As we’ve mentioned previously, manufacturers in non-CPG industries are increasingly using the online channel to sell direct to consumer (for example, Internet Retailer recently announced that manufacturers selling direct to consumer is the fastest growing online retail category in this year’s Top 500 Guide).
Mattel, the largest U.S. toymaker, made news this week with a new direct to consumer website that offers all of Mattel’s well known brands under one eCommerce site. The site, located at Mattelshop.com, includes a number of innovative social features (full coverage here).
It is very interesting to see a manufacturer combine its broad brand portfolio into a single eCommerce effort. But what I find even more interesting is the analogy to the CPG industry. Both the toy industry and the CPG industry have a retail landscape that is dominated by a few giants. Mattel, for example, generates approximately 1/2 of its revenues from three big retailers, Walmart, Target and Toys “R” Us. The national CPG brands have similar distribution among a few retail giants.
The takeaway for me? A big national manufacturer like Mattel can take bold steps to go direct to consumer online without disrupting its traditional retail relationships.
Shouldn’t the CPG industry be in the same position? CPG manufacturers have an assortment problem in going direct on their own (something we are trying to help solve with our shared platform at Alice.com). Are there other pitfalls to a CPG manufacturer going direct that aren’t present for Mattel? If not, I think Mattel is leading the way in what is sure to be a bigger trend online.