In the vast online marketplace, few categories boast the same dynamism and potential as the toy industry. With timeless brands like Barbie coexisting with newer fan favorites such as FunkoPop and Pokémon, there’s plenty of opportunities for savvy Amazon FBA sellers to explore and profit from.
The popularity of these brands isn’t solely rooted in nostalgia or trendiness. They represent a thriving, multi-billion-dollar industry that opens up lucrative possibilities for those equipped with the right knowledge and strategies.
Selling toys online may seem like child’s play, but it requires a clear understanding of the Amazon ecosystem, including the FBA service, the intricate nuances of brand ungating, and strategic product sourcing, among other aspects.
So, whether you’re a seasoned seller looking to diversify your product line or a new entrant into this segment of the entertainment industry, you’re in the right place. This comprehensive guide will dive deep into the art of selling toys on Amazon FBA. We’ll demystify the process, outline key strategies, and provide actionable insights you can use to turn playtime into business profit.
Spotlight on Barbie and shifting spending patterns
The iconic Barbie brand offers a key case study for 2023, demonstrating how trends and societal events can influence purchasing behavior.
The aftermath of the post-COVID-19 spending spree saw a decline in spending on nonessential items, as market researcher Circana reported. Discretionary general merchandise sales dropped 4% in June compared to the previous year, with unit sales falling 9% in the same period.
In response to this shift in consumer spending, retailers have turned their focus to promoting unique and trendy merchandise. The goal is to entice shoppers to splurge on wants rather than sticking strictly to needs, especially as we approach the all-important holiday season.
That strategy has seen promising results: Amazon, Walmart, Target, and other major retailers recently drove sales by offering steeper discounts and competing promotions during Amazon Prime Day. Those efforts led to consumers spending $12.7 billion over the two-day online event in the U.S. alone, representing a 6.1% growth year over year — a new record.
During the sales event, Barbie stood out as a star player; it climbed from 85th to 49th on the list of top brands this Prime Day versus last year.
The resurgence of Barbie highlights a broader trend: Retailers are successfully encouraging consumers to look beyond essential items. As an Amazon FBA seller in the toy industry, understanding these changing buyer patterns and leveraging them in your sales strategy can be a vital asset in the dynamic market.
Understanding Amazon’s toy category
This segment of Amazon’s marketplace is an ever-evolving playground of products catering to various interests, age groups, and price points. A more detailed look into its components and how to navigate it successfully will provide a solid foundation for your FBA business’s new venture.
Amazon’s toy category is broad and multifaceted, appealing to several different customer demographics. Toys range from traditional games, puzzles, and dolls to more innovative products like STEM learning kits, robotics, and collectible figures, each comprising various offerings that can enrich your product catalog:
- Traditional games and puzzles: These toys have stood the test of time, offering classic entertainment that appeals to a broad age range. This category includes board games, jigsaw puzzles, and card games.
- Action figures and collectibles: This segment attracts a unique consumer base, including children and adult collectors. Items can range from superhero action figures to popular branded collectibles like FunkoPop.
- Educational toys and STEM kits: With an increasing focus on learning and development, educational toys and STEM (Science, Technology, Engineering, Math) kits are a growing subgroup. These products aim to combine fun with educational value, making learning an enjoyable process.
- Arts and crafts supplies: This collection caters to creative children and includes items like craft kits, painting sets, and DIY project materials.
Understanding the broad scope of product types in this category will help you identify potential niches for your FBA business.
Compliance with Amazon’s guidelines
You must strictly adhere to Amazon’s guidelines no matter what you sell to ensure product safety and compliance. To prevent account suspension, pay special attention to the following factors:
- Safety standards: Toys listed on Amazon must comply with relevant safety standards, such as the CPSIA in the U.S. or the European Union’s EN71 toy safety standard. Depending on your target market, it’s crucial to learn and comply with these requirements.
