, there needs to be at least two sides. Why not supply just 1 responsible & sensible retailer to represent your brand on marketplaces? That way price wars won’t happen, but your brand will still be represented.

    It’s sad to see that while they’re are ‘championing the high street’ they’re excluding a rapidly growing group of people who only buy on marketplaces. At the end of the day, not letting people buy your stuff how they want to buy it, is a recipe for disaster.

    • Stuart
      4 years ago

      In theory you would think this would work and we actually agreed this very thing with a supplier, we would be the only seller on Amazon. However other people, once we made the listing, flocked to sell the product on Amazon and the supplier just could not stop them all…how can you?

  • 4 years ago

    I suspect that it is a serious error. If there is a demand for these type of products and because the Manufacturer/Wholesaler will not supply to Online Sellers the next step will be that a Competitor enters the Market. The competitor will produce a similar product and will sell to Online Retailers who will sell in large numbers and still take away the Sales from the High Street Sellers that this policy is meant to Protect.

    • peter stanley
      4 years ago

      Yep, as an example look at the problems Dyson are having with the Chinese manufacturers and their expensive fans it won’t take long for them to do it. Having said that the Dyson fan price is very expensive.

  • Anon
    4 years ago

    There are some “big name” brands on eBay and Amazon that the manufacturers have banned from being sold. In my experience this means that licensed retailers lose out on a slice of a very large market area whilst 3rd parties seemingly continue to sell their stock without reprimand.

    In the ever growing world of e-commerce, blocking these platforms is staggeringly backwards in my opinion.

    I would agree with other posters that part of the blame lies on allowing too many businesses to sell a certain product, causing this race to the bottom. However banning all sales on a highly successful marketplace is madness and will surely only damage the brands sales in the long term. I actually hope this does happen so that these companies may reverse these decisions.

  • paddy
    4 years ago

    They may want to consider what one of my suppliers does regarding discounts. If you are an internet only dealer you get a 22% discount off list price. If you have a warehouse or physical presence that people can come and view the products you get a 35% discount. This means that I can consistently beat any internet price for someone that comes into the warehouse and still make a decent margin on online sales.

    • Steve (UK online retailer)
      4 years ago

      And how would that work if you have both a high street and online presence?

  • Steve (UK online retailer)
    4 years ago

    This is actually all a bit misleading. Have a look on Amazon and you will see that BigJig have decided to use FBA to sell their own products direct to the public. They have just simply cut out the middleman.

    Their brand therefore will continue to be repesented online and they will have direct control over the price. Easy.

    As a sidenote, I wish more brand owners would refuse to supply Amazon themselves. They are the biggest guilty party when it comes to devaluing a brand. They don’t care about the brand and are prepared to even take a loss on sales and compete with their own third party sellers. It is all about being the no 1 retailer and acquiring customers whatever it takes.

    Steve

    • yvonne
      4 years ago

      I agree Steve I have built up a nice little T/O on three brands over the last three years all of which have opened a store front under a different guise and are selling direct to the public. That’s me bumped out! Also Amazon are the biggest guilty party re driving down the price,I know of products that they are selling at cost.

  • 4 years ago

    I think this is the wrong move. If there is a demand online for these types of products it wont take long for another manufacturer to start supplying the market with similar/identical products.

  • Merlo
    4 years ago

    We sold a lot of Bigjigs but we have decided to no longer stock it due to this ban. We’ve already had a phone call asking us to remove our stock from Amazon and they seemed surprised when we said we wouldn’t be buying anymore therefore we would continue to sell through. They sent out new terms and conditions in January to ban third party selling but their T&C’s on their website have never been changed so I’m not sure that legally they can enforce it due to their wording.

    It’s a strong brand and selling by FBA is a good short term move but in 1-2 years time they may well regret it. We’re busy looking for another supplier of wooden trains etc now to replace the business.

  • Dave
    4 years ago

    We had the letter from The Pupper Company a couple of weeks back and it did annoy me a bit when i read it. We are a responsible online retailer. We have a 30% margin. We dont get into price wars yet we are being told that as of 1st August they will no longer supply us.

    It amazes me some of the ideas these suppliers come up with (especially ones in the toy market). They seem to really oppose online retail. We were pretty much chased off the Playmobil stand at a toy show when we said we were online retailers.

    Online retail is still growing at an alarming rate and is set to continue. The high street as we all know is on the decline. Not because its rubbish but because of the change in lifestlye and the digital age. The population of the world is NEVER going to suddenly wake up one morning and think…lets stop buying online and go back to the high street. Shopping just evolves with time like everything else and at the moment the easiest way to do it is online. So why on earth do suppliers want to walk backwards?? Its beyond me!

