The pact will combine Mattel's toy brands with Alibaba's data and insights into the Chinese consumer. The goal is for Mattel to tackle the USD 7 billion Chinese toy category, which has posted strong growth though average per-child spending on toys is low compared to Japan and Western markets.
The US toy industry generates USD 20.4 billion at retail and that market is far smaller in terms of population.
Under the collaboration, Mattel will market and sell brands like Barbie, Hot Wheels and Fisher-Price via Alibaba's marketplace, targeting an audience of some 443 million active buyers. Mattel will also work with Alibaba to develop new toy products that would be made specifically for the Chinese consumer.
A cultural barrier that Mattel and Alibaba will need to overcome is that when parents do have extra money to spend on their kids, they prefer to put it toward educational pursuits. Mattel says it wants to develop educational content that can persuade parents in China that buying toys can have a benefit too.
Working closely with Alibaba can help Mattel compete more effectively in online and mobile commerce. The Alibaba partnership comes a few weeks after Mattel reported Q4 sales that missed Wall Street expectations. Results throughout 2016 were hurt by the loss of a key Disney Princess license to Hasbro, though Mattel has had some success with a turnaround for Barbie and posted sales for Fisher-Price, American Girl, and construction/art toys.
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