Weekly Wrap-Up #38 & Walmart Uncertainty [Must Read]
Addressing the elephant in the room, lend me a few minutes of your time.
Hey Friends,
A bit of a different weekly wrap-up this time. I want to really dive into the elephant in the room - Walmart. With the recent nuclear bomb they’ve dropped on the Health, Beauty, Supplement, etc. categories, it’s only right we talk about what this means for the inevitable CPC / testing reports requirements. I’m going to dive into the facts, the rumors, my thoughts, and how I’m navigating all of this at the end of the newsletter.
Before that though, just a few lighter topics I want to touch on.
Clear the Shelf Podcast Debut w/ Chris Grant & Chris Racic
Super excited to make my podcast debut on the Clear the Shelf podcast. There is something for everyone here. Whether you’re curious about toy investing and haven’t dove in, or for those who just want to pick up a quick tip or two you may not have known about — give it a watch!
We talk about how I got my toy investing start, look at some inspiration for what’s possible in the niche, touch on some research strategies, what franchises I’m excited about in the future, and so much more.
At the very least, please give the video a thumbs up to help out Chris and Chris to show some support for their channel and all they do for the community.
San Diego Comic-Con Reveals
There is too much to put into a single newsletter, so I highly recommend following accounts like @toyark and @preterniadotcom on Twitter. They will give overviews of most releases, but then don’t forget to follow your favorite franchise-specific influencers. People like @yak_face (Star Wars), @marvelousnews (Marvel), etc.
It’s a great time of the year to get informed on what’s slated for release in the coming months/year. Be mindful of the social platforms - Instagram, Reddit, etc. to see fan reception to the reveals. This is a very valuable data point worth paying attention to.
2025 LEGO Theme Analysis: NINJAGO
I posted a 42 minute video analysis one of my favorite LEGO themes — NINJAGO! I review the performance of sets from last year and start picking which sets I have my eye on as we move towards the end of the year. Check it out, this theme made me a ton of money so far this year with the 2024 retirees.
Walmart Uncertainty
Let’s get into it. Most of us have heard by now about the disastrous rollout Walmart has done with Health & Wellness, Beauty, Personal Care, Food supplements, Baby Consumables, and ingestible Pet products.
Literal hundreds of thousands of listings unpublished, and many sellers facing serious financial strain for not having any sort of heads up to sell through their inventory.
To say it is a slap in the face to the community would be an understatement.
While there are certainly discussions being had about how they can right this wrong, it doesn’t change the fact that we need to brace ourselves for what could happen next.
Here are the facts:
“To sell children's products on Walmart’s Marketplace, sellers are required to provide copies of a Children’s Product Certificate and corresponding third-party test report for each children’s product.”
“Children's products are generally defined as a consumer products designed or intended primarily for children 12 years of age or younger.”
These documents will be required on a seller-basis, not SKU-basis, like how Amazon currently operates. This means every seller will need to upload the required documents.
Up until the last couple of days, Walmart had stated that these CPC documents must be from within the last 365 days. That text seems to have been removed from their requirements, which is a sign that maybe there is some concessions that can be made as this develops.
These requirements are coming directly from their legal team, in an attempt to protect Walmart.
The exact rollout date for this is unknown, all we know is that they are ‘behind’, as this was supposed to happen July 1.
How does this affect us?
If Walmart rolls this out precisely as stated, this will result in thousands of listings having no sellers on Walmart.
If you are unable to provide CPC and testing reports for each SKU, you will not be eligible to sell the SKU.
CPC documents are relatively obtainable through distributors, but testing reports aren’t exactly easy to obtain. There is no guarantee you can get them, even from authorized distributors.
LEGO for example has the CPC documents available on their site, but does not provide testing reports.
Keep in mind, this is not going to affect all toys. It’s stated that CPC documents are required only for toys designed primarily for children ages 12 and under. There are several toy lines where the age recommendation is 12+ (McFarlane) or 18+ (like the LEGO adult-oriented sets).
My Thoughts
First, I want to stress that this is just my opinion. I am getting a lot of questions about this so I want to address it, but please do not make serious business decisions based on just my gut feeling.
First of all, I think the rollout for the categories I mentioned earlier have been disastrous and hopefully should be eye-opening for the upper level management. Whatever comes next, my hope is that they learn from this first rollout and approach the CPC rollout with more understanding. The one thing us toy sellers have that the other sellers didn’t — is notice. We know this is coming in some capacity, so we can make decisions now to lessen the blow.
Now, do I think Walmart actually commits to this long term? It’s hard to say. A big part of me thinks there is no way Walmart is willing to sacrifice a large part of their catalog, especially after spending so much effort poaching sellers from Amazon specifically for their collectibles category.
