New York (AP) — The Basic Fun toy company has made an unprecedented decision as it runs out of time to put products in stores before the holidays. It leaves one-third of the iconic Tonka Mighty Dump Trucks for the United States in China. ..
Why? Given the soaring prices of shipping containers and jams in the supply network, the cost of shipping bulky yellow toys to US soil is now 40% of retail prices, or about $ 26. This is a dramatic increase from 7% a year ago. It also does not include the cost of delivering products from US ports to retailers.
“I’ve never left a product like this,” said Jay Foreman, CEO of Basic Fun. “We really had no choice.”
Toy companies are competing to deliver products to retailers as they are tackling a serious supply network crisis that can lead to sparse holiday shelves. They are trying to find a container to ship their goods while looking for an alternative port. Some toys are flying instead of boats to ensure delivery by December 25th. Also, in the case of Basic Fun, we have left the toys in China and are waiting for the cost to go down.
Like all manufacturers, toy companies Facing supply chain problems Since the pandemic began and the Chinese factory was temporarily closed in early 2020. Since then, US stores have temporarily reduced or stopped production during the blockade. The situation has worsened since spring as businesses struggle to re-enter the surge in demand for all products from shoppers.
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Manufacturers are addressing bottlenecks in factories and major ports like Long Beach, California, and in all respects in between. In addition, labor shortages in the United States make it difficult to unload cargo from ships to trucks.
But for toy makers who rely heavily on holiday sales, there are many dangers to the nearly $ 33 billion US industry. Fourth quarter accounts for 70% of annual sales. On average, holiday sales make up 20% of the total retail industry. Steve Pasierb, CEO of The Toy Association, estimates that 85% of toys are made in China.
The growl is so terrible that some retailers are telling companies that they don’t want the product if it ships after mid-October. This is because products that normally took 4-6 weeks to arrive at a distribution center in the United States after leaving a factory in China now take 12-16 weeks, says toy consultant Mark Rosenberg. increase.
According to market research firm The NPD Group, the US toy industry is experiencing this struggle as sales increased by nearly 17% last year and parents increased by 40% in the first half of this year trying to entertain their children at home. ..
However, while analysts expect strong growth in 2021, many toy companies said sales would decline because they couldn’t handle orders for popular products, especially surprise hits. They also bear the huge cost of having to shut down some toy companies.
Toy executives say they can’t fully cover the high costs because they’re worried about shopper reactions, but they can’t raise prices above 10%. Mattel, the country’s largest toy company, warned this summer that it would raise prices in time for the holiday season to offset rising shipping costs.
The cost of shipping containers has increased more than six times last year, with some brand executives saying it has risen from about $ 3,000 a year ago to $ 20,000. As a result, major retailers such as Wal-Mart and Target had to charter their vessels.
Foreman calculates that each 40-foot container will fit 1,800 Tonka trucks. So for $ 20,000 per container, it costs $ 11 per container. This is an increase from the usual annual average of $ 1.75. He focuses on transporting small items like Mash M (soft, fluffy, water-filled collections) to the container in order to maximize the total amount and profitability of the container. Is called. He estimates that $ 150,000 worth of Mash M can be stored in a container, while $ 40,000 worth of Tonka trucks can be stored.
Something like MGA Entertainment, the maker of LOL dolls, now costs about the same shipping costs, facilitating the flight of toys.
Jim Silver, editor-in-chief of TTPM, a toy review site, says big discount stores like Target and Walmart should have a healthier toy supply than smaller ones because of their influence. Target says it works closely with vendors and shipping partners to enhance its store assortment and prepare its customers.
However, Melissa McCollum, owner of Learning Express Toys in Birmingham, Alabama, says she received only 25% of her holiday toys as of mid-September. That number is usually 50%. Toy Book, the leading trade magazine in the toy industry, also promotes a carefully selected list of in-stock products that retailers can quickly obtain from warehouses in the United States.
Many toy companies like Basic Fun and Play Monster are reducing ads.
PlayMonster president Tim Kilpin says that 15% to 20% of holiday goods growl in the supply chain and Koosh, a toy ball made of rubber filaments, is completely sold out. Kilpin said he thought it was unlikely to be replenished by Christmas in August, but said Wednesday that he was informed that several containers, including Kush shipments, were flowing from the west coast.
Bottlenecks are expected to have protracted results. Andrew Yanofsky, Head of Marketing and Operations at WowWee, said toy makers from retailers that the first flow of 2022 holiday products would be in early March instead of late April, and the second cycle would be in late July instead of late July6. We are under pressure to ship in the month.
As a result, companies need to decide how much to create and reorder without having a complete picture of their sales data.
Yanovsky said he initially made a big bet on the Got2Glow Fairy Finder. This is a light show in a jar where kids can find virtual fairies.
“We risked extra material beyond what we thought we could sell,” he said.
Even the few toy companies that manufacture goods in the United States are struggling due to labor shortages.
John Gessert is the CEO and President of American Plastic Toys, based in Walled Lake, Michigan, with another factory in Mississippi. He says the company has lost 35% to 40% of its frontline workers. The focus on play kitchens, which require six workers, is now shifting to less labor-intensive toys, such as basketball sets, where only three workers need to be put together.
“I’ve never fixed a puzzle this complicated,” he said.
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