  • Jimbo
    4 years ago

    There is more to ecommerce than marketplaces. To not manage your brand + customer relationships would be foolish.

  • James
    4 years ago

    Bit late to the party here, but I’ll have my say. As you can see its a subject close to my heart!

    Lets start with the Industry. The Toy industry is pretty old, that also applies for management at a lot of these firms and also the owners of the shops who are complaining. Before we even start on marketplaces we have a prejudice against online selling.

    So we all agree price cutting can be a problem. But will stopping marketplace sales fix the issue? I dont think so.
    Suppliers need to realise that its not just a big competition between eBay and Amazon its an competition between all selling mediums.
    We have standalone websites dropping prices to draw customers away from the marketplaces, we have shops dropping prices to draw people from retail parks and then we have multiple chains giving toys away on 3 for 2 deals every other week. So in their own right marketplace sellers are battling for their own piece of the cake.

    Im in no way suggesting that marketplaces are not guilty though, there is massive price competition but this is just the nature of the beast (imagine 5 shops in a row on the high st selling the same thing, dont tell me they’d all sell at RRP!)

    From my own experience Id happily say that a lot of price cutting on marketplaces stems from Bricks and Mortar shops themselves as they start to dabble on eBay & Amazon as they realise their business is missing out. When checking products we sell on eBay 9 times out of 10 the cheapest sellers are small accounts with only several pieces of stock. Digging deeper you generally find its a shop hiding their identity – so they have uploaded a few items on eBay and are willing to accept a low margin as its pretty much a bonus on top of their shop work. (Well I say shop work, have you had any advantage in a shop recently? Has the hungover teenager even spoken to you?!)

    So often these “poor” Bricks and mortar stores are their own worst enemy and are a big contributor to price cuts on marketplaces overall.

    Then most importantly we have the supplier. I firmly believe that price wars and this “Devaluing your brand rubbish” goes back to the supplier, they need to monitor and regulate who they supply much better. Its all too easy to set up new accounts and then start complaining about how they are selling afterwards. Do you hear every other brand in the country complaining? this is because they were mindful of who they supplied in the first place and now continue to monitor them and take action when necessary.

    IF suppliers can identify troublesome sellers and clampdown then we’d have less price wars – are they so naive that they believe every seller WANTS to make single figure margins?

    As far as I am concerned suppliers are the only people who can do anything about the whole issue as ultimately they control who has their product. The sooner they realise this the better – removing marketplaces sellers is an easy excuse and may help in the short term for marketplaces only. But for marketplace sellers I am concerned that it will be used as an easy excuse to cut the middle man.

    Lets see how many other Toy suppliers now follow suit, I think there are many other smaller brands mulling over it at the moment.

    • Alex
      4 years ago

      An excellent summary and rings true with my 20 years experience.

      I see the Toy companies selling to absolutely everyone, we are flooded with bedroom and garage business. Small bricks and motar shops with amazon accounts.

      We see managing directors and the wives of suppliers with amazon marketplace accounts.

      we see wholesalers and suppliers in the same retail space as us, which makes it almost impossible to compete on price.

      The vast majority of sellers we see in our space (Toys) on Amazon, have not understood how the pricing works and many sellers are selling at a loss.

      The problem for these two suppliers is that puppets and wooden train sets are not unique, added to the fact that consumers now know they will have to pay more for their products.

      My gut feeling is that this is a bad move for them, they underestimate the value added in the chain by online retailers and over estimate the value of their goods in the market place.

  • Martin Davies
    4 years ago

    Understandable that suppliers get annoyed at how the goods are dealt with. A few idiots trying to sell all their stock quickly and the sellers not using those sites lose sales. If xxx retailer with a chain of shops and a good website is not selling the stock very quickly they will drop it in favour of other stock. So supplier can lose out in a big way without having sales to compensate.
    Not uncommon these days for suppliers to limit the sites or prices – true retailers do not have to stick to those they also don’t have to be resupplied either.

  • Gerry007
    4 years ago

    .
    This seems to be a follow on from the BRC comments the other day:

    http://tamebaynew.wpengine.com/2013/07/online-sales-tax-still-on-the-brc-table.html

    Sue said many times ‘there is always some seller who will chase you down to the bottom’….
    How very true.

    Manufacturers could always control things by stating a minimum RRP. If they supply someone & they go below a certain level then they are out. Simply really.

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