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By Kids Electronic Toy Manufacturer Cheertone | 23 November 2023 | 0 Comments

How kids toy sellers advance in a weak economic environment?

Recently, Indonesia has globally initiated the ban on social commerce. As the largest economy in Southeast Asia, why is Indonesia going against the tide of the internet and taking drastic measures against the trending social commerce?

There are two key words in President Joko's speech: predatory pricing and economic colonialism. This refers to live-streamed product prices being significantly lower than local products, and 90% of them are not locally produced in Indonesia, causing a massive impact on local entities. Therefore, Indonesia's ban on TikTok Shop is to protect over 64 million local small and medium-sized enterprises and 130 million online consumers.

Whether this move by the Indonesian government is driven by public opinion, trade protection, or to safeguard local employment rates, we do not know. We can only speculate on two points:

Firstly, this ban reflects the Indonesian government's concern about the market impact and economic consequences of the influx of foreign goods; Secondly, the Indonesian government may not have been adequately prepared for the arrival of the e-commerce era.

With this ban in Indonesia, around 7 million live-streaming hosts and video creators will face the loss of a crucial sales channel, leading to severe economic losses. While global e-commerce giants are thriving in monopolizing large traffic flows, small and micro-sellers are still struggling.   Is low-priced live-streaming sales beneficial or harmful to the real economy? In the rapidly changing landscape of social commerce, people are refocusing on fundamental questions:

1.Can physical stores, live streaming, and e-commerce coexist, or are they inherently in opposition?
2.As the global economy enters a period of low growth, how can small and micro-sellers consolidate their traffic pools?
3.Faced with intense competition, how can small and micro-sellers build core competencies?

1.The Opposition and Unity between Brick-and-Mortar and E-Commerce
The ban on live-streaming sales in Indonesia has sparked discussions about the topic of "E-commerce surviving, physical stores declining." However, we observe a contradiction: while Indonesia is banning live-streaming sales, giants are busy opening physical stores.

For instance, WHP, the parent company of the American toy retailer Toys"R"Us, announced on September 30th its plans for expansion through air, land, and sea.  It aims to open up to 24 flagship stores in major U.S. cities, showcasing the brand's strength. Offline activities, seminars, hands-on experiences with electronic games, and interactive gaming experiences will become new selling points for Toys"R"Us in the North American market.

For some small and micro-sellers, they may consider the high rent of establishing offline stores and thus prefer to operate online. Online stores don't require expensive rent, have more exposure and foot traffic, and generally boast higher conversion rates. However, they might need to put effort into selecting cross-border suppliers to avoid issues such as delivery delays, product quality assurance, and after-sales service, which could lead to problems like returns, refunds, and customer complaints.

On the other hand, another group of small and micro-sellers might have been running offline stores since early days and may not have considered or are not planning to venture into online sales.

Regardless of which situation you find yourself in, we have to acknowledge that the future will inevitably be an era where physical stores, e-commerce, and live-streaming sales coexist. Physical stores and e-commerce meet the needs of different consumers; They are both opposing and unifying, achieving a balanced coexistence.

2. How to Solve the Dilemma of Small and Micro Kids Toy Sellers?
In the past, during an era of scarce resources, a wide array of products could easily meet people's needs. In today's era of extreme material saturation, consumer behavior has undergone significant changes. People now place greater emphasis on the quality of products and the emotional value they bring. In other words, the world has entered a new stage of competition where sales and revenue profits experience low growth, creating a squeezing competition. The easy money is gone; in the future, success will depend on professionalism and long-term strategies.

Market demands are often diverse and uncertain, requiring us to guide customers. How can we insightfully understand customer needs and pain points? Is building private domain traffic effective in the long run? Let's take a look at how toy giants do it and see if they can inspire us.

In terms of understanding customer needs, VTech is known for its precision and speed. For example, in the early stages of entering the Chinese market, VTech discovered, based on data feedback, that Chinese consumers were highly interested in learning and educational toys. They emphasized crucial periods in children's growth, such as crawling, learning to walk, and language enlightenment. 

