Toys & Games Global Online Category Report: Revealing The Top Performers This Holiday Season

Toys & Games Global Online Category Report: Revealing The Top Performers This Holiday Season

2 With the festive shopping season in full swing, it is a critical time of year for brands in the Toys & Games category. With greater choice and more deals, shoppers are turning to online as their preferred means of holiday shopping, and the Toys category is no exception to this trend. In the US, online sales for Toys have grown by over 55% in the past two years, to $17bn (Statista), while in key European markets online sales have surpassed physical store sales.

3 The following analysis covers the online performance of brands in the Toys & Games category across five leading global ecommerce markets; US, UK, China, France & Germany. Brands were measured against key metrics proven to drive sales in the online channel: 1. Share of Shelf: A brand s share of products when compared against the total number of products in the category. This metric represents a brand s breadth of range, and depth of distribution in the category. 2. Availability: Being in-stock, and available to purchase is a base requirement for any brand in the online channel. Out-of-stocks not only lead to lost sales, but impact other areas such as Search and Ratings & Review performance. Availability was calculated on the proportion of products in-stock by brand on leading online retailers. 3. Content Optimization: In the digital channel, it is essential that Product Content delivers an engaging shopping experience, and provides the information that shoppers are looking for. This metric measures the presence, accuracy and quality of content on product pages. 4. First Page Search Performance: Appearing in the first page of Search returns (key consideration set) is proven to drive sales. This metric represents how brands perform against key category Search terms, and where they rank for each term. 5. Rating & Reviews: Ratings & Reviews represent a significant opportunity for brands to understand shopper sentiment, and utilize user generated content to accelerate sales. This metric measures the number of reviews, and average star rating for each brand in the category.

4 Search and Content Optimization key to winning in the US and China Brands optimising on Search in the US across both Boys and Girls Toys Search terms included VTech and Fisher-Price. These brands featured prominently amongst first page Search returns, occupying prime consideration positions (Top 5 returns on page). For Boys Toys in the US, Paw Patrol, Disney and Star Wars rank in the Top 5 of Search most often. For Girls Toys, ALEX Toys, Shopkins and PowerPuff were the leaders in both Search rankings, and coverage. The Top Five Brands for both Boys and Girls Toys also performed above average on Product Content. However, all brands can look to Product Content as an area to be improved upon, with no single brand delivering a best in class experience. Product Content Optimization can not only deliver a more engaging shopping experience, but also help drive increased Search performance. Toys & Games Top 5 Brands Winning on Search Country Boy Brands Content Optimization % Girls Brands Content Optimization % Table 1: Toys & Games Top 5 Brands Winning on Search, US US Fisher-Price 63% VTech 58% US Paw Patrol 71% ALEX Toys 67% US VTech 58% Fisher-Price 63% US Star Wars 80% Shopkins 69% US Disney 66% Power Puff Girls 90%

5 Focussing on Content Basics and the Impact on Search Performance Image 1 Optimizing product names is proven to drive improvements in Search rankings. By focusing on this area of Product Content, brands such as VTech will see the positive impact on Search performance. Several products within the VTech range are missing the brand name in the product title, examples include Kidizoom Smartwatch DX, Red and Tiny Touch Tablet, Pink on Walmart.com which can be easily corrected. (Image 1) On Amazon, ALEX Toys experience similar inconsistencies in Product Names, highlighted in the absence and misrepresentation of the brand name, ALEX Toys in Fold N Fly Paper Airplanes Kit and Alex Peg Farm. (Image 2) Image 2

6 In this example, the absence of brand name in product details and description has potential to impact on Search performance, and sales. The foundation of a winning Product Content strategy is ensuring that the basics (Names, Descriptions, Details, Warnings) are both optimised for Search, and shopping experience. Learn more on how to drive greater engagement with Product Content Xylophone 100% brand new and high quality. Xylophone toy sounds very melodious when you knock it. Each piece of metal knock voice is different. Can inspire children s talent for music. Bright colors increase the kids sensitive to colors. Easy to learn, help to develop your kid s musical talents and wisdom. Suitable for 6 months to 7 years old baby/kids. Recommended Age: 6 months - 7 years

