Source 丨Marketing Entertainment Sauce (ID:marketingyuzijiang)
Author 丨 Lee Jong-ho
"Ten of them did Amazon, nine of them were brushing orders, and one did not dare to brush after being banned."
Tina, who has fried Bitcoin and sold e-cigarettes, said so. Since graduating from university and coming to Shenzhen, she has been working hard in the foreign trade circle for many years, and finally chose to settle in the cross-border e-commerce industry, completing a "fast-forward and fast-out" in the toy sea track in the past two years, and gradually transformed into an output expert and KOL of the sea-going methodology.
In Guangdong's Chenghai toy industry belt, "going to the sea" is not a sexy concept, but a "long history" business, as early as 1995, toy manufacturing has become the pillar industry of Chenghai, exports of nearly 100 million US dollars, "here are thousands of large factories and small workshops, even if it is dozens of people's family small production line, they have been doing foreign trade business for more than ten years, many bosses not only have factories in China, some also built production bases in Southeast Asia." ”
But the clock is set to 2020, in the past two years of global supply chain blockage, China's thriving environment, "going to the sea" for small and medium-sized players is a lightweight construction brand, reduce the channel share of the "curve overtaking" opportunity. This kind of play can help a small jumping frog with 9.9 yuan on Pinduoduo, cross the ocean to amazon in the United States to sell a high price of about 20 US dollars each, excluding various costs, and the gross profit margin can be 30%.
Source: Shenzhen Toys & Games Fair official website
Affected by the epidemic, home puzzle toys worldwide hot sales, according to the Toy Association of the United States (The Toy Association) data, building blocks (Building Sets) is the fastest growing toy category in the United States from 2019 to 2021, Chenghai has a large number of toy factories to open related production lines, the main raw material of building blocks ABS plastic purchase price is also from 8000 yuan / ton in 2020, to 15000-16000 yuan / ton in 2021.
But from the beginning of the "black five" in 2021, and then to the outbreak of the epidemic in 2022, the unpredictable risk of destroying orders is frequent, the situation began to take a sharp turn for the worse, in addition to the "various costs" have surged, the door of "going to the sea" has slowly closed, the small workshops in Chenghai, which have survived tenaciously, have gradually returned to the traditional "foreign trade" model, and the big factory owners have worn masks and have gone to Southeast Asia to "supervise the war" factory construction process, trying to continue to participate in a new round of opportunities for the recovery of the global industrial chain, sharing nearly 50% of the local monthly Dividends from the growth of foreign trade.
Started in Guangdong in 1998, large-scale Vietnamese factory in 2010, 2022 will be listed in Hong Kong GFT International, is a supplier of international brands such as Tomei, Hasbro, four of the world's seven major global toy brands are its customers, in addition to self-built factories, GFT also invested in two factories in Vietnam, Haiyang and SDV Haiyang, with a shareholding ratio of 36% and 25% respectively, to increase flexibility and adjust production on demand.
When Chenghai Toys took thousands of small family factories to drink soup, GFT, a Chinese-funded company hiding in Vietnam, was the big man who ate meat, although it was also exposed to the risk of the epidemic, but after a brief downturn in 2020, its turnover rose by more than 30% in the past three years, and its profit tripled.
Where there is money to go, Tina, who was once trapped in Chenghai, has turned to the small home appliance track, she told the marketing entertainment sauce (ID: marketingyuzijiang):
"Now the people who have entered the domestic market must return to the essence of business."
A-side: The first person to eat crab can indeed make money lying down
Going to the sea was once an opportunity for white-label manufacturers to turn over and do branding, but not every factory can create products such as DJI drones and stone sweeping robots, with an annual output value of 50 billion yuan and an export ratio of more than 70% of the Chenghai toy industry belt, using the domestic already familiar traffic method to fish first, which is the first choice for most toy cross-border e-commerce entrants.
Under the continuous challenge of the blockage of bitcoin transactions and the successive increase of e-cigarette regulatory policies in China and the United States, Tina has shifted her career direction to e-commerce overseas marketing, and has dealt with foreigners for many years, and her first target is Amazon in the United States. "Now do overseas traffic is very mature, no matter what category you are, use crawlers to grasp the data, and then simply do overseas customer research, you can find the best selling products at the moment, toys are relatively simple."