Consequently, VTech introduced electronic educational toys like the Newborn Toy series and the Kidi School series into the Chinese market, receiving widespread acclaim. For instance, the Kidi School series launched in 2018 targeted English enlightenment for toddlers aged 1-3. At that time, few toy manufacturers in China were producing such products, giving VTech a first-mover advantage in the market.

Post-pandemic,VTech capitalized on Chinese consumers' interest in doctors, the medical industry, and medical tools. They timely introduced a new set of role-playing toys called the "Medical Kit," incorporating voice content closely related to the pandemic. This encouraged children to develop good hygiene habits, resulting in a booming market response.
VTech Medical Kit Play 1VTech Medical Kit Play 2
VTech Medical Kit Play - Picture From VTech Kid Toys

In terms of building a private domain traffic pool, Lego serves as an exemplary model. We know that Lego faced a significant operational crisis in 2003, and its subsequent rebirth had many reasons. One crucial aspect was Lego's adept utilization of its "super users." It built an online community called "Lego Ideas" around its fans. This community gathers fans and creators from around the world who imagine and propose the next Lego products. They can then seek support for their ideas within the entire community. Once they receive a specified number of likes, Lego's product and legal teams get involved. If the idea progresses to the production stage, it can be released globally. The proposer receives a 1% sales bonus. Lego's approach activated its "private domain traffic," unleashing the powerful creative force of its loyal fans.
Lego Ideas Zoom
Lego IDEAS Zoom - Picture From Lego
Whether it's Vtech's precise demand positioning or Lego's establishment of a private domain traffic pool, the essence is to reach customers accurately, reduce costs, and use the saved resources to enhance the user experience.

For small and micro-sellers, going online often involves high expenses in terms of labor and traffic costs. Simultaneously, intense price competition makes business difficult. After the rise of e-commerce, selling prices are generally transparent, making it challenging to sell at a higher price. Some small and micro-business owners choose to do live streaming themselves or manage customers through social media, but these efforts often come to nothing, mainly because some product categories lack competitiveness and are unsuitable.

For small kids toy sellers:
1. Choosing the right supplier is crucial, as product quality directly determines your competitiveness and can build long-term brand value.
2. Categories with high repurchase rates are suitable for focusing on maintaining old customers through private domain traffic operations.
3. New products or those with slightly higher unit prices should move towards localized e-commerce platforms.

However, it's essential to recognize that the public domain also has its limits.Thinking that any place the platform reaches is your market is not realistic. Even with basic platform support, if you lack brand influence and a private domain foundation, you won't retain customers. Lego’s success in private domain operations is rooted in its prior brand influence. For instance, if Lego had recruited a team to operate its private domain without having built a brand first, it might not have been as cost-effective or successful. Their wise decision to allocate part of the budget to loyal fans, stimulating their creative drive, yielded excellent results and significantly increased fan and brand loyalty.

Therefore, for small and micro-sellers, whether seeking traffic through public or private domains, the key is to choose suppliers with excellent product quality and some brand value. Gradually operating private domain traffic with products that have high repurchase rates is a solid strategy. With a foundation in private domain operations, future self-broadcasting on platforms can also contribute to private domain traffic. In this regard, the public and private domains are mutually reinforcing and indispensable to each other.

3. Building "Core Competence" Through Branding
Regardless of whether it's online or offline, the essence of business lies in the perfect combination of talent, goods, and market—the market being both physical and digital. Operating the market effectively is essential to achieving a seamless connection between people and products.

In today's world, the market has been divided into online and offline domains. In a capital-driven landscape dominated by giants, do small and micro-sellers truly need to navigate both online and offline routes simultaneously? Is it not feasible to operate solely as a physical store? The answer is affirmative; it is not viable. Other small and micro-sellers are transitioning into the live streaming trend, gaining some traffic. If you choose not to engage in live streaming, your only source of traffic might be diverted.

