1THE ECOMMERCE TOY S TORY

The eCommerce Toy StoryHow to win in the new Amazon-dominated toy market

2

• Part 1: The state of play for eCommerce

• Part 2: What makes Amazon such a disruptor?

• Part 3: How to accelerate your toy sales online

• 5 key takeaways

About the author

Andrew supports Profitero’s customers, working closely with

them to drive their eCommerce performance across all areas

of the digital shelf. Prior to Profitero, Andrew spent 13 years

in Category Management and Shopper Marketing roles

at Mars, McCormick and Tata Global Beverages. Andrew

is a frequent speaker at industry events, including Kantar

Consulting and IGD, and his insights are regularly featured in

retail industry press.

What you’ll learn• What’s driving toy category growth online

• How doing business on Amazon is different than brick and mortar

• The importance of promotional events like Black Friday and Cyber Monday

• Where you should focus efforts to fast track your eCommerce performance

Contents

Andrew Pearl VP Strategy &

Insight, Profitero

The toy retail landscape changed dramatically in

2018 with industry giant Toys “R” Us announcing it

was closing all of its stores. While a long languishing

company, its sudden exit from the market left a

vacuum in the toys & games market — one that looks

set to be increasingly filled online.

eMarketer predicts that eCommerce toy sales will

grow from 31.4% of U.S. retail sales in 2019 to nearly

half (47.9%) by 2023 — an increase influenced largely

by the closure of Toys “R” Us.

Amazon is now well-positioned to take advantage

of the $12 billion in annual sales that Toys “R” Us

once generated. A Profitero survey conducted in May

2019, surveying 1,000 respondents in the U.S. and

U.K., reveals that Amazon is second only to Walmart

as the top destination for U.S. shoppers who had

bought from Toys “R” Us in the previous 12 months;

for Toys “R” Us shoppers in the U.K., Amazon is now

viewed as the #1 choice for toys.

This playbook outlines strategies and tactics

designed to help toys & games manufacturers win

in this new Amazon-dominated toy market, and

guidance to help you prioritize the levers you need to

pull to succeed on the digital shelf.

Introduction

3THE ECOMMERCE TOY S TORY

Walmart

Amazon

Amazon

Argos

Target

Smyths Toys

Specialty toy store

Supermarket

Other retailer

Other retailer

Specialty toy store

43%

40%

33%

27%

17%

23%

6%

5%

1%

3%

1%

Top retail destination for U.S. shoppers who purchased toys from Toys “R” Us in last 12 months

Top retail destination for U.K. shoppers who purchased toys from Toys “R” Us in last 12 months

Source: Profitero consumer survey, May 2019; n = 1,000 per market

Source: Profitero consumer survey, May 2019; n = 1,000 per market

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PART 1. The state of play for eCommerce “The biggest thing we felt with Toys “R” Us being removed from the market was shelf space. It really was the only national retailer that we could showcase the range of products that Playmobil has to offer. What does this do? It actually pushes customers online where the range is more comprehensive.”

Alf Blohm Sales Manager,

Playmobil

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eCommerce growth is outpacing brick-and-mortar by 3:1

According to Euromonitor, the only channels with

positive share growth in the last 10 years for U.S. toy

sales have been eCommerce and hypermarkets (aka

supercenters in the U.S.), highlighting the importance

of price and product variety when deciding where to

shop for toys.

Analyst firm UBS suggests that online sales of

toys are growing 2-3x faster than brick and mortar,

while eMarketer forecasts that the toys & hobby

category will see a 23% growth on Amazon in

2019. Euromonitor’s analysis further predicts

that eCommerce will be the only channel to see

continued toys sales growth through 2022.

U.S. toy sales by channel share (2007 - 2022)

Source: Euromonitor International

0%

10%

20%

30%

40%

2007 20132010 2016 2019 2022

eCommerce Department stores Toy & hobby HypermarketsMass merchandisers

Shar

e

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3 in 4 U.S. online shoppers start their search for toys on Amazon

The results of Profitero’s consumer survey reveals that

toy shoppers have largely switched to a digital-first

mindset when shopping the category:

• Amazon is the go-to destination for consumers

at the start of their purchase journey — whether

that’s online or in-store. When shopping for toys

online, 77% of U.S. consumers and 70% of U.K.

consumers start their search for toys on Amazon.

• Online is the primary way shoppers are buying

toys today: more than two-thirds of U.K.

consumers (70%) and more than half of U.S.

consumers (56%) say online is their preferred

channel to shop.

• We expected a large number of shoppers to

research products online but then purchase in-

store, particularly for a category like toys, where

kids and parents alike may want to try it before

they buy it. But, this doesn’t seem to be the case.

Our survey shows just 16% of U.S. consumers

and 14% of U.K. consumers prefer to research a

toy online before buying in a physical store.

The ability to see, touch and play with a toy before

buying is clearly less important versus the online

benefits of convenience, price and assortment —

and therefore less of a differentiator and protective

moat for brick-and-mortar retailers. It could be one

of the reasons why Toys “R” Us lost influence, and a

warning sign to other brick-and-mortar-only retailers.

