by Hank Schlesinger, Vending Times – Issue Date: Vol. 51, No. 11, November 2011, Posted On: 11/29/2011
There can be no denying the changes bulk vending toys have undergone. Price and quality have risen more or less in parallel over the past two decades. Product development, once comprised of recycling a few standards, is now a key component of the industry. Operators and patrons alike are always on the lookout for something new and different.
This evolution, spurred on by consumer acceptance of higher price points and industry innovation, has dramatically transformed bulk vending. What was once dismissed as a penny business on the margins of retail is now very much in the mainstream. Gone are the anonymous plastic toys with little or no play value aimed exclusively at preteens. Mixes in which the perceived value of a product varies widely are in decline; they have been replaced by high-profile licenses and original high-perceived value items. These changes have expanded the customer demographic that includes tweens, teens and even adults. It is not uncommon to find bulk toys adorning office cubicles or dorm rooms.
Behind all of these changes is an increasingly sophisticated infrastructure that stretches from North America to China. A&A Global Industries, a bulk vending giant, for instance, presently produces products based on some of the hottest licenses in the media and sports. Nickelodeon, Disney and Marvel Comics, along with such sports licenses as the NFL, MLB and NBA are among its most high-profile properties for bulk.
“At any given time we have approximately 120 products in various stages of development,” said A&A product development manager Kim Mattison. “And what we try to do is keep a balance between licensed and unlicensed products.”
However, not all of those 120 products will make it to the vending marketplace. The company may abandon an idea if the concept or industry conditions change. That’s true for both licensed and unlicensed products. “If at any point it strikes us that a product is not viable, we’ll pull the plug,” Mattison said. “For instance, if we can’t get the manufacturing costs in line or if we have concerns about safety, we’ll just stop.”
Another thing that might cause the company to abandon a product is timing. If a factory can’t make a production date or a license doesn’t come through in time, the project is halted (NFL products don’t do anyone any good in April).
Product developers like A&A must also deal with property owners’ standards. “Licensors expect key elements they’ve developed for their brands to be maintained,” Mattison explained. “Mickey Mouse has to look like Mickey Mouse, SpongeBob needs to be doing things that SpongeBob would do.” Not only do the colors and logos have to match exactly, but the toys’ physical attributes and functions must also. And it has to fit in a capsule.
At A&A Global Industries, based in Cockeysville, MD, product design is done mostly in-house, where licensors sign off, often after several revisions through each development stage. “When you’re as restricted as we are with price points, you have to be very creative,” Mattison said. “There’s a lot more thinking and planning to meet all the requirements.”
Before a toy is ready for operators to put into their machines, there is constant exchange between licensors and factories. “It could take six to 12 months to bring a product to market,” Mattison admitted. “Someone somewhere along the way is working with that toy every single day trying to get it right. We have some items that are sculpted, three-dimensional toys; other item forms are simpler, but require more elaborate pad printing and painting; and for some of the toys we develop you’re easily looking at hundreds of man hours.”
Brand Vending Products of Scottsdale, AZ, has taken another approach to product development, eschewing licensing several years ago in favor of creating its own brands. “At one point we did all licensing, and that’s all we did,” said Brand’s Dax Logue. “It was a conscious decision to get out of it. We actually formed our own studio as a separate company to focus on developing products.”
But is it even possible for house product to compete with products based on high-profile licensed properties? Brand has proven its case with products like Sqwishland, one of the best-selling products in bulk vending history. “We see it as back-story driven,” Logue explained. “For instance, Sqwishland has an online game tied to it, which has become an excellent connection between bulk vending and the Internet.”
Sqwishland products themselves don’t necessarily have to be more sophisticated. However, if they don’t have brand recognition they could get passed up. “That’s why licenses were important,” Logue said. “Now we’ve created our own brand by connecting a code in the product to the Internet. We have people pay as much as a dollar for a 1″ capsule with a very light-weight product in it because they recognize the character. If there’s brand recognition, they’ll buy it.”
Adam Dorfman, president of Allstar Vending, based near Montreal, reports that off-the-shelf products that work in bulk vending are getting more difficult source from suppliers in China. “There are no factories in China that can survive on selling only bulk vending items,” he said.
This nonexclusivity may not be a bad thing. As Dorfman sees it, supplier control enhances the industry’s ability to offer products unique to bulk vending. This gives Allstar the ability to lower costs and increase capacity by making items that are a little smaller and lighter. It also improves quality control. In the past, some products bought off the shelf often had trouble moving through vending machines. If a product weighed too much, for instance, it could get jammed in a machine or it could force a capsule to “pop” apart during loading or in transit.
These are issues Dorfman understands well. Starting off as an operator of flat vending machines 20 years ago, he began designing and printing his own stickers. “There were only two suppliers, and they did not design products geared towards our market, so we did,” he explained. “Soon, other operators began asking us if they could purchase these stickers from us. Ultimately the same thing happened with capsule products — we didn’t like what was out there and we began developing our own product for our routes.”
Since those early days of supplying product for its own machines, Allstar has sold off the majority of its routes and concentrated on the supply side. Today, the company offers a large assortment of both licensed and generic products that range from 1.1″ to 4″ capsules. Large 4″ capsuled products, which can include remote-control cars, are primarily aimed at the Canadian and European markets. “Later this year, we’ll be releasing our 500th product,” Dorfman reported. “For us, it’s not about having the one or two good items, although we have had our share of homeruns, like Funky Face and Dress Up Girls. It’s more about consistently supplying a full line up of top-selling items in various sizes and at different vend prices, and having them in stock and updating them frequently.”
NO SMALL CHANGE
Bulk vending has certainly come a long way from its origins. Veteran operators might recall an era of cheap plastic rings and charms. For impulsive preteen consumers, it was more about the purchase than the product. Products based on hit television shows or movies were infrequent, and licensing agreements were uncommon. Typically, a product tied to a TV show or movie would consist of a paper sticker or lenticular image on a plastic ring. For the licensors, bulk vending was not a consideration. With Mickey Mouse being the first licensed character for them in 1935, lunchboxes held the interest of licensors for most of the 20th century.
It was also not uncommon for products to stay put in machines for months at a time, even if they didn’t sell. With capsule merchandise relatively new to the marketplace, operators relied on the gumball model, which meant keeping products out on location until they sold out, no matter how long it took or how many potential sales were missed between service cycles.
The contrasts between the early and present days are stark. Not only are the price points significantly higher, but operators routinely change out products more frequently, often consigning slow-selling items to discounted “mystery mixes.” It is not unusual to see several high-profile products on the typical bulk rack.
Coins Photo Credit: a love dc, Flickr