So, how can small and micro-sellers get a share of the pie after the giants have taken their part?  At a foundational level, we believe small and micro-sellers can redefine their business models by:

Positioning and Product Selection: If you haven't built a brand yet, start with extensive user research to determine product pricing, identify target consumer groups, collect user feedback, and highlight differentiation in subtle details. Moreover, the ability to create a brand is critical, and product selection is key. Supplier qualifications are crucial, as product quality and after-sales service directly determine your brand image.

Cheertone has 17 years of experience as a manufacturer of kids electronic toys and 15 years of experience in OEM and ODM services. We are an integrated trading company that combines research and development, production, sales, promotion, and export. Our main products include children's smartwatches, children's cameras, children's learning devices, game consoles, and more.  We not only have factory certifications like BSCI, ISO9001, ICTI, etc., but our products have also passed certifications such as CE, ROHS, FCC.

In addition, we have a professional team of 10 people in research and development and operations, helping clients quickly understand the latest market information, locate and select products, and expand into global markets. We understand that producing a high-quality product that meets market expectations is not an easy task. We have collaborated extensively with well-known brand distributors and retailers such as Disney, ToysRus, Aldi, and Walmart to confirm this. As of now, our products have been exported to various regions worldwide, accumulating over 100+ clients on online platforms like Amazon, Lotte, Yahoo, etc.

Online and Offline Promotion: The purpose of promotion is to gain exposure and acquire more customers. In the era of e-commerce platforms and social commerce trends, even small and micro-sellers with physical stores should consider rapidly transitioning their offline business online. E-commerce's role is to expand the radius of physical stores beyond a few kilometers. 

After accumulating a certain number of loyal customers in a physical store, moving offline products online can radiate not only a few kilometers but also more remote markets. Regarding sales strategies, small and micro-sellers can consider a territorial approach—tailoring promotions and marketing according to the characteristics of different e-commerce platforms. Promotions typically target basic products, while marketing is often aimed at popular or new items.

For instance, on platforms where customers habitually make purchases, conduct extensive promotions for basic toys to increase word-of-mouth. On platforms with substantial traffic, focus on marketing new or popular toys to generate interest.

Personalized and Refined Operations: Currently, the global economy has entered a period of low growth, and the decline in demographic, capital, and traffic dividends is rapid. Therefore, whether for toy giants or small and micro-sellers, customer increments are relatively limited.  With fewer customers spending recklessly, even American toy giants like Hasbro and Mattel have experienced significant revenue declines. Mattel, in particular, has started to recover due to the success of the movie "Barbie" released this year, but whether this recovery is sustainable remains to be seen, and only time will tell.

Personalization is, in fact, a form of refined operation, but it leans more towards precise control of consumer demands and real-time responsiveness to those demands. For example, as mentioned earlier, VTech's toys like Kidi School and the "medical box" cater to the personalized needs of Chinese children. Consumer demands are diverse, and it's no longer the era where everyone buys the same things. Therefore, if small and micro-businesses understand how to meet the personalized needs of these diverse users, it will be a future focal point of competition.

Apart from selecting good products, small and micro-sellers can also try small-batch OEM or ODM customization services based on personalized consumer demands. This involves customizing various aspects such as colors, accessories, logos, or UI interface designs on the basis of a single product's functionality. This not only effectively meets consumers' personalized needs but also broadens the product line, giving rise to more types of high-quality products.

Therefore, in the future, both large enterprises and small and micro-sellers will enter the stage of refined operations, aiming for efficiency improvement at every step. There will be many data-driven opportunities in this space, and small and micro-sellers can explore research company reports to determine user interest directions.

The aforementioned strategies aim to help small and micro-sellers reach users at the right time, in the right place, through the right marketing methods, channels, and products, thereby enhancing sales opportunities. In the face of trends, only by adapting accordingly can one grasp the users.

On the front of personalized and refined operations, we have invested a lot of time and cost to explore what types of products can stand out among many similar ones and satisfy consumers' latent personal needs.

The Kids Instant Print Camera CT-P14 will answer this question on behalf of Cheertone. Why do we say that? Please take a look at the pictures of similar products below.

