Pragmatism rules … it’s the Friday Blog!

Published on: 24th February 2023

Apologies for returning to the Amazon situation so soon, but a) there appear to have been some key developments since I wrote last week’s Blog and b) not much else of note has been happening in the world of toys this week. It’s also a topic that clearly resonates with the toy community: I received numerous calls and emails this week from people keen to understand what’s going on and, ultimately, desperate for some clarity.

I do find it mildly ironic that it falls to people like me or Amazon specialists like Asha at Etopia (other Amazon gurus are available) to let everyone know what’s going on, rather than Amazon themselves, but here we are. Maybe communication – and personal relationships – is an area Amazon needs to work on if it wants to be thought of by suppliers in the same way as the likes of Smyths or The Entertainer.

Anyway, the good news is that based on conversations with several people this week, it appears that the whole situation may not be quite as bad as it first seemed. Any fear that swathes of distributors are about to have their accounts closed overnight has dissipated, and the ‘solutions’ don’t seem to be all that complicated.

It looks like the new ‘distributor’ strategy will largely be run through brand registry – there have been some subtle wording changes this week which give an indication as to how it will all work going forward. The key clause is that only a brand owner can sign up to register brand names (distributors can’t register themselves anymore). If you are a distributor, the brand owner needs to add your account as an additional user, which sounds straightforward enough.

All brand owners will need to register their own brands – so, if I understand it right, licensors shouldn’t let licensees register their brands, as it might get complicated if the licence changes hands a few years down the line.

Other companies have suggested that a letter from the brand owner to Amazon, confirming that company X is the official distributor for the territory, will suffice. Although I have seen an email from Amazon to one distributor which said: “Thank you for providing all the documentation and explaining that you own the brands you refer to. However, having reviewed these brands, we can confirm that we will still be proceeding with our decision to stop sourcing the brands in question, because we will not be able to continue to sell them in a way that is economically viable in Amazon Retail.” So, it clearly isn’t black and white.

While there may be some other grey areas that haven’t come to light yet, it does appear that, in the main, pragmatism is ruling the day. There are a couple of very good reasons why this is a smart choice – first and foremost, as Gerald at Geemac helpfully reminded me, if a brand owner is willing to supply Amazon directly but doesn’t have a UK or European registered business (which is a big reason why some use distributors), Amazon would have to adopt the CE/CA mark and assume liability. Based on past conversations around safety issues, I am not sure I can see Amazon being willing to do that for hundreds of thousands of lines – or having the resource to manage that scenario.

The second big threat would be to advertising commitments – as several people pointed out, why would a distributor spend a fortune on advertising when it wouldn’t benefit from a significant percentage of sales generated by the activity? Of course, that would affect Amazon’s own advertising funding, as well as many other media channels.

All in all, it makes sense for Amazon’s toy team to adopt a pragmatic, common sense approach to the situation, rather than making a lot of additional work for itself. Make no mistake – some people will still be affected, and Amazon still sees this as an opportunity to prevent a situation where there are multiple distributors in different markets, leading to inconsistent pricing and more work to manage the account. Amazon will continue to push for pan-EU dialogue with suppliers, so it can manage the account with a single contact point and unified pricing. But I suspect it has realised that it doesn’t want to throw the baby out with the bath water and cause problems with accounts that are running perfectly smoothly.

That’s my two pennorth as it stands, but if anyone has any different experiences or perspectives to share, do let me know.

Away from the digital world, Sainsbury’s has announced that it will be introducing a four-day working week trial, which will include head office staff. The three month trial is said to be aimed at “improving flexibility”, although I suspect suppliers may now find it even harder to speak to buyers than they did before.

Elsewhere, there are a couple of ‘big’ stories that I am aware are floating around the industry. Thanks to all the people who have flagged them up, but sometimes there are good reasons why we choose to wait before putting a story into the public domain. I suspect all will become clear in the coming weeks, and we will share the news – and offer any appropriate comment – when we feel the time is right.

I’m also hoping to be able to share the dates of the 2024 Nuremberg Toy Fair next week. The organisers are currently analysing this year’s visitor data to check if there are any post-covid changes in their behaviour, and a decision on next year’s timeline is expected within days. We’ll keep you posted.

In the meantime, I’m off to see if it’s worth popping over to France this weekend – not on a booze cruise as once might have been the case, but to see if I can top up our fruit & vegetable drawer. Another Brexit bonus – scurvy! (I’m aware that inclement weather in growing regions hasn’t helped, but if stock is short, growers have to decide which orders to fulfil – and as the toy community knows only too well, in that situation, you’ll take the path of least resistance…which unfortunately isn’t shipping from the EU to the UK anymore).

It’s also worth keeping an eye on the ill-judged and rather naive ‘bonfire of EU regulations’ currently being threatened by our increasingly floundering government, which could have a big impact on toy regulations, potentially landing legitimate toy companies with greater costs and allowing dodgy companies to find it easier to swerve scrutiny. A mess that can be so easily avoided, if only they can see the sense of settling for pragmatism….