Why Toys and Games Are a Top-Selling Category in Latin America
E-commerce in Latin America is growing at an accelerated pace, with a compound annual growth rate of 25%. Similarly, toys and games sales in the region are also experiencing outstanding growth. According to NPD, the highest growth for toys and games sales globally was registered in Brazil (+23%) and Mexico (+13%), followed by Spain, Canada, and the US. Let’s dive deeper into the toys and games market in Latin America and explore why it has become one of the top-selling categories for e-commerce in recent years.
The size of the Toys and Games market in Latin America
The toys and games market in Latin America is set to grow by US$11 billion during the period of 2021-2027, at a compound annual growth rate (CAGR) of 12.9%, according to analytics company, StrategyHelix. Mercado Libre, the largest marketplace in the region, has reported a significant surge in orders, with a 354% increase from 2018 to 2020.
Factors that have contributed to the growth of the toys and games market
The growth of the market can be attributed to several factors. One such factor is the increasing exposure of children to social media and the internet. Children are avid users of platforms like YouTube and Instagram, where they are frequently exposed to social media ads, reviews, and promotions. While parents are responsible for finalizing purchases, it is often the children who initiate the shopping process by searching for products online. According to data from Kidscorp, over 72% of Latin American kids constantly look for new games and toys online before making a purchase decision.
Research shows that two out of three kids in Latin America watch a YouTuber or streamer and are highly influenced by the products they showcase in their videos. According to Kids Insights Latam, 68% of children and teenagers discover new toys online, while 56% discover new toys and games by watching TV. Furthermore, over 83% of kids take action after watching advertisements about toys or games.
The pandemic was a significant trigger for the boom in the toys and games market. As people turned to online platforms and marketplaces to shop during the pandemic, the search rate for toys and games increased. To keep up with the sales rate, most marketplaces also offered attractive discounts, further boosting the sales of toys.
Another factor contributing to the boom in the toys and games market is the rising popularity of didactic and educational games. According to Mercado Libre, one of the most popular search terms for the Toys and Games category in 2021 were “puzzles,” “board games,” and “educational games,” among others.
Top-selling toys and games categories in Latin America
The Latin American toys and games market is divided into multiple categories, such as traditional toys, games, and electronic toys. The traditional toys market is further segmented into action figures and accessories, arts and crafts, baby toys, construction toys, dolls and accessories, games and puzzles, outdoor and sports toys, and vehicles, among others.
Licensed or branded toys, such as those featuring popular characters from movies or TV shows, are currently dominating the Latin American toys and games market due to their popularity among children. However, it is important to note that many kids still enjoy playing with classic toys like outdoor games or traditional board games that promote physical activity, social interaction, and creativity.
According to the Kids Insights LatAm Industry Report in 2020, children prefer toys, dolls, puzzles, action figures, and outdoor games, while board games and arts and crafts are more appealing to older age groups, registering a 60% growth from Q2 to February 2021.
Toys and games market in Brazil
The total revenue of the Brazilian toys and games retail market was $2.3 billion in 2020, and it is forecasted to reach $3.36 billion by 2025.
In addition to the increased use of the internet, another critical factor contributing to this growth in Brazil is the reduction of poverty and the increase in employment rates after the pandemic, which has led to an increase in consumption.
The highest peak of sales for this category is during Children’s Day and Christmas, which represent 65% of total toys & games sales in a year. The average ticket in 2021 exceeded US$ 17, while product prices remained stable. Additionally, the industry offered 1,300 new toys.
According to Mercado Libre, the product that achieved the most sales in 2021 in Brazil were Dolls (34.9%), followed by Cars & Vehicles (8.8%), Bicycles (8.4%), Board and card games (6.6%), and Outdoor toys (6.2%).
During the period of 2018-2020, the number of orders processed through Mercado Libre increased by 318%, indicating a significant rise in demand for these products. Additionally, the total sales in USD also increased by 194% in the same period.
Toys and games market in Mexico
Mexico has established itself as a major player in the global toy industry, ranking 13th in terms of toy production worldwide. The toy sector in the country is valued at 2.1 billion USD, with imported toys and games accounting for more than 70% of the total market.
In the past five years, the Mexican toy market has experienced remarkable growth, increasing its revenue from 21 million dollars in 2016 to a whopping 2.01 billion USD in 2021.
Furthermore, online retailers have emerged as the primary sales channel for toys and games in Mexico, representing over 39.5% of the market’s total value. According to Mercado Libre’s analysis, units sold through their online marketplace grew an impressive 509% from 2018 to 2020, and revenue also grew an impressive 352% compared to 2018.
On special days like Children’s Day, Reyes Magos, or Christmas, 8 from 10 people buy games or toys via eCommerce or online marketplaces. These figures demonstrate the growing demand for toys in Mexico and the increasing importance of online sales channels in the industry.
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