Amazon Hot Sell Kids instant print  camera
Amazon Hot Sell Kids instant print  camera

The above three kids instant-print cameras are relatively popular on Amazon. At first glance, they seem to differ significantly in appearance. However, upon closer inspection, they are fundamentally similar, all being simple cameras with an added photo-printing feature. Apart from a few minor innovative features like different camera shapes, colors, accessories, etc., these three products do not offer significantly different experiences to consumers in actual use. Therefore, we have derived conclusions based on the common points of similar products in the market and consumer feedback.

Real freshness comes from creating user experiences based on actual usage. Besides obvious aspects like design and color, innovation must extend to the operational experience. In today's fast-paced era, portability is crucial. So, the first innovation for the CT-P14 is its modularity, allowing it to be disassembled and freely combined, similar to Lego blocks. As seen in the pictures, the CT-P14 is no longer a fully integrated instant-print camera. You can freely combine the camera with the Bluetooth printer or even change the zoom lens to different magnifications.

Consider a scenario: when using a traditional integrated Bluetooth instant-print camera to take pictures for your friends, your friends need to come close to you to see how the photos turned out. With the P14, your friend can hold the Bluetooth instant-print camera 10 meters away, waiting for you to capture beautiful moments. This design perfectly solves the portability problem of similar products, enhancing its practicality. Additionally, the P14's lens can twist like a classic SLR camera, providing you with a completely new operational experience.
Kids instant camera with tripodKids instant print camera with tripod
Kids instant printer camera with tripod
The second innovation involves the encouragement of holistic child development. Given that physical activity has become an indispensable part of a child's routine, if a child wants to record their sports activities, it's impossible with a traditional instant-print children's camera. Therefore, we've added two types of tripods for the P14, one being a 180° adjustable tripod and the other a fixed tripod. This design caters to a child's filming needs during activities like running, climbing, or even cycling.

The third innovation is about making the instant-print camera toy not just a toy but also an enlightening teacher for a child's growing years. The P14 has several practical educational features, including learning cards, music, stories, puzzle games, a one-click album creation function, and time-learning tools. Notably, the one-click album creation function is a unique innovation developed exclusively by Cheertone. Children can choose their favorite pictures to create a playable slideshow, presenting photos in a more vivid way. This allows children to exercise their hand-eye coordination and expand their general knowledge while playing.

The fourth innovation involves eliminating bundled sales to meet the diverse needs of different markets.  Most products on the market are bundled with many accessories, leaving consumers with no choice. However, the P14 is different. Its product definition is "freely combinable." Therefore, all components of the P14 kids camera and its accessories can be individually selected. This is done because buyer demands and purchasing power vary globally. We believe in adapting our products to suit regional needs, empowering consumers with the right to choose the most suitable and cost-effective products.

These are the four innovative points of the children's instant-print camera P14. We understand that a good product must start from the consumer, with manufacturers and distributors collecting user feedback and improvement suggestions to refine the product. Our core motivation on the path forward is centered around the value proposition of consumer-centricity and mutually beneficial cooperation with distributors.

We understand that capital always flows towards places with substantial profits. Similarly, whether it's an e-commerce platform, a physical store, or a social live-streaming platform, consumers will always choose a shopping platform that offers quality products at affordable prices; it's a fundamental aspect of human nature.

It's often said that the darkest hour comes just before dawn. As the pace of the economy slows down and the consumption awareness of the next generation changes, most sectors find themselves in the squeeze of reduced market share. In the face of numerous challenges, everyone is continuously exploring new paths forward.

Micro and small-scale sellers need not be overly pessimistic. Only by persistently investing in research and development, continuously innovating, enhancing efficiency, reducing costs, and consistently introducing new products, can they stabilize their foundation. Providing customers and users with better experiences and value through excellent products and services, precisely acquiring customers, and retaining them in the "private domain" through a combination of short videos, live streaming, and various AI tools, will always bring breakthroughs.

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