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Let the holiday toy wars begin

November 21, 2016 03:18 PM
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Assortment, not price, is the weapon of choice for e-retailers as they go after a piece of shoppers’ toy spending this holiday season. But don’t discount discounting―it’s still an important strategy, according to research reports published ahead of the all-important, long Thanksgiving weekend.  

The “hot toys” lists announced by and  featured on the websites of four leading toy sellers – Wal-Mart Stores Inc., No. 4 in the Internet Retailer 2016 Top 500 Guide; Target Corp. (No. 22), Toys R Us Inc. (No. 35) and Amazon.com Inc. (No. 1) – don’t overlap much, according to a report from price monitoring firm 360pi Corp. The Wal-Mart and Target lists (as of Oct. 31) had the greatest overlap, with eight of the same products on Wal-Mart’s 30 featured toys and on Target’s list of 50 promoted toys. Amazon’s list of 23 toys presented the least overlap among the retailers, sharing only four items with the Toys R Us listing of 50 products.

Joleen Wroten, senior retail strategist for 360pi, says the variation in promoted items makes perfect sense. A price war on toys—something 360pi has seen in previous years—benefits none of the retailers, she says.

This year, she says, the strategy seems to be to remain competitive on price while also emphasizing different sets of toys—and, in some cases, exclusive items. For example, Wal-Mart, Target and Toys R Us have their own variants of the ultra-hot Hatchimals, which are “creatures” that come in an egg-shaped container and “hatch” in response to interaction with its owner.

Pricing powerhouses

Of course, prices still matter. Heading into Black Friday, Wal-Mart and Amazon have the best prices online for the holiday season’s hottest toys, according to research from global e-commerce analytics firm Profitero.

Profitero’s analysis, conducted Nov. 10, looked at the 16 toys on Walmart’s “Chosen by Kids” list  that also are available online through Amazon, Target and Toys R Us. It found that Wal-Mart’s toy prices beat the average price across the four retailers by seven percentage points. Using the average price for the basket of toys as 100, Wal-Mart scored 93 on Profitero’s price index, while Amazon, the second cheapest, scored 97, Toys R Us at 104 and Target scored 106.

“As the busy holiday season heats up, brands and retailers that want to remain competitive must closely monitor their performance online,” said Keith Anderson, senior vice president of strategy and insights at Profitero. “After all, consumers know to compare prices across multiple sites, and a difference of 5% or more could be the difference between success and failure.”

Amazon has most variety  

Based on overall assortment of toys and games, Amazon is clearly in the lead, according to research from Boomerang Commerce, which looked at data from Amazon, Wal-Mart, online marketplace Jet.com, Target, Toys R Us and GameStop Corp. (No. 45).

Boomerang says Amazon lists 5 million items in its Toys & Games category. However, the report says, Wal-Mart is becoming increasingly more competitive in assortment and now offers a 66% overlap with a basket of Amazon’s most popular items, Boomerang finds.

Based on a random selection, Boomerang finds that Jet.com (now owned by Wal-Mart) had 46% of Amazon’s most popular products offered at prices below Amazon’s.

Other findings by Boomerang include:

  • Target’s assortment has not shifted much year over year, and 58% of popular matched items were found to be more expensive at Target.com than on Amazon. However, the retail chain has been seeking to win new customers via promotions.
  • After Wal-Mart, Toys R Us has the highest assortment overlap with the basket of Amazon’s popular items (40%), an improvement over last year (35%).
  • Wal-Mart and Jet are the most aggressive discounters. Wal-Mart discounted 54% of the best-selling products believed to strongly influence customer perception of whether a retailer is expensive or inexpensive. At Jet, 47% of such products were discounted.
  • For the most popular and influential products, the median discounts offered were found to range from 19% at Wal-Mart to 25% at Amazon and Target.

Boomerang’s analysis incorporated 1,800 randomly selected items drawn equally from three categories: popular, best-selling items, products of medium popularity, and infrequently purchased items have the least impact on a customer’s perception of the prices offered by the retailer. The data used was compiled during October.

The hard-to-find Hatchimals

One toy no retailer might have in stock anytime soon is a Hatchimal. Last-minute shoppers looking for Hatchimals might be out of luck unless they’re willing to pay a premium. 360pi finds that as of Halloween, the formerly $49.99 toys had been out of stock on the websites of Wal-Mart, Target and Toys R Us for about a month. Shoppers can still find some online, but prices have gone up a lot.

Marketplace sellers on Amazon were offering Hatchimals for as high as $399.99 each on Nov. 18, but many were available for about $250. Prices from Wal-Mart’s marketplace sellers went as high as $347.99. Prices on eBay.com were less steep. One Japanese seller listed a buy-it-now price of $124.42, with free shipping. However, eBay Inc. also had some purportedly rare Hatchimals listed for tens of thousands of dollars. One seller listed a Burtle Hatchimal for $100,000, with the proceeds to be donated to Ronald McDonald House. The second-highest asking price was $60,000 for a Draggles Purple Hatchimal.

It’s not just Hatchimals that are selling out online. Excluding marketplace sellers on the Amazon and Wal-Mart sites, 360pi finds the percentage of top toys unavailable as of Oct. 31 was 32% at Target, 18% at Amazon, 13% at Toys R Us and 10% at Wal-Mart.

 

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