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Temu, Shein expand further in toy sales amid Black Friday

shopping

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Major retailers still dominate U.S. toy market, analyst

says

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Concerns remain over counterfeit toys on Temu and Shein

platforms

By Jessica DiNapoli, Helen Reid, Arriana McLymore

NEW YORK, Nov 29 (Reuters) - Fast-growing specialty

e-commerce sites such as PDD's Temu and its rival Shein

are branching deeper into the business of selling toys as many

American and European shoppers prepare to seek out steep

bargains during the Black Friday weekend.

In previous years, Temu and Shein - which sell primarily from

mobile phone-based apps - would not have been the usual places

for shoppers to buy toys and other holiday gifts. The sites face

concerns from regulators and U.S.-based consumer product makers

about fakes and counterfeits.

The competing platforms serve as America's digital "dollar

stores," offering mostly unbranded items, from bath towels and

clothes to home appliances, at low prices.

Now both Temu and Shein are looking to win a bigger slice of the

global market for toys, which fuel sales for retailers during

the holiday season. Toys drove $108.7 billion in sales globally

in 2023, according to market research firm Circana.

At Shein, which became popular selling $5 t-shirts and $10

sweaters, toys are one of the fastest-growing categories, a

spokesperson for the site said. Toys have seen double-digit

percentage growth in sales volume on Shein's platforms

year-over-year, the spokesperson said.

Temu said it is seeing an increase in searches for toys by

prospective shoppers.

To be sure, major mass-merchandise retailers Amazon ( AMZN ),

Walmart ( WMT ) and Target ( TGT ) remain the mainstay for toy

shoppers - together representing nearly 70% of U.S. toy sales,

said Linda Bolton Weiser, a research analyst at D.A. Davidson.

Still, the share of U.S. holiday shoppers planning to buy

gifts on Temu this year stands at 13%, up from 9% last year,

according to market research firm Kantar. Additionally, U.S.

credit card spending on both sites this month is up compared to

2023, according to data firm Facteus.

The recent surge in toy buying on Temu and Shein is getting the

attention of U.S. companies like L.O.L Surprise! doll maker MGA

Entertainment, which sells its stuffed animals and figurines to

traditional retailers like Target ( TGT ) and Macy's. MGA

CEO Isaac Larian said the company would consider selling on the

e-commerce platforms to reach more shoppers.

"We want to reach (all levels) of consumers, not just the

people with average incomes," he said.

Shein and Temu increasingly appeal to shoppers earning less than

$50,000 per year, who have been squeezed by a surge in consumer

prices since 2021. More low-income shoppers are making purchases

online to find bargains, according to Bank of America credit

card data ahead of the holiday shopping season.

In Europe, young shoppers aged 18 to 34 in particular are

increasingly buying toys on Temu, Shein and rival Alibaba's ( BABA )

AliExpress platform, according to a September study by

Circana covering France, Germany, Italy, Spain and the UK.

AliExpress also offers cheap made-in-China goods, such as toy

guns for less than $1.

The study found 39% of European consumers have bought toys or

games on one of those sites since the start of this year. Among

younger consumers, the figure stood at 60%.

WORRIED ABOUT 'DUPES'

Barbie maker Mattel ( MAT ), however, does not directly sell to

Temu or Shein and its distributors are not authorized to do so,

according to a company spokesperson. Still, listings on Temu for

Mattel's ( MAT ) Uno card game and on Shein for its Hot Wheels toy cars

featured badges and claims that the products are authentic.

A Shein spokesperson said its suppliers are required to certify

their products do not infringe on a brand's intellectual

property and are not counterfeit. Shein has a team to ensure

sellers comply with the policy and takes swift action if they

are not, the spokesperson said.

A Temu spokesperson said it took down the Uno product

listings after receiving questions from Reuters and that it

would conduct a thorough investigation.

"This is part of our standard operating procedure for

dealing with products suspected of non-compliance or subject of

a complaint," the Temu spokesperson said.

Enticed by lower fees to sell on the platforms, toy

distributors like Popmarket have increasingly joined Shein and

Temu's online marketplaces.

Popmarket is selling more Funko Pop figurines, Hasbro

G.I. Joes and other toys on Shein than it initially

expected, said Jeff Walker, CEO of Popmarket's parent company

Alliance Entertainment.

Compared with toy buyers on Amazon ( AMZN ), Walmart ( WMT ) and online retail

marketplace eBay ( EBAY ), Shein shoppers generally tend to

purchase the lower-priced Popmarket toys, added Tim Hinsley, a

retail executive at Alliance Entertainment.

Funko ( FNKO ) and Hasbro ( HAS ), which Shein has tried to recruit to its online

marketplace, did not return requests for comment.

Shein is offering to waive fees for new sellers for the first

three months, with a 10% charge thereafter. Temu this month

opened up applications to all U.S.-based sellers - after

previously requiring sellers join on invitation only, the

company said.

Popmarket plans to start selling its toys on Temu after the

holiday season, said Hinsley, adding that the distributor is

working with toy makers to bring more of their products to the

two platforms and ByteDance's TikTok Shop, the e-commerce arm of

the popular short video app.

"We didn't have any manufacturer that flat out turned us

down when we asked them to sell on Shein," said Hinsley.

"Everyone was pretty enthusiastic about having a new marketplace

and reaching that demographic."

Despite the rising popularity of Shein and Temu, MGA, like other

toy makers, has concerns about so-called "dupes," or fakes on

both sites, particularly of its new Miniverse brand, named a top

toy for the holidays by Walmart ( WMT ), Amazon ( AMZN ) and Target ( TGT ), Larian

said.

The Chatsworth, California-based toy company's attorneys are

in discussions with Shein and Temu's legal departments on how

they can better police the knock-offs, Larian said.

He said the fake products could have improper age labels,

and small pieces that could pose choking hazards for young

children.

A spokesperson for Toronto-based toy maker Spin Master ( SNMSF )

said that toys on Temu and Shein resembling its new "Ms

Rachel" doll for infants as young as six months are "fake," and

that the company has concerns that those plush items have not

undergone quality and safety testing.

A Temu spokesperson said that Spin Master ( SNMSF ) contacted the

platform on Nov. 8 about an intellectual property concern.

"We immediately investigated and removed the products in

question," the spokesperson said. The spokesperson said Temu

added Spin Master ( SNMSF ) to its proactive monitoring system which scans

new posts from sellers to ensure the products listed do not

match other companies' intellectual property.

Mark Carson, the president of toy maker Fat Brain Toys, said

he will closely watch Shein and Temu to see if he should begin

selling his company's toys on the sites.

"I'm not going to do it just because consumers are rushing

there for the cheapest thing they could find," he said. "It has

to be something that works for us."