- Product compliance: Each item listed has to abide by Amazon’s product compliance guidelines. For example, you must clearly specify the recommended age range for toys, particularly when they include small parts that could pose a choking hazard for younger children.
- Product authenticity: Counterfeit products are a serious issue in the toy category. Amazon has strict policies against these illegal goods, and violating them can lead to account suspension. Ensure you source your products from legitimate suppliers to avoid this risk.
Seasonal demand and trend analysis
Toys are highly subject to seasonal demand and popular trends. Successfully predicting these patterns can boost your business performance.
Certain toys and games are more popular at specific times of the year. Outdoor toys and water games see increased demand in the summer, for instance, while board games and craft kits might see a surge during the winter season when families spend more time indoors. Planning your inventory around these fluctuations can yield higher sales.
The toy market is fluid, with popular movies, TV shows, and cultural phenomena influencing its trends. Keep abreast of what’s gaining traction and stock up on popular items ahead of the demand curve to give your business a competitive edge.
To stay updated, use tools like Google Trends, social media platforms, and industry reports.
Brand ungating on Amazon
Amazon gates certain products and categories as part of their commitment to maintaining a customer-centric platform. The marketplace aims to ensure a consistent and trustworthy shopping experience for consumers while also protecting the integrity of product brands.
Several factors influence these limitations, including:
- Consumer confidence: By restricting certain categories, Amazon can ensure the products sold on their platform meet the highest quality and safety standards. This helps maintain consumer confidence in the marketplace, as buyers know they’re getting authentic, reliable items.
- Counterfeit prevention: Restrictions are an effective deterrent against fraudulent sellers aiming to flood the marketplace with counterfeit goods. By requiring sellers to gain approval before listing in certain categories or brands, Amazon can minimize the risk of fake products reaching consumers.
- Brand protection: Some brands require restrictions to maintain their brand integrity and control over their supply chain. They want to ensure only approved and authentic sellers list their products to protect their reputation and consumer trust.
It’s worth noting that gaining ungated status in a category doesn’t equate to unrestricted access. Restrictions may still apply at various levels, including categories, sub-categories, and even down to individual ASINs. Similarly, specific brands or items within a brand portfolio may remain restricted, which reinforces the importance of understanding Amazon’s complex landscape before listing items.
Interested in learning more about Amazon brand protection? Check out MyFBAPrep’s guide, How to protect your brand on Amazon.
Why brand ungating is important in the toy category
While the toy category on Amazon is broadly open, many of its sub-categories and specific brands require approval. Some of the most popular and profitable brands — including household names such as LEGO, Star Wars, FunkoPop, and Barbie — are gated.
By gaining approval for these brands, you’ll have access to a trove of sought-after products that customers love, which can significantly boost your sales.
With brand ungating, your business can enjoy:
- Access to high-demand products: Gated brands often have a large following and high demand.
- Less competition: Since the ungating process requires some effort and adherence to stringent performance metrics, fewer sellers opt for this route. That means less competition so your listings have a better chance to stand out.
- Trust and credibility: Customers are more likely to trust and buy from vendors who offer products from recognized, reputable brands.
The process of ungating on Amazon
Amazon has streamlined the process for requesting access to a gated category, making it relatively straightforward. To find out if you’re eligible to sell a certain product, follow these simple steps:
- Log in to your Seller Central account.
- On the home page, click on the “Category” tab in the screen’s top-left corner.
- Select “Add Products” from the dropdown menu.
- Search for the specific item you wish to sell.
- Next, click “Show limitations” (positioned to the left of the product information).
- At this point, you’ll either be able to select the “Request Approval” button to kickstart your application process, or you’ll receive a message indicating that applications aren’t being accepted at this time.