With the help of customs, industry and Amazon sales data, Tina's team found that the toy market ceiling in the United States is extremely high, although There are many merchants in China, but there is no monopoly giant, coupled with the network support of supply chain partners, they finally locked in the two subdivisions of party toys and building blocks, such as water guns, there is a clear peak consumption season overseas, as long as you get the goods, you don't have to worry about sales, and the building blocks are low in cost, single raw materials, It is a category with low price advantages for a long time in Chenghai Toys, and in the early stage of entrepreneurship, it can make a small profit by getting public mold products, so both are relatively stable profit margins.
In 2020, Alibaba AliExpress listed building blocks as the primary key investment category
In response to the challenge of the epidemic, in December 2021, Lego officially announced the $1 billion Vietnam "carbon neutral" factory construction plan, which is also Lego's second plant in Asia after the Chinese factory, which is expected to be put into operation in 2024 and will bring more than 4,000 jobs to the local area. The reason behind this is that Lego is targeting the Asia-Pacific market with a toy revenue growth rate of 28% by 2025, which is higher than the global average of 28%.
But in addition to this giant, which is known for IP cooperation and intelligence, on Amazon, other brands and even white cards can play their own living space with differentiated pricing and diversified design.
Image source: Amazon, USA
At the marketing level, Tina told marketing entertainment sauce that the overseas delivery model has also undergone a lot of changes in the past few years. Although various products cannot be generalized, in the toy category, the delivery efficiency of old channels such as Google and Facebook is not as good as directly buying graphic and short video social media, Instagram and Tiktok' direct visual stimulation effect. No matter what track you do, Youtube blogger cooperation is essential, with "evaluation" to achieve grass planting effect, with a variety of list optimization, you can convert into good sales.
At the age of 9, Ryan had already become one of Youtube's most profitable bloggers through the toy review experience
And to the specific sales link, "ten Amazon Chinese sellers, ten are brushing orders" in Tina's view is not a lie, because before Amazon's large-scale suspension, the platform's algorithm decided that as long as the sales and comments are quickly brushed up, it can "white prostitute" a lot of traffic, and the overall marketing cost can be controlled below 10%, which also makes the entire industry form a strong traffic dependence, and lose the power to fight back under the tough blow of platform supervision.
Tina was one of the earliest sellers to prepare for both hands, and began to build an independent station before the title was banned, trying to shift from the selection mode to brand building, and designed the official website and logo for her own party water gun and building blocks.
But in fact, the independent station is not "true independence" from scratch, but some people have long been ready to "sell shovels". As long as you make good use of Shopify, which provides a full set of website building services, coupled with the PayPal of "American Alipay", any overseas seller can quickly build an independent e-commerce website with complete functions, and the business of "building a website" even feeds a large number of agent service providers in China, which is also the routine used by Tina, "Do this in Shenzhen, you can send a circle of friends to get it."
With more and more independent sites, Shopify has been regarded by Amazon as one of its biggest competitors, the latter recently launched the "Buy With Prime" feature, allowing other website builders other than Shopify to access their perfect payment and fulfillment system, and the powerful distribution and warehousing system is one of Amazon's biggest global advantages.
Players like Tina who have just entered the game, as long as they take out a "micro-innovation" water gun from the product library in the first two years, through two-pronged marketing channels, coupled with the global supply chain blockage in the first two years, the unique competitive advantage of China's scenery, supplemented by the traffic dividend in the early stage of toys going to sea, they can use a team of 100 people and a customized production line to achieve annual revenue of 100 million to 200 million, sitting on 30% of the profit, and this is only the "small and medium-sized" scale in Tina's mouth.
At least in 2020 and 2021, it is not a myth that toys will go out to sea to make rich.
B side: The situation is stronger than people, and there is a way out when you move
However, the dividend disappeared faster than its arrival, with platform blockades, rising freight rates, and giant encirclement and suppression. The big factories that have returned to wei'er have begun to increase THEIR IP cooperation and overseas production, and the white card players who have just started and the small team of the overseas operation team have gradually been squeezed out of the track by the capital giants.
Amazon's large-scale suspension is the first blow of "pre-publicity", in the case of brushing a single becomes a "rule", Tina and her peers know that this day will come sooner or later, but most people did not expect that the platform would be so ruthless. Because the source of procurement is mostly white cards, initially they used the way of changing the label to try to pass, but the product will be "debunked" in the hands of overseas consumers, and a complaint will not be able to open a new store.
This impact also quickly spread to independent sites, as a competitor of Amazon, Shopify can not turn a blind eye to the seller's "riot operation", must play a certain degree of regulatory role, consumer complaints and mutual reporting between peers will affect the safety of website operations, "we do poor information business started, have thought about accumulating brand equity, make more long-term money", but before that, living to fight is a more important thing for Tina.
