Opinion
The elephant, no, the whale in the room…
Letter from America
Richard Derr shares his experiences as a specialist toy retailer in the US. After 20 years working at A. C. Nielsen/D&B Research Company, Rick opened the first Learning Express Toys franchise in 1996 in the Chicago area, and then became a sub-franchiser, opening nine more stores. Although leaving the corporate environment behind, he has combined his expertise in data and numbers with a passion for the toy retail space. This month, he discusses how independents must coexist with Amazon, rather than compete.
I
n 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization. Made up of two major business units; retailing and cloud services, my focus here is of course on the company’s retail services. The retailer’s current logo was designed to depict a smile that goes from A to Z, signifying that the company is willing to deliver anything to everyone, anywhere in the world – making it a tricky competitor to challenge.
Amazon is now part of our families; in the US there are over 112m Prime service subscribers and this represents one of every two American households. And Prime is synonymous with free shipping (even though you pay a fee to be a member). The question is, simply, how does one compete? Whether you are an online company, retail bricks and mortar or both, the simple answer is - you don't. You coexist with Amazon, as retail shifts to more of an instantaneous fulfilment of needs/wants and consumers increasingly shop for experiences, or buying memories. When I examined the phenomenon of experiential purchasing, in which a retailer offers consumers the chance to buy an experience rather than just an object or service, I was fascinated to see just how widespread it has become. However, even in this sphere, you are still forced to compete with Amazon. So, what does all this have to do with whales? The blue whale is the largest animal ever to have lived on Earth; the biggest recorded blue whale was 30.5m long (more than 3.5 times the length of a doubledecker bus and as long as a Boeing 737 plane) with an estimated weight of 144 tons. The tongue alone of a blue whale can weigh as much as an elephant and an entire football team could stand on it! The heart of a blue whale is about the size of a VW Beetle and weighs up to 990 pounds. The aorta, a major blood vessel for the heart, is big enough for a human child to crawl through. The remora fish, meanwhile, is so ridiculous that no one would try to make it up. The top of its head is a giant, flat suction cup. It uses the cup to lock onto the bodies of larger animals, such as sharks, sea turtles and whales. As the big animal swims for miles in search of a meal, the remora hangs on for the ride. When its host finds a victim, the remora detaches and feasts on the remains. It sometimes cleans its host's body and mouth of parasites, and then clamps back on for another ride. So, the bottom line is, in 2016 I decided to become a remora fish, feeding off Amazon as it blasts its way to take over the toy market. Some estimate that Amazon now enjoys over 30% market share, maybe higher coming out of the Covid crisis. We let Amazon drive the consumer’s thirst for toys, especially hot, fad or hard to find toys, by hyping the market, advertising and creating demand. I monitor trends around the Amazon sphere and attempt to be first in my local market to carry these items, but also to add an experiential element that Amazon generally does not do – in a physical store, customers can be hands on, try before you buy, take home that minute (Amazon will be at least an hour or two). I can offer free gift wrapping and personalizing of items. It should be noted that Amazon is not even the lowest price supplier of many toys, especially hot or hard to find items, as resellers take over and drive prices up. In fact, its pricing is sometimes 3-5 times higher than indie store pricing, with or without free shipping. This offers an opportunity to stress our value proposition and tout all the value-added services we provide; the aforementioned free gift wrapping, free personalization, demo service, delivery in a defined area, loyalty programmes, in-store play dates and events, catalogues, emails, texts, kerbside pickup and so much more. Add to this the community element of donations to a local organisations, schools and charities, as well as local taxes paid for schools, we are able to not only justify our value proposition but trumpet it and be proud of it.
Richard can be reached on LinkedIn or by email at LE45@sbcglobal.net.
Toy World 28