When shopping for toys online, where do you first start your product search?

Which of the following best describes your shopping behavior for toys?

Source: Profitero consumer survey, May 2019; n = 1,000 per market

Source: Profitero consumer survey, May 2019; n = 1,000 per market; Note: Respondents could only select 1 shopping preference

Amazon

Prefer to shop for toys most often online

Google

Prefer to shop for toys most often in-store

Other online retailer

Prefer to research online but purchase in-store

Other search engine

Prefer to research in-store but purchase online

77%

18%

2%

3%

51%

28%

16%

5%

70%

24%

2%

4%

62%

17%

14%

8%

U.S.

U.S.

U.K.

U.K.

7

Amazon is the beast driving toy category growth online

As with nearly every other category it has disrupted,

Amazon holds the lion’s share of online toy sales.

Analysis from Jumpshot across four major toy brands

— Nintendo, LEGO, Hasbro and Mattel — reveals

that Amazon captured more than 83% of online sales

for each of these brands in 2017.

Jumpshot’s Retail Winners, Losers and Amazon report shows that Amazon continues to dominate

the toys category online, representing 81% of all U.S.

online transactions in 2018.

In the U.K., Argos is currently the top toy retailer with

a 12% market share, followed by Smyths and Amazon,

both holding a market share of 9.6%. GlobalData predicts Amazon will soon overtake Argos as the #1

toy retailer in the next five years due to its wide

range, low prices, and fast and affordable delivery

options.

Amazon dominates online sales of 4 major toy brands (based on 2017 online sales)

Source: Jumpshot Inc.

THE ECOMMERCE TOY S TORY

Amazon Toys “R” Us Walmart

89%

5% 6%

83%

11%6%

85%

13%

2%

92%

2%6%

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“With more options than physical stores can provide, and customer reviews to help narrow those options, people are choosing the convenience of digital commerce for their toy shopping — especially when prices are competitive and shipping is low-cost. While retailers of all stripes will have opportunities in this channel, it is Amazon that is best positioned.”

Source: Euromonitor as quoted in Global Toy News, December 2018

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PART 2. What makes Amazon such a disruptor? Nearly everything about Amazon — from its endless assortment and ultra-competitive pricing to dynamic merchandising and next-day Prime delivery — is quite different than any other retailer you’ve ever encountered.

Doing business on the Amazon platform really does require a new way of thinking to succeed.

On the following pages, we uncover what really makes Amazon such a disruptor for the toys category.

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1. Shoppers have (a lot) more choice on Amazon

Traditional retailers, such as Walmart or Argos,

provide a limited assortment of products for the

shopper to choose from. If we take the example of a

popular toy keyword such as “construction toys” on

Amazon, the search results return more than 50,000

listings. This compares to the 13 SKUs available in a

local B&M Walmart store in Rogers, Arkansas.

What this means is your list of competitors multiplies

exponentially on Amazon. It also means that

competitors winning on Amazon may not be the

same ones you’re competing against in traditional

retail. Increasingly, they may also be an Amazon

private label brand, for example, this AmazonBasics

toy storage organizer.

So, cracking the code on competing with the long tail

— e.g., the importance of search placement, winning

page 1, and other execution-oriented tactics covered

in Part 3 of this playbook — becomes increasingly

paramount. “Amazon is a very different retailer. They don’t curate a range to present to the consumer — they allow the consumer to browse the full product range and make their own decisions on what they are going to purchase. On one hand, that’s great if you’ve got Playmobil fans who want to easily go and find those products. However, the competition is much higher for consumers that are simply browsing.”

Alf Blohm Sales Manager,

Playmobil

Track Fast Movers. These are the ASINs that are moving up fastest on the list of best selling items in your category (Profitero offers free monthly reports to help you track them).

Look at the biggest brands in terms of sales & share of sales in your category and within those brands identify their top selling ASINs. Which products are growing faster than yours at the moment?

Always be aware of the ASINs that are showing up on page 1 on search results for the top keywords in your category.

1 32 4

PRO TIP:

“How can I tell who my serious competitors are?”

Not every competitor in the long tail of Amazon is a

threat. Some ways to prioritize where to focus:

11THE ECOMMERCE TOY S TORY

Look at who is bidding for your own keywords. These brands are clearly gunning for you and likely competitors to watch.

12THE ECOMMERCE TOY S TORY

2. If you’re not online, smaller challenger brands will eat your lunch

One of the most common comments we hear from

our clients is: “Who are these challenger brands

selling online? I just don’t recognize them from the

brick-and-mortar world.”

That’s because the virtual aisles online are indeed

endless. Low barriers to entry for selling on Amazon

empower small brands to reach more shoppers and

defy the distribution moats large brands enjoy at

brick-and-mortar stores. These challenger brands

could easily steal away market share and gain ground

if you’re not there — or even if you are, and not

paying attention.

There’s no way around it, you will find a proliferation

of small challenger brands and low-priced imports

making a play for your category on Amazon — this is

very different than brick and mortar.

