How one of the world’s biggest toy manufacturers sold on scarcity with an international brand
A Brief History of Wholesale Toy Cars
In the 1960s, the Lesney company in England was the most profitable wholesale manufacturer of toy cars in the world. This is because of their Matchbox line of die cast vehicles. The cars were primitive. They didn’t roll that well and were painted in typical, normal colors. But they were in a market that had nearly no competition. Matchbox ruled an entire segment of the toy industry.
Until 1967. At Mattel Corporation in El Segundo California, the designers figured out how to disrupt the die cast car market. They turned the toy industry upside down. Their plan was simple. They would make a hot new toy car that would do everything Lesney’s Matchbox cars couldn’t do.
The Birth of Hot Wheels
That’s how Hot Wheels were born. Lesney’s Matchbox cars didn’t roll well. Hot Wheels cars had wheels and axles that were designed to make them fly across the kitchen floor. The Matchbox cars were all tired old models, mostly antiques and commercial or military working vehicles. Hot Wheels chased trends in the automotive market, and focused on muscle cars. Where Matchbox cars were painted boring solid colors with blocky wheels and tires, Hot Wheels cars were painted bright, glittering hot rod colors with a proprietary process Mattel called Spectraflame, and they had 5 spoke wheels with redline muscle car tires. A trend that was all the rage in car culture.
Hot Wheels destroyed Matchbox in the toy stores, and put the entire industry on the backfoot and had them playing catch up. Matchbox tried to catch up by releasing a line of cars called SUPERFAST, which had redesigned wheels and axles that they hoped would catch up to the speedy Hot Wheels, but Lesney didn’t have the engineering knowledge of Mattel, and the first run of SUPERFAST cars were disastrous- The wheels were too weak and were prone to falling apart on their axles.
Lesney’s Matchbox brand would eventually be acquired by TYCO. TYCO was then later acquired by Mattel, and today, both Hot Wheels and Matchbox are Mattel brands. To avoid cannibalizing sales, each brand focuses on different vehicles. Hot Wheels as always focuses on fast cars and trends in car culture, while Matchbox focuses on commercial working and service vehicles.
The Biggest Wholesale Toy Brand in the World
Today, Mattel’s Hot Wheels cars are one of the world’s largest and most recognizable toy brands in the world. The cars themselves have remained the same price they were initially when they first hit the market in the late sixties. In order to keep the price per item low for the customer, Mattel has developed every part of the production cycle, from changing the paint operations on the cars to replacing expensive metal parts with cheaper plastic ones, to building the cars in factories in Thailand, Vietnam, and Malaysia.
The toy cars are available worldwide. They can even be found in captive domestic markets like Japan, where the dominant toy car line is the natively Japanese Tomica.
But even wholesaling and distributing the biggest toy car franchise in the world, Mattel has still found ways to create scarcity to drive their sales.
I’ve Got a Golden Ticket
In Charlie and the Chocolate Factory, Willy Wonka drives up sales for his flagship product the Wonka Bar by offering a golden ticket. Hidden inside the packaging of his otherwise pedestrian and mass-market product. By creating the golden ticket contest he managed to drive sales through scarcity marketing on what was otherwise a wholesale item. After all, winners of the golden ticket contest came from all over the world. Wonka had driven demand for his eponymous Wonka Bar with his golden ticket ad campaign.
Offering a contest like the golden ticket, or trying to create it by offering vacations or other prize packages is a giant undertaking by itself- Furthermore, it’s one that intersects with its own host of legal rules. When a business offers prizes like raffles, points programs, or vacation giveaways, they are under legal obligations to produce a winner or they can face lawsuits or charges.
But if the prize is the product itself, then there’s no need to jump through the legal hoops of the golden ticket campaign. When the prize is just buying the product, there’s no problem with the other promotional issues.
Enter the Treasure Hunt
In 1996, the largest toy car wholesaler in the world invented their own golden ticket. Mattel created the Treasure Hunt series- 10,000 collector cars that were hidden among normal Hot Wheels. These special cars had unique paint, realistic rubber tires, and all metal construction. Demand for the Treasure Hunt cars became so massive that Mattel had to inject more into the market, increasing the number of Treasure Hunt offerings to 25,000 cars.
New Promotion Tactics
The promotion was such a huge success that Mattel has run the Treasure Hunt program every year since. Collectors searching for the unique cars hiding among the more pedestrian mainline cars will wholesale order cases of products for themselves, with the sole intent of ripping open the cases and finding a Treasure Hunt inside.
In this picture, you can see a 2020 series Super Treasure Hunt GT40 side by side with the normal car. The collectible Treasure Hunt car has unique Spectraflame paint, rubber tires, and an all metal construction. (You can’t see it, but the bottom of the normal car is plastic.)
With cars like these hidden inside their normal flagship mainline offerings, the adult collector market for Hot Wheels cars has surged. Customers make daily trips to their local retailers to scan the pegs for unique cars. Some parents use it as a bonding experience and organize father-son hunting trips. Hot Wheels collectors have become such a problem for retailers that many large chain stores won’t hire a prospect that they know is a Hot Wheel collector.
Of course, imitation is the sincerest form of flattery. When other manufacturers of diecast toy cars saw what Mattel was doing to drive collectors into wholesale, they followed suit with their own promotions. One of Mattel’s competitors, Greenlight, has their own limited edition promotion by hiding cars with bright green wheels among their normal stock.
Drive Wholesale by Creating Scarcity from Abundance
The lesson here is that even a wholesale brand that has complete market penetration and is sold at retailers around the world can be a scarcity driven brand with the right kind of promotion.
You can also see that Mattel’s version of the promotion is extreme. The difference between the mainline normal car and the Treasure Hunt car is radical, with unique parts and manufacturing operations. Greenlight’s car is more reasonable in its expectations.
The drive for scarcity need not be as extreme as the Treasure Hunt. In Greenlight’s lesson, we see that there is only one operation between the normal car and the collector car.
Any wholesale consumer product brand can activate this power. It can be as simple as changing a badge, a brand logo, or a paint color. By inserting a collectible rare variant into your normal product line, you can drive sales through collectors that will make bulk orders just to look for it.
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