Seems to me the product here is the "plush toy experience." It involves buying plush toys while participating in a plush toy community. Even if Amazon isn't selling the plush toys today, presumably it could do it tomorrow, and at cheaper prices. But it will be a lot harder for Amazon to replicate the community, and that is how this site can compete with a 900-lb. gorilla.
They are also selling a brand. People buy Sony (I'd say Apple, but then the OS clouds the issue) laptops because they like the brand. Reputation, good configurations, good quality ... you guys know what a good brand should be.
One way to build a brand is to build a web store. You lose Amazon's distribution, payment systems, data-mining, and visibility; but you gain more brand recognition. You could also sell on Amazon, but that will take people away from your site which may mean your brand loses it's uniqueness.
Face it, if you don't have a good brand and you are selling anything that can be made in China, you can't expect any margins. Wallmart and Amazon will sell the same thing cheaper.
I like Squishables site, and I love stuffed animals, so I really wanted to love my Squishable cow.
But it's kind of an impractical stuffed animal. Hard to hug, takes up a lot of shelf space and falls off a lot. Not quite as cute as I'd hoped. Though I got my mom the giant squishable moose, and she loves it, even though the dogs are terrified of it.
I'm especially a fan of how they make it seem like it's okay for adults to love stuffed animals. So I'd order from them again, if they come out with some less rotund animals.
I hadn't seen that, it looks like they're moving into lots of different types of offerings. I'll have to look around the site some more, since my brothers have started providing me with nephews.
So the point is to make your own brand, sell it on your own site and then when the big A comes calling ----- continue selling to them and on your own site ??? and make a killing? I have been approached by Amazon before about selling my products. They are a distribution channel like anyone else. And they WILL take your product and do it themselves if they think they can profit at it. I personally know a guy that had one of his best niche sellers (but still kind of a commodity) on Amazon get picked up by Amazon themselves. Poof. There went 60% of his sales. So be aware if you have a commodity. If you have a brand name - like these guys - then embrace the Amazon ecosystem and hold on to your hats. You will get lots of orders. Some manufacturers I know say that the big A can be 8-10% of their sales.
I've heard the same complaint from a client, adding products to Amazon, and having them taken over.. Definitely a risk to consider when giving a potential competitor all your sales statistics.
Here's my recipe:
1) own the product or the rights to the product - stay away from commodities
2) sell something with low inventory costs and low shipping costs. Digital goods are the best.
3) sell something in the price point above $50 but below $500.
4) get good at seo and adwords
5) try and get featured in blogs and magazines
6) ???
7) profit!
Squishables has good customer service too. The nose on the hedgehog I bought for my girlfriend torn. I emailed them and they just sent a brand new one (and replied in their absurd but nonetheless amusing cutesy speak they use throughout the site) No need to send back the old one (though I'm sure that's because you can't resale a used stuffed animal anyway but it sure does make things nicer). It was all very pleasant.
Another way would be to do what newegg has done and build a deeper system of filtering than amazon. There is no way I can filter certain components on amazon that are common place on newegg.
I believe win for many would be to quit their job and work for themselves instead. You know.. Bunting to get to first instead of going for the grand slam. I can see how you can bunt against Amazon and make it to first. Hitting a grand slam? Not so much.
Considering their clientele is passionate enough to send in video and photos of them doing ridiculous poses with their squishable toys (and adults, no less) shows that they do have a fanbase. The only other places that I know of that has such outwardly passionate users is Threadless, who last I heard they were making around US$40 Million a year selling t-shirts that they didn't even design themselves; and ThinkGeek, which makes about 80 Million selling geegaws and doodads for geeks.
I'm not seeing the win here. I think it's not a very compelling product. The message may be that they are so good at doing the store that they have been able to sell the product despite the significant downsides:
1. Small market for adult stuffed animals.
2. Rather high price.
3. Large variety of product probably drives up costs.
If you can sell ice cubes to Eskimos, that's great for your marketing department, you'd do even better with a better product.
Since the product is made in China, I'm inclined to agree with you. Get a few more Chinese factories to produce the item and start selling in volume with retail partners.
If it were a artisan-made item with a limited monthly production output, then going the exclusive (and increasingly higher-priced) route might be the better option.
So surely they're creators of a product first, an online store second.