This example shows two challengers appearing on

page 1 of Amazon’s search results for “toys.”

It also underscores the importance that (1) not only

do you need to make your products available on

Amazon, but (2) you must clearly define your value

proposition in light of the increased competition, and

(3) figure out how to optimize your digital shelf so

shoppers can find and choose your brand and not

the competitor’s.

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3. The Amazon Marketplace reacts quickly to market demand

Amazon’s third-party (3P) marketplace is a dynamic

beast and opens up a whole new set of challenges.

Take the example on the right in the U.K. — the

classic game of Monopoly. Besides the product being

sold directly (1P) on Amazon.co.uk, there are more

than 40 different 3P sellers offering the same item.

Consequently, on any given day, one of them can

drop the price to gain the Buy Box and steal away

some of your sales.

Inventory issues like out-of-stocks are also a huge

deal on Amazon, playing right into the hands of 3P

sellers. If you run into stock issues (which frequently

happens on Amazon), there’s likely a 3P marketplace

seller waiting to pick up the slack. This underscores

the importance of having the ability to regularly

and routinely monitor your assortment and the

marketplace situation for your products. If you don’t,

you’re in danger of losing control of your distribution

and sales on Amazon.

It’s equally important to pay heed to the risk of

counterfeit toy products. Inc. magazine reported

a story of a fake popular child’s pacifier, the

Mustachifier, which was being manufactured in China

and sold to U.S. consumers via Amazon’s third-

party marketplace, is a case in point. The genuine

manufacturer was only alerted to the counterfeit

product by consumer reviews where the product

was noted to be defective. They alerted the issue

to Amazon to remove the products but would have

been blind if not for careful monitoring of consumer

feedback.

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4. Marketing & merchandising dynamics change daily on Amazon

As an online business, Amazon’s competitive and

marketing dynamics change more quickly compared

to a brick-and-mortar retailer.

For example:

In a brick-and-mortar store, promotions have to be

planned months in advance. But Amazon has its

own advertising program built into its platform that

virtually allows brands to sponsor keywords and

bump up their search position, and sales, at will. You

can run a promotion or drop a coupon and affect a

change on Amazon anytime you want… but guess

what? So can your competitors!

Unlike brick-and-mortar retailers, Amazon has the

ability to de-list products overnight if they become

unprofitable to ship, which is known as CRaP (Can’t

Realize any Profit), even if they sell at high volumes.

Amazon also can designate items as “Add-ons”

or “Prime Exclusive,” reducing their visibility and,

ultimately, sales. In fact, we saw one Profitero

customer lose 20% of sales in one week due to some

top-selling products becoming Prime Exclusive.

These kinds of ongoing dynamic activities can

massively swing sales and market share away from —

or toward — your favor.

You need to be on your game 24/7. And most

importantly, you need analytics to help you

understand which factors are moving your sales &

share up and down most. Otherwise, how can you

prioritize where to focus?

Example of a product designated as an Add-on Item by Amazon

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5. Holiday is make-or-break for toys online

Many toy purchases are event-driven, with the all-

important holiday season delivering the lion’s share

of sales for the category. Amazon announced that

customers worldwide ordered more than 18 million

toys on Black Friday and Cyber Monday combined in

2018. Profitero analysis reveals that more than half of

all toy sales on Amazon — both in the U.S. and U.K.

— happen in Q4.

Amazon.com in U.S. — Toys & games sales index 2018

Source: Profitero; Time period: Jan 2018 - Dec 2018

So, just as in the brick-and-mortar world, be sure

to stay on top of your category’s online seasonal

promotions, and the magnitude of online traffic

events like Cyber Monday.

This chart illustrates the level of sales spikes the toys

& games category can expect on Amazon.com during

the Q4 holiday season.

Index of 100 = average sales

Of the categories we studied across Black Friday and Cyber Monday 2018 on Amazon.com, the toys

& games category recorded the highest sales spike

on Cyber Monday: +3.4x the category average (index

of 343). But toys had a strong showing on Black

Friday too, with unit sales up +2.3x. On Amazon U.K.,

Black Friday was actually the biggest selling day of

2018 for the toys category.

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5. Holiday is make-or-break for toys online (continued)

Toy brands with highest Q4 2018 sales index — Amazon.com

Tier 1 brands

Tier 1 brands

Toys & games category

Toys & games category

Tier 2 brands

Tier 2 brands

Toy brands with highest Q4 2018 sales index — Amazon U.K.

Source: Profitero; Index of 100 = toys & games December 2018 Q4 sales Tier 1: Brands that make the top 25% of the sales Tier 2: Brands that make the second top 25% of the sales

Source: Profitero; Index of 100 = toys & games December 2018 Q4 sales Tier 1: Brands that make the top 25% of the sales Tier 2: Brands that make the second top 25% of the sales

100

100

176

152

168

147

159

134

142

132

140

128

475

324

408

249

404

243

305

225

288

210

17THE ECOMMERCE TOY S TORY

“For the toys category, it is imperative to have a promotional calendar in place. There are so many holidays beyond the obvious ones per marketplace that you could benefit from greatly by being more aggressive with pay-per-click and promotions.”

