To get it right, Wonder Workshop is working with Launchpad, a program run by Amazon, to forecast demand, boost marketing and plan for Black Friday, when discounting plays a significant role in the onset of the year’s most critical shopping period. The toy maker expects sales to as much as double this holiday season. In the past, brick-and-mortar retailers were the cornerstone of a brand’s holiday retail strategy. And while Wonder Workshop is selling Cue in chains such as Target Corp., Best Buy Co. and at Apple Inc. stores, Amazon will make or break the toy maker’s holiday season. A surge in holiday shopping online has made Amazon a kingmaker. Amazon is expected to drive as much as half of all U.S. retail sales growth this year during the holidays, according to Morgan Stanley estimates. About 42 cents of every dollar spent online year-to-date went to Amazon, up from 38 cents during the holiday period a year ago, according to Slice Intelligence, which tracks a panel of more than 5 million U.S. online shoppers. With a small product lineup, “it is tough for us to create visibility for our products in stores like Target and Best Buy,” says Vikas Gupta, co-founder and chief executive at Wonder Workshop, a 5 year-old startup based in San Mateo, Calif. The only way to do that would be to invest more in displays, and that is “very hard for a small company.” Target and Best Buy declined to comment. Companies are using Amazon’s online reviews and marketing on the site as an alternative to persuading traditional retailers to add a new item to store shelves. In addition, the 2,100 startups that participate in Launchpad get special visibility on Amazon’s website, dedicated pages that include information about the company and founders and inclusion on gift lists. Amazon also buys inventory from the startups and sells the products directly on its site. Amazon handpicks and invites startups to join its free Launchpad program based on a number of factors, which can include existing customer reviews, online sales performance and outside awards. For Amazon, access to early-stage brands gives the company exclusive or new, hot products and a bigger selection than rivals. Sateesh Srinivasan, director of Amazon Launchpad, which started in 2015, said the program can “get customers to look at all these products in one place.” Other hot-selling holiday items that have taken off on Amazon include the car-racing game Anki Overdrive and the Star Wars BB-8 droid in 2015, both also Launchpad participants. Toys ‘R’ Us Inc., which filed for chapter 11 bankruptcy protection in September. The toy maker also sells some of its products directly on its own website.Despite the surge in online sales, toy makers still need to have a physical presence for shoppers who want to walk in and buy something now, Mr. Gupta adds. Discounting the robots for Black Friday and Cyber Monday is critical, Mr. Gupta says. Wonder Workshop decided to mark down Cue by $20 across the board—in stores and online—while Dash is $30 off. “It’s spectacular over the years how the Black Friday deals and the Cyber Monday deals drive demand,” he says. “We want to be part of it, because it creates more visibility.” Of course, the youngsters who may put Cue on their wish lists already know where to get the toy. Kevin Sayers, a middle-school teacher in Burnsville, Minn., bought two Cue robots for the school. “When we did our first coding week, some of the kids were like, ‘Where did you get this? Amazon?’” said Mr. Sayers, who also has a fifth-grade son into coding. Yes, he replied, he had. Three of his students told him last week they are getting Cues for Christmas.
A Brief History of Retail