7 Lego outperforms BanBao on Search and Content Optimization in China In China, brands winning on Search across genders were more differentiated than the US. BanBao was the only brand to have a presence in both boys and girls Search rankings. Big players like LEGO perform well for boys Search terms while Chinese Toys companies like XinLei and Auby also rank in the Top 5 of girls toys Search returns. Echoing the trends seen in the US, no brand is achieving full marks on Product Content, with the average Content Optimization score 77%. Only Audley and XinLei performing above this. Country Toys & Games Top 5 Brands Winning on Search Boy Brands Content Optimization % Girls Brands Content Optimization % Table 2: Toys & Games Top 5 Brands Winning on Search, China CN Auldey 77% BanBao 72% CN COGO 70% XinLei 92% CN LEGO 72% Beiens 58% CN BanBao 71% Brilliance Love 67% CN Sluban 72% Auby 71%

8 Who are the European Category Leaders? A recent survey in the UK has revealed that a massive 90% of shoppers say they will do their Christmas shopping online this year, with 73% preferring to order online than battling the high street queues. Hence, Toys & Games brands need to have a strong online presence in order to perform to capitalise this holiday season. Across the UK, France and Germany, Disney and VTech consistently feature amongst the top performers on Share of Shelf, Availability, Review Scores and Product Content. LEGO has the largest Share of Shelf in both UK and French markets with 8% and 9% respectively. Disney claims top spot in Germany with 4% of all SKUs in the category, significant given the level of fragmentation. The Top 5 brands account 18-20% of all Toy products across markets. Product Availability is amongst the most important metrics, in both the online and offline channels, given the direct impact of lost sales if a product is out-ofstock. Availability scores across the leading brands in Europe are high, with the Top 5 brands across markets averaging Availability in excess of 93%. LEGO in the UK & France however, and VTech in the UK should monitor Availability closely over the comings weeks as these brands seem to be feeling the pressure of increased demand with 14% of LEGO products outof-stock in the UK.

9 Toys & Games Top 5 Brands Winning on Search Country Brands Share of Shelf % of products in Stock % of 4+ Star Reviews Content Optimization UK LEGO 8% 86% 87% 73% Table 3: Toys & Games Top 5 Brands Winning on Search, UK, Germany & France Disney 5% 97% 25% 59% Thomas & Friends 2% 99% 27% 72% VTech 2% 86% 51% 60% My Little Pony 2% 93% 33% 59% DE Disney 4% 99% 20% 81% LEGO 4% 97% 20% 56% Zapf Creation 3% 100% 31% 97% Ravensburger 3% 96% 13% 56% VTech 3% 99% 25% 51% FR LEGO 9% 90% 49% 80% Playmobil 4% 92% 64% 81% VTech 3% 99% 54% 67% Ravensburger 2% 99% 71% 94% Peluche 1% 99% 6% 41%

10 Understanding the Drivers of Content Optimization Content Optimization, as we also saw in both China and the US, is an opportunity for brands to deliver a consistently engaging shopping experience. The LEGO brand ranges from 80% in France, to 56% in Germany against this metric. Inconsistencies in Content basics (Names, Descriptions) can negatively impact both Search performance, and add to basket. In the Disney Magnetic Sketcher example, including the Disney brand name in the product title, and product description is a quick win to improve Content Optimization scores. This product also lacks product details and specifications on the product page, further impacting on the shopper experience. Customers Sentiment an Opportunity Area in France and Germany Consider Ratings & Reviews in both France and Germany, it is a massively underutilised and underdeveloped area compared to other UK. This means there is a big opportunity for brands to lead on this metric, a proven driver of add to basket. A Clavis Insight survey found over 20% of shoppers considered the presence of Ratings & Reviews as important as basic Product Content (such as Names, Details), in their eyes when influencing their purchase decision.