Stefan Jordev Advertising Director,

Bobsled Marketing

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Electronics Electronics

Tools / DIY Grocery

Beauty Beauty

Baby Tools / DIY

Health & household Toys & games

Pet supplies Pet supplies

Grocery

Toys & games

215% 298%

200% 153%

186% 104%

167% 90%

152% 83%

134% 58%

108%

52%

Prime Day sales lift vs. average daily sales of previous week

Source: Profitero; 2018 Prime Day sales indexed vs daily sales of previous week

Amazon U.S. Amazon U.K.

6. Should you play on Prime Day?

While not nearly as important as Cyber Monday

or Black Friday is to the category, it’s still worth

considering Amazon Prime Day — a manufactured

sales event from Amazon which many consider a

mid-year sales-boosting opportunity during a

typically slow time on the retail sales calendar.

Although the sales lift we saw on Prime Day 2018

may not be as dramatic as some other categories

such as electronics or tools & DIY, the toys category

still saw a sizeable increase. Profitero analysis of the

toys category reveals a 52% sales uplift on Amazon

U.S. and 83% sales uplift on Amazon U.K. compared

to the average daily sales of the previous week, and

was the top-selling day of the year (off-season) in

both markets.

What’s more, a Profitero survey we conducted of

Prime members who plan to shop deals on Prime Day

2019 reveals that 40% of U.S. consumers and 39%

of U.K. consumers plan to purchase toys & games

during this year’s event.

19THE ECOMMERCE TOY S TORY

6. Should you play on Prime Day? (continued)

Promotions can certainly pay off big for brands that

participate — it’s not uncommon for brands running

promotions to double or triple (or even more) their

sales versus their average daily sales.

Let’s look at a specific product example where we

saw this happen: The Fisher-Price Rainforest Music &

Lights Deluxe Gym typically sees average daily sales

of $2,237 on Amazon. On Prime Day 2018, sales

increased to $46,881 — a staggering 2,000x of the

product’s average daily sales. The halo effect lasted

several days afterwards, with the product seeing

average daily sales of $9,404 in the week following

Prime Day.

The halo effect of a Prime Day promotion

Source: Profitero; Time period: July 9, 2018 – July 24, 2018

7/9 7/16 7/17 7/24

Average

daily sales:

$2,237

Average

daily sales:

$9,404

20THE ECOMMERCE TOY S TORY

PART 3. How to accelerate your sales online There are many things you could do to accelerate your sales on Amazon, but the real question is: What should you do?

This is exactly the question we set out to answer at Profitero.

Using our daily updating, item-level view of Amazon sales & share, we examined the impact of more than 10,000 unique change events across the digital shelf, spanning 7,200 products across categories. Change events were things like updating content with specific types of images or increasing the number of reviews. We then ranked each change event from first to last according to what drove the most sales for the products studied.

Over the following pages, we discuss the key digital shelf drivers in more detail to help you deliver a sales-prioritized approach to eCommerce optimization.

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“Amazon is a very different retailer to work with, and it changes the dynamic. What we become is a buyer of Amazon services to meet the strategic requirements that we have as a brand. How do we defend the brand? How do we go after new customers from other brands? And how do we best showcase our product within the platform? Amazon will sell you all manner of services in order to do that. The discipline is actually picking the right ones for you at any given time.”

Alf Blohm Sales Manger,

Playmobil

22THE ECOMMERCE TOY S TORY

Assortment & Availability

Pricing & Profitability

Search

CategoryPlacement

Ratings & Reviews

Product Content

2.Traffic

3.Conversion

1P/3P Sales Analytics

Pricing & Profitability

SALES & SHARE

1.Availability

Step 1: Address availability issues

Product availability should be a top priority for all

manufacturers on Amazon and on every other online

retail site. Monitoring out-of-stocks and fixing inventory issues is a quick and cost-effective path to boosting eCommerce sales.

Remember: It doesn’t matter how good your content

is in driving traffic to a product page if there’s not

enough stock on hand to make the sale.

Using an eCommerce performance analytics solution

like Profitero makes it easy for brand manufacturers

to routinely monitor out-of-stock (OOS) rates across

an entire product portfolio — and oftentimes

pinpoint the root cause of out-of-stock issues.

Armed with these kinds of data-driven insights and

metrics, you can (1) take action to remedy problems

under your control, and (2) be better positioned to

negotiate inventory and supply terms with Amazon.

Profitero’s sales-prioritized approach to eCommerce optimization: To maximize online sales, brands must ensure they are optimizing the key levers of availability, traffic and conversion.

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First things first: Be in stock when shoppers look to buy

A surprisingly large amount of online sales are lost

every day due to products being out-of-stock (OOS)

when shoppers go to buy. As a brand, you may be

doing a terrific job driving interest and traffic to your

product pages, but then you fail to convert at the

critical final moment because the retailer doesn’t

have enough inventory in-stock. On Amazon, this

usually means a third-party (3P) seller is instead

getting credit for the sale.