While the exact requirements for ungating may differ based on the specific category or your selling history, Amazon typically demands the following to grant approval:
Basic business information, including:
- A valid business address
- Business tax information, such as a Social Security Number (SSN) or an Employer Identification Number (EIN)
- A copy of a valid government-issued photo ID for either the seller or an authorized representative
Proof of authenticity and compliance, including:
- Evidence of a relationship with a vendor or wholesale distributor
- Proof of purchase, typically in the form of an invoice for at least 10 items from the category or brand you wish to sell
- Photographs of products from multiple angles to ensure packaging compliance
- If required for your category, you may need to provide certifications or testing documents that demonstrate your products adhere to necessary safety guidelines
- Certain brands and circumstances may require an authorization letter from the brand owner
Amazon also evaluates your overall selling performance on its platform.
You might have to apply separately to become ungated for the category and specific brand. As such, you could find yourself going through this process more than once.
Beyond these requirements, you must be fully versed in the legalities, certifications, and restrictions of the products you wish to sell. Being informed and compliant helps you navigate the ungating process smoothly and contributes to building a trustworthy and successful Amazon FBA business.
Selecting the right toys for your FBA business
Choosing the right toys to sell is an involved process due to how many factors influence a product’s popularity and sales performance.
Recognizable toy brands often have a significant consumer base and a well-established market presence, which can yield consistent sales.
However, it’s crucial to stay updated on licensing news and releases related to these brands, as specific products can surge in popularity based on current events, movie releases, or television shows (as we’ve seen with Barbie).
Sales rank is a measure Amazon provides that reflects a product’s sales history. Those with a high sales rank in their category tend to sell more frequently than those with a lower rank. Examining the sales rank of different toys can give you insight into which items are currently in high demand.
While popular toys can yield high sales, they also attract more sellers, which leads to increased competition. So, it’s essential to assess a toy’s competitive landscape before deciding to list it.
Consider how many other sellers offer the same product, their prices, and their seller ratings. Sometimes, a less popular toy with lower competition can provide a higher return on investment.
Profitability should be a key factor in your decision-making process. Compare the cost of sourcing and shipping the toy with its potential selling price on Amazon.
You also need to factor in Amazon’s FBA fees. Often, the best choices are toys that balance cost-effectiveness with potential profit.
To better understand and navigate FBA fees, check out our Guide to Amazon FBA Fees.
Keeping an eye on current trends in the toy industry can reveal profitable opportunities. For instance, eco-friendly toys and educational games have recently grown in popularity. Regularly check trend reports, industry news, and social media to identify trending products early on.
By considering these factors in tandem, you can make informed decisions about which toys to include in your Amazon FBA business. Over time, you’ll develop an eye for profitable investments and be comfortable with the toy market’s dynamics.
Sourcing toys for your Amazon FBA business
Sourcing toys for your Amazon FBA business requires strategic planning and smart choices. Here are some methods you can employ to ensure a steady supply of products:
- Direct from manufacturers: Purchasing toys directly from the manufacturers can be a good way to secure high-quality products at a lower cost. However, this method often requires a sizable investment and the ability to purchase in bulk.
- Wholesale distributors: Wholesale distributors buy products in massive quantities directly from manufacturers and sell them to retailers at discounted prices. Research and select a reliable distributor who offers a wide variety of toys, competitive prices, and favorable terms.
- Retail arbitrage: Retail arbitrage involves purchasing toys from brick-and-mortar or online retailers and selling them for a profit on Amazon. This approach can be particularly lucrative during sales or clearance events when you find high-quality toys at significantly reduced prices.
- Online marketplaces: Other online marketplaces like eBay or Alibaba can be excellent avenues for acquiring toys, especially rare or collectible ones. However, be cautious about product authenticity and quality when sourcing from these platforms.
- Trade shows and toy fairs: Trade shows and toy fairs provide excellent opportunities to discover new products, meet manufacturers and distributors, and negotiate deals. These events also offer a wealth of insights into current and upcoming trends in the toy industry.
- Liquidation sales: Businesses that are closing down often sell their inventory at significantly reduced prices. Those liquidation sales can be a great chance to source toys at a fraction of their retail cost.