I think their legal team does not understand how much lost revenue will occur if brands that are heavily dependent on aftermarket sales are wiped out. Collectibles aren’t lotions and sunscreen. Customers won’t just shift to the next available item. They will actively seek out the specific collectibles they want. If Walmart doesn’t offer them, they will go to Amazon.
Does Walmart want that? Is the millions lost in revenue worth requiring testing reports?
It’s strange. Walmart has a better relationship with vendors like LEGO, Hasbro, Mattel, etc. than any of us. Couldn’t they just request those testing reports as needed and not sacrifice millions of dollars?
That’s the conclusion I’m hoping they come to once they do some sort of CPC rollout.
Will they reach that conclusion at all? Not sure. I anticipate them doing a rollout, realizing how much damage they’ve caused, and then hopefully backpedal to something that meets in the middle.
How I’m Proceeding
Please keep in mind that my situation may be different from yours so my decisions may not be feasible for your business. I have the luxury of being un-gated in all of the brands I like to sell on both Amazon and Walmart.
I also do a lot of wholesale toys. I can get CPC documents for most of the stuff I sell in any large quantity.
I also choose to believe that even if another disastrous rollout happens, there will be a path to resolution that makes sense (even if that takes a couple months).
Therefore, for my business personally, I am operating my business mostly as usual. The only real hit I’d take here is if they truly required testing reports for LEGO, then I’d have to recall and just sell them on Amazon. Until this rolls out, I am pushing pause on sending any LEGO to Walmart and pricing the 12 and under LEGO that I have already there competitively to sell.
I am also not opposed to paying for testing reports if I think I am going to purchase a large amount of a specific LEGO set. I haven’t dove too deep into the details of this yet, but I do think it’s likely a viable option if you want to continue selling LEGO in large quantity. I will explore this more once we see how the actual rollout ends up.
I know this isn’t helpful for most, but I want to be transparent about what I’m doing specifically.
The truth is, Walmart has been great to me so far. I have not been impacted by the beauty/health rollouts because I sell only toys. My profit there is great. For the first time ever, my rolling 30 days of sales on Walmart have surpassed Amazon. I am enjoying the platform. I haven’t yet personally been given a reason to move away from it.
What Can YOU Do?
I understand not everyone has the luxury of being un-gated on Amazon or having access to CPC reports. For those of you doing mostly arbitrage or LEGO, I can understand the uncertainty and worry that comes while we wait in this limbo period. Here are the things I’d consider:
If I was doing primarily LEGO investing and was restricted on Amazon, I’d begin putting more effort into selling NON-LEGO toys on Amazon. There are rumors that if you sell enough toys and games on Amazon, you may become eligible to apply for un-gating. This is not guaranteed. This is not confirmed. It’s just a rumor. But it’s something I’d explore.
If I was doing primarily LEGO investing, I’d start pivoting away from children’s sets and start focusing on the 18+ sets. I would also say push pause on buying anymore sets until this gets ironed out. On the contrary, you can gamble on the fact that a lot of people are scared right now and likely moving away from LEGO. You know the saying, be greedy when others are fearful? But this obviously involves risk.
If I was doing primarily LEGO investing, I’d start exploring alternative marketplaces like Facebook, Whatnot, and eBay. I wouldn’t fully commit to those yet, but I’d begin learning them just in case I need to pivot to them.
I would begin making decisions on which SKUs I deem sellable NOW, that I already have in-stock on Walmart, and get them moving in case the worst happens. You don’t want to pay removal fees. Walmart charges an arm and a leg.
If I had a large quantity of a specific SKU, I’d look into which distributors carry that toy line and see if I can acquire the CPC documents ahead of time. Some distributors may even have the item in stock, in which case I’d order the lowest amount of units so I can obtain the CPC docs. Check with your rep for the process on this for each distributor.
If I was doing general toy investing, I’d begin focusing on toys that are not platform reliant. I’d be investing in toys that transcend the platform and would be able to be sold easily on eBay or locally. Think less Cocomelon, Fisher Price, Bluey, and more Pokemon, convention exclusives, limited print items, limited time crowd-funded items, etc.
I am digging into this as best I can. I am trying to communicate with several others from the collectibles community. Reaching out to various Walmart connections. I will be attending the Walmart conference in San Diego next month and will be doing my best to meet with the appropriate people.
Uncertainty is never fun, but collectibles and toy investing existed long before Walmart, long before Amazon, and will continue regardless of what rolls out next.
Stay tuned, I’ll provide updates as I get them and do my best to help us all navigate moving forward.
Thank you! This is clutch.
Good call on pricing competitively to sell now. I didn’t realize WM fees are high to send back but there’s no doubt the boxes will be crushed by the time they are returned to me