The key is to fix OOS so you’re not leaving money on

the table. We’ve seen customers increase monthly

sales in the neighborhood of 3% - 5%, on average, by

proactively sharing daily availability data with retailers

to up their inventory levels.

Consider this example, which demonstrates just how

big the lost opportunity can be. The chart shows

the sales that a leading toy brand lost in a recent

3-month period due to out-of-stocks at Amazon and

Target.com. This toy vendor lost close to $200,000 in

sales in a single quarter due to availability issues!

But with an eCommerce analytics solution in place

that easily and cost-effectively detects out-of-stock

issues early on, the vendor could have acted quickly

to increase retailer inventory levels or develop a

back-stop fulfillment solution.

Toys brand OOS rate & opportunity by retailer

Source: Profitero. *Assuming other retailers represent 20% of Amazon’s sales.

Brand OOS rate (%)

Opportunity by retailer(3-month period ending March 31, 2019)

Amazon Target.com Total

$178,256

27%

5%

$92,556$85,700

24THE ECOMMERCE TOY S TORY

Stay on top of pricing to protect availability

PRO TIP:

One way to fight back against

downward price pressures is by

implementing a MAP policy with all

your retailers and distributors. Using

analytics like Profitero’s, you can track

if and when these policies are being

violated.

First movers and followers put pressure on price

Amazon 1P lowers the price

Amazon 1P goes OOS and 3P seller increases price

3P seller on Amazon matches the price

$0

$10

$20

$30

$40

11/14 11/15 11/16 11/17 11/18 11/19 11/20 11/21

Source: Profitero; Timeline: November 14, 2018 - November 21, 2018

Amazon 1P Amazon 3P seller

1

2

3

It’s clear that dropping the price can have a significant

impact on a product’s conversion rate — when the

price drops, sales increase. But this can also lead to

availability issues, underscoring the importance of

monitoring price drops on a regular basis.

Take this example. Amazon 1P reduced its price on

this particular toy product in January 2018. The third-

party (3P) seller subsequently lowered its higher price

to match Amazon’s new selling price. After a few days,

however, Amazon 1P went out of stock as a result of

the lower price. The 3P seller then took advantage

of the situation by increasing the price back to the

original higher price point.

25THE ECOMMERCE TOY S TORY

Step 2: To boost traffic, findability is fundamental

Once your product is available, maximize traffic

opportunities next — particularly on products that are

your “unsung heroes” — those products that convert

well with shoppers but are currently receiving low

levels of traffic.

The following example shows the impact of increased

traffic (glance views) and conversion on sales for this

Baby Einstein product on Amazon.com during Black

Friday and Cyber Monday 2018.

Understand that findability is fundamental. That is,

where your products rank in search results on retailers’

sites directly impacts your eCommerce success

online. If a shopper can’t find your product, they can’t

buy your product.

Search is also a driver of the now-famous “flywheel

effect” at Amazon and other online retailers: products

that place well in search results tend to sell more, and

products that sell more tend to place better in search

results. Success breeds success, creating a moat for

competitors and rewarding those that move early and

decisively to win.

Baby Einstein — Increase in sales driven by an increase in traffic & conversion during Black Friday and Cyber Monday, 2018

0 0%

20,000 15%

40,000 30%

60,000 45%

80,000 60%

11/10 11/1811/1611/1411/12 11/20 11/22 11/24 11/26 11/28 11/30

Source: Profitero, AMZ Maximizer; Timeline: November 10, 2018 - November 30, 2018

Sales Glance viewsConversion rate (%)

Conversion rate

Sale

s &

gla

nce

view

s

26THE ECOMMERCE TOY S TORY

If you’re not on page 1, you’re basically invisible

Page placement is the most critical performance

metric. 70% of shoppers never click past page 1. So,

your first goal in Search should be to increase your

share of page 1 placement for prioritized general

keywords in your category — and your own brand

keywords relevant to your highest-potential products.

Larger teams or those working with an agency may

also want to tackle more advanced opportunities, like

sponsoring competitors’ brand keywords.

Our research shows that winning page 1 placement

for top keywords can double sales. This chart shows a

product moving from page 2 to the bottom of page 1

for a top keyword yields a +84% sales lift.

Sales lift for products moving organically onto page 1 of search results

Top search keywords

Source: Profitero

Products moving to the BOTTOM of page 1

Products moving to the MIDDLE of page 1

Products moving to the TOP of page 1

+152%

+100%+84%

27THE ECOMMERCE TOY S TORY

Sponsor your own keywords, or someone else will

We covered the benefits of moving up to page 1,

but fair warning: an opposite effect in sales loss can

occur if you drop off page 1. This means owning your

branded keywords should be an integral part of your

sponsorship strategy — especially given that 60% of

the top 100 most popular search terms in Amazon’s

toys & games category are branded.

