Marketing Blog

Marketing Blog

3% Margin on branded toy sales? Whatever next?

A colleague told me a curious tale last week with regards to a toy shop owner he recently met when visiting his store. Two girls playing leap frog

Whilst walking round the store with my colleague , the owner suddenly stopped in his tracks and started to curse and rave about the product located in the prime position in the centre of the store.

“How much do you think we make on these toys?” Sensing the answer to the question was not going to be favourable as at this point the shop owner has steam coming out of his ears and nostrils, my colleague politely responded “I am not sure – 30-35% possibly?”.

The owner retorted ” I wish I did, can you believe I only get 3% margin and I spent £30,000 on the stuff at the Toy Fair!!!” Passing a handkerchief and a packet of Werthers to the shop owner (my colleague swears by them for all upsetting occassions) , my colleague asked the shop owner why on earth he stocked the product!?

“I don’t know, we always have and it seems like we should have the product available – even if we make no money on it…it’s not as if it brings people into the store – I guess I am just taken along by the welcome on the stand at the fair – my ego is always well massaged!!”

There is no need to accept such low margins on products as there are many excellent products available for customers with very high margins, also these products are not available in Tescos and the like and sell in great quantities. Our margins range from around 45% – 65% depending what price the retailer decides to sell the product. We also have some very fast selling lines that would outsell many big brand names and these are great secrets that our stockists keep well hidden to their competitors and order again and again in lareg quantities.

So perhaps now is the time to start reviewing the lines you stock and if you are selling items with such a low margin…..either give them the “old heave ho” or demand more discount!!! Or of course you could look for something unique and which has a strong consumer appeal with excellent margins. I look forward to hearing from you.