Regardless of your preferred sourcing method, it’s crucial to prioritize product quality and compliance with safety standards. Doing so helps you build a reputable FBA business with a loyal customer base. You should also monitor your inventory levels constantly to maintain a consistent supply of your best-selling products.
Listing and pricing strategy
A well-thought-out listing and pricing strategy is vital to the success of your Amazon FBA toy business.
When crafting product listings, here are some general guidelines for each foundational element:
- Title: Your product title needs to be concise yet descriptive. It should include the brand name, product type, main features, and any important differentiators. Incorporating relevant keywords in your title can also improve your product’s visibility in search results.
- Product descriptions: Detailed and accurate product descriptions help potential buyers understand what they’re purchasing. Highlight the item’s key features and benefits and detail information about dimensions, materials, age suitability, and safety features.
- Images: High-quality images are essential for showcasing your product. Provide multiple pictures from various angles and include close-ups to emphasize the details. Images should accurately represent the product, including colors and size.
- Keywords: Besides the title, incorporate relevant keywords throughout your listing to improve searchability. Leverage Amazon’s back-end keyword field to include additional keywords that you couldn’t fit into your product title or description.
- Bullet points: Use bullet points to highlight key product features and benefits. This format makes it easier for customers to scan your listing and absorb important information.
When structuring your pricing strategy, evaluate factors like:
- Competitor analysis: Regularly monitor the prices of similar products to stay competitive. That doesn’t always mean you have to have the lowest price, but you should be aware of what other sellers charge.
- Price bracket: Identify the price bracket for similar toys to ensure your product falls within an acceptable range. Setting your price too high can discourage purchases, but setting it too low can undermine the item’s perceived value and potentially impact your profit margins.
- Price flexibility: Be prepared to adjust your prices in response to changes in demand, the availability of similar products, or seasonal trends. Having a flexible pricing strategy will help you maximize your earnings.
- Profit margin: Ensure your price covers the cost of the product, Amazon’s fees, and any additional expenses (such as advertising) while still yielding a profit. Calculating and considering all your costs is crucial when setting prices.
- Promotions and discounts: Occasionally offer promotions or discounts to boost sales and improve your product ranking. However, verify these discounts are sustainable and won’t significantly eat into your profits.
Remember, your pricing strategy isn’t set in stone. Regularly review and adjust your approach based on your sales performance, market changes, and customer feedback.
Effective inventory management is essential when selling through Amazon FBA, no matter the category. Balancing the supply and demand for your toys can be complex, but these strategies can help:
- Forecast demand: Use your sales data and market trends to predict future product demand. Consider factors such as seasonality, market trends, and any planned marketing campaigns. Amazon’s Inventory Planning tools can provide valuable insights and forecasts based on your historical sales data.
- Replenishment strategy: Determine how often and in what quantities you should restock your products. Consider your suppliers’ lead times, the shelf life of your items (if applicable), storage costs, and the sales velocity of your products.
- Safety stock: Maintain a certain level of safety stock to protect against unexpected surges in demand or delays from your suppliers. This helps prevent stockouts, which negatively impact your sales and seller rating.
- Storage and fees: It’s crucial to understand Amazon’s storage fees and the implications they have on your inventory decisions. Long-term storage fees can significantly impact your profitability, so avoid overstocking items that sell slowly.
- Inventory turnover ratio: Keep an eye on your inventory turnover ratio, which indicates how often your inventory is sold and replaced yearly. A higher ratio often implies strong sales and efficient inventory management.
- Managing returns: Develop a robust system for handling returns, which tend to be higher in the eCommerce space. Efficiently dealing with returns ensures the returned stock is quickly processed and re-listed for sale.
- Multi-channel selling: If you sell on multiple platforms, ensure your inventory management system can handle the various sales avenues. It should sync inventory levels across all channels to avoid overselling or stock discrepancies.
By effectively managing your inventory, you can maintain steady sales, avoid stockouts and overstocking, minimize storage costs, and improve your profitability.