Toys & games popular keywords

Source: Profitero, Amazon; Branded keywords on Amazon.com, December 2018

Branded General

lego

lol surprise dolls

melissa and doug

nerf guns

barbie

hot wheels

funko pop

paw patrol toys

pokemon cards

transformers toys

toys

squishies

drone

remote control car

board games

puzzles for adults

kids toys

stocking stuffers

baby toys

girls toys

60% of the 100 most popular search terms in Amazon’s Toys & Games category are branded keywords

28THE ECOMMERCE TOY S TORY

Sponsor your own keywords, or someone else will (continued)

Let’s take a look at a few examples:

On the left, we find LEGO 100% defending its

position on page 1 by sponsoring its own brand

keyword.

In the example on the right, Mattel is sponsoring just

39% of keywords containing the brand name “Barbie”

— while competitors are sponsoring the rest (61%).

This results in Mattel-owned Barbie products being

pushed further down page 1. Worse yet, what if they

got pushed off page 1 completely? That could have a

disastrous sales effect.

Sponsored share of page 1 on Amazon (selected keywords)

Source: Profitero; Time period: April 2, 2019 - May 23, 2019

Keyword: BarbieKeyword: Lego

LEGO: 100%

Barbie: 39%

Competitors: 61%

29THE ECOMMERCE TOY S TORY

Sponsor your own keywords, or someone else will (continued)

Another area to consider sponsoring is keywords by

age group. This example shows the share of page 1

sponsored results for the keyword “toys for 7 year old

boys” on Amazon.com.

Popular age-oriented keywords Share of page 1 sponsored results on Amazon keyword: “toys for 7 year old boys”

Source: Profitero, Amazon; Non-branded keywords on Amazon.com, December 2018

Source: Profitero; Time period: March 2019

Toys & games

toys for 1 year old

toys for 3 year old boys

puzzles for kids ages 4-8

toys for 2 year old boy

games for kids ages 4-8

2 year old boy toys

games for kids 8-12

crafts for kids ages 8-12

toys for 1 year old girl

toys for 7 year old boys

LEGO

Force1

IQ Builder

USA Toyz

Building Blocks

36%

10%

8%

7%

5%

“An interesting place to start your keyword research, which is unique to the toy category, is the age restriction label on your products. We’ve seen so much potential around keywords such as ‘toys for toddlers,’ ‘toys for 2 year old boys,’ ‘girl toys 2-4,’ etc.”

Stefan Jordev Advertising Director,

Bobsled Marketing

3 0THE ECOMMERCE TOY S TORY

Stay a step ahead: Put a scorecard in place

The keyword search examples on the previous page

underscore the importance of having an analytics

solution in place to help you monitor which of your

competitors are targeting your products, and when

they’re doing it.

Here is an example of a scorecard you should be

regularly receiving and reviewing to help monitor

what’s happening with keyword search. With this

kind of data at your disposal, you can easily see

who’s winning vs. losing keyword search, and

then act accordingly — whether that’s focusing on

improving organic search or putting more skin in the

sponsorship, e.g., Amazon Advertising, game.

Example scorecard — Amazon placement

Source: Profitero

Time period: March 2019

Keywords (ranked by search frequency):

toys, kids toys, baby toys, toddler toys, infant toys

Spot 1 Spot 2 Spot 3

9%

10%

15% 16%

15%

10%

11%7%

7%

Share of top 3 spots 5 high frequency keywords

Toys — Amazon share of page 1 5 high frequency non-branded keywords

Fisher-Price

Vtech

Vtech

LeapFrog

Fisher-Price

Infantino

Little Tikes

Iplay, Ilearn

Fisher-Price

Little Tikes

All other

Little Tikes

Bright Starts

Sassy

Vtech

Baby Einstein

GundVtech

Munchkin

Lamaze

31THE ECOMMERCE TOY S TORY

Assortment & Availability

Pricing & Profitability

Search

CategoryPlacement

Ratings & Reviews

Product Content

2.Traffic

3.Conversion

1P/3P Sales Analytics

Pricing & Profitability

SALES & SHARE

1.Availability

Step 3: Optimize conversion

Now that you’re getting enough traffic, it’s time to

boost conversion — ensuring your product pages will

convert browsers into buyers.

To boost conversion, start by identifying products in

your portfolio with significant conversion upside (i.e.,

those getting high traffic but have sub-par conversion

rates). You can do this via analytics like those

provided by Profitero, which help you measure the

conversion rates for your individual product pages.

At the same time, be sure you’re not wasting time

and money enhancing content for products that

have other fundamental issues, i.e., low traffic and

low conversion due to out of stocks or pricing issues.

Fix those problems first before investing more on

content.

32THE ECOMMERCE TOY S TORY

Step 3: Optimize conversion (continued)

Once you’ve identified products with significant

conversion upside, focus on improving product content and then Ratings & Reviews for those

products. Assuming your products already get

enough traffic, visual content (images, video, and

enhanced or A+ content) correlate strongly with

improved conversion rates. Profitero’s survey reveals

that after price, detailed product descriptions and

product photos are deemed the most important

factors when shopping for toys online.

