Sector guide · Toy, gift & hobby retail
Channel mix, seasonality, and where the margin actually is
Retail store, own website, marketplaces, wholesale accounts, and sometimes party or event trade. Each has different margin, different working capital.
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Retail store, own website, marketplaces, wholesale accounts, and sometimes party or event trade. Each has different margin, different working capital and different transferability.
Buyers want to see the split and the trend. A business shifting from high margin own-site sales toward low margin marketplace volume is a different proposition from one moving the other way, even if total revenue looks identical. If a large share of online revenue comes through a single marketplace account, that is concentration risk and it will be priced in. Wholesale accounts are usually stickier than retail customers, which cuts in your favour if you have them.
If you import, the law calls you the manufacturer
Section 7(1) of the Australian Consumer Law, in Schedule 2 to the Competition and Consumer Act 2010, defines manufacturer more broadly than the ordinary meaning of the word. It includes a person who grows, extracts, produces, processes or assembles goods. It includes a person who holds themselves out to the public as the manufacturer. It includes a person who causes or permits their name, business name, brand or mark to be applied to goods they supply, and a person who causes or permits another to hold them out as the manufacturer.
Then comes paragraph (e), which is the one that catches this category. It covers a person who imports goods into Australia if the person is not the manufacturer of the goods, and at the time of the importation the manufacturer of the goods does not have a place of business in Australia. The ACCC puts the same rule in plain words on its product safety guidance: a manufacturer includes a company that imports the goods where the maker of the goods does not have an office in Australia.
If you buy direct from an overseas factory, or from an overseas brand owner with no Australian entity, section 7(1)(e) makes you the manufacturer for Australian Consumer Law purposes. So does putting your own house brand on goods someone else makes, under paragraph (c). Many toy and gift businesses do both, on different parts of the range, without ever having drawn the distinction.
Supplier, manufacturer, and what each one carries
| Your position in the chain | What attaches to you |
|---|---|
| Retailer buying from an Australian distributor | You are a supplier. Mandatory safety and information standards, permanent bans, mandatory reporting under section 131 and recall obligations all apply to you. Consumer guarantees apply to you as the seller. You cannot rely on the distributor’s assurance as a defence, which is the point the City Beach judgment turned on. |
| Retailer or wholesaler importing direct, overseas maker has no Australian place of business | Everything above, plus deemed manufacturer status under section 7(1)(e). Manufacturer liability includes liability for goods with a safety defect and consumer guarantee actions brought against manufacturers, which is a longer tail than seller obligations alone. |
| House brand applied to goods made by a third party | Manufacturer status under section 7(1)(c), which covers a person who causes or permits their name, business name, brand or mark to be applied to goods they supply. This applies whether the goods are made in Australia or overseas. |
| Selling through an online marketplace | The same supplier obligations as a shopfront. The ACCC’s 2 June 2026 takedown requests to Amazon, eBay, Kogan and Fruugo concerned banned magnet products, and a platform removing a listing does not extinguish the supplier’s liability for goods already supplied. |
| Selling parallel imports | You are responsible for the consumer guarantees. The ACCC states that where there is a consumer guarantees problem with a parallel import product, the seller is responsible for providing a solution to the consumer. A manufacturer’s warranty may not apply in Australia, and the local authorised distributor is not responsible for parallel imports. |
Section references are to the Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth). Sources: Federal Register of Legislation and ACCC Product Safety Australia, current as at August 2026.
Why deemed manufacturer status changes the share sale conversation
Deemed manufacturer status attaches to the entity that imported the goods. That single fact is why the asset sale against share sale decision matters more in this category than in a service business.
In an asset sale, the buyer takes the stock, the fit out, the lease and the goodwill. The importing entity, with its history of goods brought into Australia, stays with you. You will be asked for compliance warranties and an indemnity, and the negotiation is about how long that indemnity survives and what it is capped at. Those two numbers are worth more attention than a small movement on the headline price.
In a share sale, the buyer acquires the entity and the history travels with it. Buyers know this, so the diligence goes deeper: test reports by SKU, supplier declarations of conformity, artwork approval records, complaints and incident logs, and any report lodged under section 131. Expect a longer process and a more detailed disclosure schedule.
There is one more item to run down before you choose. If you sell under licensed characters or brands, check every agreement for a change of control clause, because a share sale can trigger the same licensor consent requirement as an assignment. Get advice on structure from your accountant and your solicitor at the appraisal stage, not once a buyer is in due diligence.
Shares in a private company are a financial product under the Corporations Act 2001. Tony Pope does not hold an Australian Financial Services Licence and does not give financial product advice. Nothing on this page is a recommendation to buy or sell shares.
Where a sale is structured as a share sale, the share transfer itself is handled by your solicitor and your accountant. This page explains why the structure matters to your licence, your accreditation or your registration. It does not tell you which structure to choose.
This explains how the rules generally work on a business sale. It is not advice about your situation, and nothing here should be acted on without your accountant running your actual numbers.
Tony Pope is not a registered tax agent and does not give tax advice. Deal structure changes what you keep, sometimes by more than the negotiation does, so get that advice before you sign anything.
Tony Pope is a licensed business broker, not a solicitor. This explains how these rules and clauses usually work so you can have a better conversation with your lawyer.
Your contract should be drafted and reviewed by a solicitor. Where anything on this page differs from an official source or from your own legal advice, that source and that advice are right.
Seasonality is the first thing a buyer will not understand
Toy businesses do a disproportionate share of annual revenue in the run to Christmas. To an owner that is simply how the trade works. To a buyer reading a monthly revenue chart for the first time, it looks like a business that nearly dies for eight months of the year.
The preparation work is showing three to four years of monthly figures side by side so the pattern reads as reliable rather than volatile, explaining the working capital cycle that goes with it, and being clear about how much stock has to be bought and held from around August to service a December peak. A buyer who understands the cycle before they see the numbers assesses the business completely differently from one who discovers it in due diligence.
What a buyer asks for before they price a toy, gift or hobby business
| What a buyer asks for | What it has to show |
|---|---|
| Monthly revenue and margin, three years | Seasonality shown month by month rather than buried inside an annual total, with the stock build that funds it. |
| Supplier and distribution agreements | Term, territory, exclusivity, and whether each agreement survives a change of ownership or names you personally. |
| Stock on hand, aged by line | What sold in the last six months, what has not moved in twelve, and what has already been written down. |
| Channel split with margin by channel | Store, online, wholesale and marketplace, each carrying its own margin rather than one blended figure. |
| Licence agreements for branded product | What is licensed, until when, and whether the licensor has to approve the incoming owner. |
| Buying and range calendar | Who selects the range, which trade fairs and forward orders are already committed, and how far ahead the business is buying. |
The first line does the heaviest lifting. Seasonality presented properly turns a buyer’s biggest objection in this sector into a demonstration that you understand your own trading year.
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