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Why the Slow Down in Commission Payments to Reps?August 31, 2008
So what may be causing this stress and the subsequent slow payments? Brian Maggio in his excellent response to my blog, laid out a number of causes: I agree that all of these are having an impact but I suspect that the underlying cause is structural. Many toy manufacturers have built their businesses around retailers buying on direct import from This year, however, retailers are risk averse and are hedging their bets by demanding that manufacturers hold inventory for them domestically. The retailers will then order in smaller quantities and will order later in the year. Suddenly, manufacturers are finding that their cash flow is, well, not flowing. They just don’t have the money to finance the receivables; the logistics and warehousing that come with maintaining a domestic program. What makes it tougher is that, as Brian put it, the banks have tightened financing and money is not so easy to come by. I am not sure that things are quite as dark as Brian paints them (at least I hope they are not) but I do think that some companies are at risk. Where I don’t agree with Brian is the notion that these conditions will weed out poor products and make the toy industry stronger. I do, as Brian alludes to, believe in creative destruction but what will bring companies down will not be how good their products are but how well financed they are. We could actually lose some great products, not because the consumer has spoken, but because underfunded, small and start-up companies struggle in tough economic times. Can we do something to change this situation? Maybe! That will be in my next blog. Posted by Richard Gottlieb on August 31, 2008 | Comments (1)
August 31, 2008
In response to: Why the Slow Down in Commission Payments to Reps? Brian Maggio commented: Hi Richard. Good points above - you forced me to read through my last response to catch the nuance. I agree that we don't want to lose good products. I should revise my comments to read "weed out weak companies" vs. "weak products". We all want to see great, fun, innovative products come to market - that's why we do what we do!
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