Importance factors when shopping for toys online (rated extremely important / important)

Source: Profitero consumer survey, May 2019; n = 1,000 for each market

Price / promotion

Brand name / specific product

Product video

In-store pickup

Detailed description

Product photos

Ratings & reviews

87%

68%

48%

46%

85%

84%

76%

82%

56%

32%

40%

80%

79%

68%

U.S. U.K.

33THE ECOMMERCE TOY S TORY

“As the landscape evolves, the lines between in-store and digital interaction with a toy will be blurred. Consumers will be looking for more content that mirrors the physical engagement with a product they can get in store. Brands that will succeed in this area will be looking beyond product imagery towards creating videos, lifestyle content and interactive visuals to capture audiences.”

Kelly Marcus Associate Director, eCommerce SEO,

Reprise Digital

34THE ECOMMERCE TOY S TORY

Source: Profitero; n = 7,134 products studied on Amazon.com; Time period: August 5, 2018 - February 23, 2019 (comparing 28-day periods)

Controlled for products with differences of no more than +/- 10% on the following factors: OOS rate, lost Buy Box rate, promotion rate & price change. Products with at least 28 glance views, unit sales >10 units and conversion rate >0.1% on the 28-day period studied.

Boost conversion & sales with enhanced content

We’ve carried out research on thousands of products

on Amazon to determine what types of content best

converts.

As shown in the chart on the right, adding product

images can have a significant impact on traffic

and conversion. Our analysis shows products that

improved their image count saw an average increase

of 90% on their conversion rate. This underscores the

findings of our survey in which product photos was

rated the third most important factor when shopping

for toys online.

This is especially true for the toy category where

shoppers are not able to physically see how the toy

works.

Average sales lift related to change in product content

Adding images Adding videos Adding A+ content

+5%

+51%

+90%

+17%+6%

+19%

% average delta in conversion rate

% average delta in traffic (glance views)

35THE ECOMMERCE TOY S TORY

Importance of keeping product content current

Equally important for the toys category is monitoring

your content in case of product recalls or to respond

to changing regulations. This is where a Product

Information Management (PIM) solution comes into

play, helping you to constantly monitor and control

your product information at scale.

“A PIM solution is imperative for organizations selling on Amazon. Every marketplace has different requirements, however, most organizations would do best to optimize their products on Amazon first. Implementing a PIM solution helps streamline and accelerate time-to-market. It also enables marketing and merchandising teams to control the product information from creation to enrichment to deployment across the enterprise, ensuring consistent and exceptional customer experience.”

Johan Boström Co-Founder,

InRiver

36THE ECOMMERCE TOY S TORY

Don’t fly blind: Use benchmarks to guide your content

An important point to keep in mind: Never focus

solely on your products in a vacuum. Benchmarking

against your competitive set and particularly best-

in-class products for your category is a great way to

ensure your products not only remain highly visible

to shoppers, but more importantly highly likely to

convert browsers into buyers.

Among the key metrics you should be monitoring

and benchmarking against, include the number of

reviews, average star rating, number of images, and

number of characters in your product descriptions

and bullet points.

Of course, Amazon doesn’t make it easy. Its

algorithms are constantly changing and, therefore,

what you need to optimize in your product content

changes too. “Set it and forget it” doesn’t cut it with

product content. If not already doing so, it’s a good

practice to set a regular cadence for product content

audits. We recommend quarterly at a minimum and

monthly if possible.

Amazon Best Sellers benchmark—Toys & games

Top-selling brands in Amazon toys & games

Source: Profitero Amazon FastMovers, February 2019; Top Brands - Q4, 2018

ReviewsAvg. # of reviews

Star ratingAvg. star rating

ContentAvg. # of images

ContentAvg. character count in title

1,718 4.4 6 71

Here are the product benchmarks you should be

striving for in the toys category on Amazon.com:

37THE ECOMMERCE TOY S TORY

Earn your Amazon badges

Scroll through any Amazon search results page and

you’re bound to see products with the “Amazon’s

Choice” and “Best Seller” badges.

Based on an analysis of 37,000 products on Amazon,

both with and without badges, Profitero learned

that Amazon’s Choice and Best Seller badges have a

major impact on a product’s traffic and conversion.

• Amazon’s Choice increases conversion rate by

25% on average, especially on products with a

high number of daily glance views

• Best Seller has a greater impact on traffic,

increasing a product’s glance views by an

average of 45%

We’re conducting more research to find out what

specifically causes a product to get the Amazon’s

Choice badge. But for now, it’s reasonable to

assume it’s a combination of all the steps featured

in this playbook: (1) be in stock and priced right; (2)

optimize search to get found; and (3) offer great

content.

It’s time to get cracking on making your priority

products as strong as possible across each of these

dimensions so you can optimize your Amazon

Flywheel.