11 How Toys & Games Brands stack up on the Digital Shelf In Summary For brands looking to win online this holiday season they need to focus their efforts on: 1. Minimising Lost Sales through Out-of-Stocks: As we enter the busiest trading time of the year for Toys & Games, Availability comes under significant pressure. The analysis revealed that even leading brands are missing an opportunity through Availability. LEGO in the UK saw 14% of SKUs out-of-stock, reiterating the importance to monitor and measure this key metric daily to adjust stock volumes, and quickly identify any issues. 3. High Volume, High Quality Ratings & Reviews: Proven to drive sales, Clavis Insight considers a product positively reviewed if it has more than 20 reviews and above a 4.0 star average. Ratings & Reviews are a powerful tool for Toys & Games brands to use to lure shoppers, and missing out on this shopper engagement can mean missing out on sales in the online channel. 4. Strong Product Content: It is critical that brands deliver an engaging shopping experience via their product page content. Focussing on the basics of complete product names, descriptions and warnings will not only provide shoppers with the information they are looking for but also positively impact on Search performance. 2. Appearing Top of Search Rankings: With the majority of purchases coming from the first page of Search returns it is key for brands to place in the Top 15-20 positions. Availability, Product Content, and Sales are among the driving factors behind Search rankings, hence brands need to ensure they take a holistic view of performance to win.

12 Analysis Scope The analysis centred on the Toys & Games Category across five global markets; US, UK, China, France and Germany. Stores, Product Counts and Search parameters included in the research were as follows: US Top 5,000 Toy products on Amazon.com, Walmart.com and Toysus.com CN Top 4,000 products on Tmall.com, JD.com, Suning.com and Amazon.cn UK Top 18,000 products on Amazon.co.uk, Tesco.com, Littlewoods.com and Toysrus.co.uk FR Top 12,5000 products on Amazon.fr and Toyrus.fr DE Top 15,000 Amazon.de and Toysrus.de

13 Online Key Metrics Availability Track your portfolio s state of availability by retailer, category, brand, and manufacturer to optimise your range, maximise distribution, and improve sell-through. Search Rank Understand where your products rank in search results for specific search terms to ensure your products are discoverable. Content Integrity Monitor compliance of product content for individual SKUs by category and online retailer so that you can make sure your products are optimised to win the digital shelf. Category Placement Understand where your products rank on the online store category menu structure. Target categories to ensure specific product sets are easily discoverable. Ratings and Reviews Set targets for total number of product reviews and average rating score to help drive omnichannel sales. Media Tracking Monitor online media placements for compliance and effectiveness; track category competitors. Price and Promotions Tracking Monitor pricing and promotions for your products and your competitors products to make sure your products are optimised to win the digital shelf. Location Based Tracking Monitors locationbased product Distribution, Availability and Price & Promotion, and provides aggregated analysis of metrics at the market-level by retailer, brand and category.

14 About Us Clavis Insight is at the forefront of the ecommerce revolution, delivering ecommerce insights and online retail store analytics to a broad range of consumer products brand leaders around the world. Our Insights are designed to enable you to optimise your distribution, content integrity and online placement in the digital channel in order to protect your brand online and grow your sales. To learn more please contact: info@clavisinsight.com BOSTON 46 Farnsworth Street, 1 st Floor, Boston, MA 02210 + 1800 693 9591 LONDON #610, 6 th floor, 22 Upper Ground London, SE1 9PD +44 20 3318 6329 SHANGHAI Room 965, ECO CITY No. 1788 Nan Jing Road West, Jing An District, Shanghai, China +86 21 2231 0511 DUBLIN 7 th Floor, O Connell Bridge House, D Olier Street, Dublin 2, Ireland +353 1 254 3440