MyFBAPrep is a comprehensive inventory management service specifically designed for Amazon FBA sellers. Learn more about our services and how they can streamline your Amazon logistics.
In the bustling Amazon marketplace, optimizing your sales is key to outpacing the competition and growing your FBA toy business.
Utilize Amazon’s marketing tools
Amazon provides various marketing tools designed to maximize visibility and boost sales. Some of these include:
- Amazon Sponsored Products: This pay-per-click (PPC) advertising solution lets you promote individual listings. Your sponsored products appear in search results and product detail pages, helping increase visibility and sales.
- Amazon Sponsored Brands: This feature allows you to advertise your brand and product portfolio. A sponsored brand ad displays your brand logo, a custom headline, and up to three of your products to give buyers a general idea of your product range.
- Amazon Sponsored Display: These are self-service display ads that appear on Amazon product detail pages, shopping results pages, and even outside Amazon. They target audiences based on specific shopping behaviors.
Optimize customer reviews and ratings
Customer reviews and ratings are pivotal in an online buyer’s purchasing decision. They also significantly affect your product’s ranking in Amazon search results.
Politely ask your customers to leave a review after their purchase. Amazon allows this communication as long as you don’t request positive reviews specifically or offer incentives. Check reviews regularly to understand your customers better and spot any common issues or complaints. That’ll help you improve your products and listings.
Leverage Amazon Seller Central reports
Amazon Seller Central provides various reports that reveal insights about your sales performance. By analyzing them, you can pinpoint what is and isn’t working and adjust your sales strategies accordingly. Some important reports to review are:
- Business reports: These provide data about your sales, traffic, and conversion rates. They can help identify trends, peak selling times, and popular products.
- Performance reports: These detail information about your seller performance metrics, such as order defect rate, pre-fulfillment cancel rate, and late shipment rate. Those metrics can affect your eligibility for selling certain categories and impact your product visibility.
- Fulfillment reports: If you use FBA, these reports yield detailed information about your inventory, including inbound shipments, inventory health, and FBA customer returns.
Embrace third-party tools
To take your Amazon FBA toy business to the next level, it’s beneficial to consider integrating various third-party tools into your operation. These can make several aspects of your business more efficient and help maximize your success.
Here are some third-party tools that are particularly beneficial:
- Keyword research tools: These assist in discovering the most popular and relevant keywords related to your products. This can significantly improve your product listings’ visibility and ranking in Amazon search results, leading to increased sales.
- Competitor analysis tools: By using competitor analysis tools, you can gain an in-depth understanding of your competitors’ strategies, such as their best-selling products, pricing policies, and marketing tactics. This information can help you devise effective strategies to stand out in the competitive toy market.
- Pricing strategy tools: These offer dynamic pricing options, allowing you to adjust your prices in response to changes in the market and competition.
- Inventory management tools: These are critical for keeping track of your inventory levels, predicting future demand, and preventing stock-outs or overstocking. Such tools can automate many of the mundane tasks related to inventory management, allowing you to focus more on strategic business decisions.
- Sales analytics tools: These can provide a detailed analysis of your sales performance, helping you identify patterns, trends, and areas for improvement. Understanding your sales data allows you to make more informed decisions and continually refine your business strategies.
Sales optimization is a continuous process. It involves regularly monitoring your strategies, adapting to changing market trends, addressing customer feedback, and assessing your business performance.
By managing customer reviews effectively and utilizing valuable insights from Seller Central reports and third-party tools, you can significantly enhance your sales performance on Amazon.
Wrapping up — Start on the right foot with your Amazon toy journey
Whether or not you’re an FBA business, venturing into Amazon’s toy category is a journey bubbling with creative and lucrative possibilities. This dynamic market offers a vast array of sales avenues to break into, from timeless classics to trendy novelties.
Transforming that potential into profit requires a blend of strategic planning, smart decision-making, and creative experimentation. So, be tactful while leaving yourself room to play. That fluid combination will enable you to embark on your next profitable business adventure.