Increase in traffic & conversion when having an Amazon badge

Source: Profitero; 37,086 products studied, July 2018, US

‘Amazon’s Choice’ badge ‘Best Seller’ badge

Traffic+17%

avg increase in

daily glance views

+45%avg increase in

daily glance views

Conversion rate

+25%avg increase in

daily conversion rate

+3%avg increase in

daily conversion rate

38THE ECOMMERCE TOY S TORY

Alf Blohm Sales Manger,

Playmobil

Have plenty of authentic ratings & reviews; they matter

Consumers rely heavily on the experience and

opinions of others during their path-to-purchase. This

is a key reason why having an adequate number and

sustained flow of high-quality, authentic ratings & reviews on your brand website and syndicated across

online retail sites matters.

Systematically measuring the impact of reviews on

traffic, conversion and sales may matter even more.

Ratings and reviews can have a profound effect on

online as well as offline performance.

It’s equally as important that brands routinely monitor

consumer product feedback, which means having

an analytics tool in place to flag any problems or

negative comments.

Change in traffic, conversion & sales when adding reviews to a product on Amazon

Source: Profitero; n = 7,134 products studied on Amazon.com; Time period: August 5, 2018 - February 23, 2019 (comparing 28-day periods)

Controlled for products with differences of no more than +/- 10% on the following factors: OOS rate, lost Buy Box rate, promotion rate & price change. Products with at least 28 glance views, unit sales >10 units and conversion rate >0.1% on the 28-day period studied.

% average delta in CONVERSION RATE

% average delta in TRAFFIC (glance views)

% average delta in UNITS SOLD

Up to 50% increase in

reviews-1% +25% +12%

50% - 100% increase in

reviews+1% +42% +42%

>100% increase in

reviews-3% +73% +65%

“If you get good reviews then you should be able to convert those page visits. It takes a lot of work, it takes a lot of effort, but if you get it right, you’ve got a marketplace of millions to reach.”

5 key takeaways

“Size the prize” — What’s your upside on Amazon?

Keep track of online penetration of the category

and prioritize the specific retailers driving that online

growth.

“See where you stand” — Are you outpacing? Or

are you trailing? There’s an old saying: “A rising tide

lifts all boats.” Just by the very fact that Amazon is

growing, your brands will grow too. But unless you

can benchmark against competitor sales or growth of

the category in total, you don’t know if you are truly

winning or not. Profitero’s sales and share estimates

can help you here. Similarly, you should be using

digital analytic tools like those offered by Profitero

to benchmark your content, search placement and

pricing against competitors.

“Prioritize actions” — What fixes will yield the

biggest gains? If you are like other companies, your

eCommerce teams and budgets are woefully under-

resourced. With traffic and conversion data for your

products, you can start to identify the products that

are most critical to improve and better prioritize

where to spend your Amazon Advertising and

promotions dollars.

“Execute” — Don’t wait to hire… use agencies!

Profitero has identified more than 100 unique

eCommerce agencies who have vast expertise and

experience optimizing all facets of digital execution.

Start piloting projects with them and you will be

surprised what you can accomplish on a lean budget

and in a small time window. (To identify an agency,

visit Profitero’s eCommerce Agency Directory.)

1 3 5

2

4

39

It’s imperative you make Amazon your priority today.

Our recommended path to get started and scale:

“Prove your business case” — Measure ROI to

get more budget. The easiest way to expand your

eCommerce budget is to select a subset of products

and start optimizing them. This could mean adding

A+ content or adding more images. It could mean

upping your Amazon Advertising spend. Whatever

it is, you can work with Profitero to measure sales,

share, traffic and conversion increases you get as a

result. Use us as an objective 3rd party to craft your

business case for more budget.

THE ECOMMERCE TOY S TORY

4 0

Request a demo of AMZ Maximizer today and learn how Profitero can help you win on Amazon!

WANT YOUR OWN PERSONALIZED PL AYBOOK?

Profitero’s eCommerce experts will create a

personalized eCommerce Acceleration Playbook

for your brands, for FREE.

For more information,

email sales@profitero.com

or visit http://www.profitero.com.

For additional guidance, contact Profitero today at:

Tel U.S.: +1 844 342 7464 Tel U.K.: +44 208 123 3101

ABOUT PROFITERO

Profitero is the eCommerce Performance analytics

platform of choice for leading brands around the

world. With Profitero, brands can measure their

digital shelf performance across 8,000+ retailer sites

and mobile apps in 50 countries, gaining actionable

insights to improve product content, search

placement, ratings & reviews, availability, assortment

and pricing. Profitero also allows brands to measure

their Amazon sales & share performance, along with

the ability to correlate their sales performance with

changes across the digital shelf. Many of the world’s

leading brand manufacturers depend on Profitero’s

granular and highly accurate data to measure and

improve their eCommerce performance. These

include Bayer, Beiersdorf, Dorel Juvenile, Edgewell,

General Mills, Kids II, L’Oreal, The Master Lock

Company and Molson Coors.

"We selected Profitero as it provides us with accurate, detailed and, most importantly, actionable insights on the key levers driving eCommerce sales, helping us to take both strategic decisions and prioritize daily actions. Profitero’s user-friendly platform and personalized alerts were also central to our decision." Pauline Junne

EMEA eCategory Manager,

Groupe SEB

Request a demo

41THE ECOMMERCE TOY S TORY