And Chenghai's toy production volume has always been very serious, Tina's team in order to do their own brand, in the use of a large number of white-label production capacity to make money at the same time, but also invested in a production line of their own, but the "micro-innovation" of water guns and building blocks in Shenzhen and Chenghai survival time will not exceed a week, a verified effective product iteration, will quickly spread to the entire toy industry belt, before waiting for their own new products into the container, hanging other brand logo of similar products may have been on the ship, When sales channels continue to tighten, the living space of small and medium-sized sellers will inevitably disappear.
Search for water guns on Amazon, the product homogenization is serious
Wei Zai, who runs a small family factory, feels this more strongly, because of the wave of going to sea, the demand for small batches of customization large-scale foundries is dismissive, but his three small assembly lines have repeatedly exploded, and once needed to recruit people to expand production with several times the salary, they are also the support behind Tina's ambition to "do brand". But not long after the production capacity came up, the tightening of the sales side spread to his "family business". Several closures in the past six months have forced the newly developed production line to repeatedly stop work and resume production, making him a small business owner who relies on the amount of electricity to level the cost of electricity.
All kinds of pains are superimposed and erupted before the "Black Friday" in 2021. At that time, the freight rate had risen in an overly hot market environment, exceeding the red line that originally occupied 30% of the cost, and once reached more than 70%. The background of the rise in freight rates is the force majeure of the continuous blockade of the transport capacity, Tina for the hottest shopping season in the United States prepared a new water gun and bricks were pressed in large quantities in the country, when the arrival of the goods can only be directly discounted to inventory, busy for half a year of preparation, and finally only barely recover the cost, which is also the last straw to crush many small and medium-sized sellers.
After the big waves and sands in the past two years, what remains is a large factory with deep roots.
In Chenghai, there are giants such as Aofei Animation, who built moats in the early years through "Fire Boy King", "Balala Little Magic Fairy" and "Audi Double Diamond, My Partner", which is far beyond the reach of white-label factories. Although there was a sudden rise of Bubble Mart, and after the TOP TOY of the famous creation and excellent products, the imagination of Aofei Entertainment seems to be not as big as the two opponents who took the fast lane of "tide play", but its stable profit and the status of the domestic K12 toy leader are still unshakable, and the development of movies and theme parks has new actions every year, which is the valuation dark horse of the capital market.
Source: Tianfeng Securities Research Report
Senbao bricks, which also started as a foreign trade OEM in Chenghai, decided to transform after seeing Lego's successful experience in 2013, but the inertia of long-term focus on order production was difficult to turn around for a while. In an interview with the media, founder Lin Zezhe dismantled The experience of Senbao testing the C-end market: first test consumer feedback by giving away 10,000 sets of new products for free, and then use this set of data to push back to dealers to promote orders. After 2017, Senbao has successively won the IP rights and interests of "The Wandering Earth", "Three-Body" and "Spirit Cage", sitting on more than 6,000 sets of building block molds, and has achieved a sales share of four or six joint and original products, and is getting closer and closer to "China Lego".
Source: Senbao Bricks official website
The experience of Disney, Bandai and Lego is at hand, there is no IP and story toys, lack of ability to form an impact across generations, can not support the ambition of "brand", and the huge scale of foundry leaders, has the incomparable scale and marginal cost advantages of family workshops, the two-eight effect has long been formed.
Although the platform and dividends have faded, the integration of production capacity in Shenzhen and Chenghai is still at the top of the country, Tina left the toy track after the "Black Friday" and turned to the small household appliances that are in the limelight, and her new team has sold more than 5 million air fryers overseas (net red small household appliances: from air fryers to sweeping robots, are you "deceived"? This year, the company is expected to have revenue of 4 billion to 5 billion yuan, and the number of sales of friends' overseas investment funds is also increasing. With the normalization of local epidemic control, Wei Tsai's family factory production has also returned to normal, but the profit is not as crazy as in the previous two years.
What makes Tina and Wei Tsai even more emotional is that in addition to large factories such as Lego, Aofei and Semba, even the bosses of medium-sized toy manufacturers have also worn masks to Vietnam and risked supervising the construction of their own overseas factories, which has a strong GDP rebound in the first quarter of 2022 and a total import and export volume of 38.1% in March, which is about to become a new gold mine for overseas players.
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