Dan Heath: Alan Bass is a toy distributor. He buys products directly from hobby kit and toy manufacturers. Plastic model kits, model train sets, model rockets that most of us shot off when we were kids. He sells them to brick-and-mortar hobby and toy stores in the US.

Alan Bass: The stores that we deal with are generally small. The smallest ones we deal with are about 1,000 square feet, which is about the size of a very small one-bedroom apartment. We're servicing any independent store that does not need to buy in depth. We offer breadth, not depth.

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Dan: Now, being the middleman exposes Alan to some risk. Once he's bought goods from the manufacturer, there he is. There are no refunds. If his customers stop buying, it's his problem.

Alan: There was a mass-market customer that was purchasing an item from us that we had manufactured specifically for us in China. They were buying thousands at a time. We were stocking multiple thousands at a time. Then one day, with no notice, they told us they found another supplier, probably their own factory. I believe we are still working on getting rid of that inventory. I think that was about 15 years ago.

Dan: What was the toy or product?

Alan: It was a custom play set, like a plastic play set for kids. It's like a castle and knights play set. It's a really awesome item. We just had about 10,000 of them.

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Dan: I'm Dan Heath, and this is what it's like to be. In every episode, we walk in the shoes of someone from a different profession, a couple's therapist, a stand-up comedian, a piano teacher. We want to know, what do they do all day at work? Today, we'll ask Alan Bass what it's like to be a toy distributor. We'll talk about what happens when your goods get stopped by customs, how his business went from the brink of shutting down to quadrupling in size almost overnight, and what it's like to carry on the family business. Stay with us.

Shankar Vedantam: I'm Shankar Vedantam, here to tell you about a great mystery. That mystery is you. As the host of a podcast called Hidden Brain, I explore big questions about what it means to be human. Questions like, where do our emotions come from? Why do so many of us feel overwhelmed by modern life? How can we better understand the people around us? Discover your hidden brain. Find us wherever you get your podcasts.

Dan: Alan sells to hobby shops whose customers are people who like model trains and model airplanes and that kind of thing. Often, they are middle-aged men rather than kids. I asked him why those shops couldn't just buy their items straight from the manufacturers and cut him out altogether.

Alan: That's an excellent question, and some of them do. Some of the larger independent stores in the country do and try to buy direct from the manufacturer. Suppliers are set up to ship case packs. You want to buy a model kit or a toy or a train set, you can't buy one from a manufacturer. You have to buy a pack of 12 or a case of 24, especially when you're talking about suppliers overseas who are shipping directly from a factory. If a store is large enough that they can sell that volume, they will certainly buy direct because it's cheaper. Where a distributor comes in is when you're servicing an actual small business store, someone who says, "Well, I can't sell 12 of them, but I can sell one or two of them." They'll buy one of this and two of that, and they'll combine a bunch of different items into one order that we ship out of our warehouse.

Our expertise is putting all of those items together into a carton for those stores so that they don't have to buy 12 deep of one item or 100 deep of a small item. That allows a store to be more profitable, especially when it's a small business because they can worry about turning over the inventory as opposed to I'm stuck with this many items on the shelf and I have to get through it.

Dan: A big part of what Alan does is anticipate what retail stores are going to want before they need it and to get it to them as quickly as possible.

Alan: We have everything in stock in our warehouse. When they order from us, that order is getting put together and shipped out the same day most likely. That would be the benefit of buying from a distributor from their perspective because from a manufacturer, you're going to wait a while until they get around to shipping it. From a distributor, it's right then and there. You're getting that shipped to you immediately.

Dan: This has got to be such a huge part of your profitability is just getting those predictions right. What have you learned over the years about how to order well, how to forecast well?

Alan: Again, in exact science, one of the things that we do is we order regularly and often. Instead of placing one giant order once a year with a manufacturer, we will place an order every month with them. It allows us to keep on top of our inventory counts a little bit more. It allows us to adjust our inventory level based on the whims of the economy, the supply and demand at any given point, and that allows us to stay fairly flexible from that perspective and to not be stuck with too many items that we have to close out. If we only bought once or twice a year, you have to buy more so that you can stock 12 months that's usually a recipe for disaster.

Dan: I want to talk through the logistics chain that gets toys to you. A train set made in a Chinese factory, it comes off the end of a factory line. Can you talk us through the steps and the process that get it from the end of the factory line into your warehouse?

Alan: Sure. Most of what I do on any given day is logistics. Taking your example of a train set being made in a Chinese factory, the manufacturer informs us that our order will be ready to ship on this date. We inform our customs broker and our freight forwarder. They arrange some shipping options for us. We haggle on price, of course, as does everyone. You try to find the quickest yet cheapest way to get it to your door. Then usually for a large order, it'll get on a ship. If it's coming from China, we're on the East Coast of the United States. We actually bring our ships through the Panama Canal to the East Coast. Alternatively, you can bring it into the West Coast and truck it across the country.

That process from the time it gets on a boat till the time it arrives at the dock closest to us is probably five to six weeks. At that point, you're waiting for your customs broker to clear that shipment. That involves working with Customs and Border Patrol, declaring what the item is. If there's an associated tariff, you're paying that tariff.

Dand: How often do things get held up in customs?

Alan: Oh, you're just getting there. [laughs] What happens after that is customs has the right to say, "We want to take another look at this." That means that Customs is going to take your container or maybe you have a few pallets of items and they're going to bring it to their facility separate from the port. They are going to go through it with a fine-tooth comb. They might x-ray it. They might open up cartons and take things out. It's usually random. We've been doing this a very long time and we have never found a pattern as to what does and doesn't get taken for an intensive exam.

Dan: They're just searching for fentanyl or something. Is that the deal?

Alan: They could be searching for anything. They could be making sure that items are labeled properly. We once got hit because, unbeknownst to us, our manufacturer forgot to put the made in Taiwan on the box. They were not allowed to be brought into the US. We had to work with customs to get a fix for it. Things like that they're looking for. Of course, they're also looking for illegal stuff like that. That's nothing that we've ever experienced. That will sit in the customs warehouse for a week or two while they wait for it to be examined. It waits in line with everything else. It gets examined. Then it sits and waits for a week or two before a trucker can come pick it up. Then they eventually deliver it to our door. A customs exam can add about three to four weeks to the time frame. Then they also bill you anywhere from a few hundred dollars to up to $5,000 for the pleasure.

Dan: Wait, they bill you because they chose to monkey around with it and check it out?

Alan: Absolutely. Customs and Border Patrol is financed by all of our tax dollars, but also the exam charges that they do at port. Honestly, stuff like that is incorporated into the costs. We're not getting political on the show, but a lot of the discussions about who pays for tariffs over the last few months, obviously, the importer pays the tariff, not the country that's exporting the product. Tariffs, the shipping costs, any associated fees, that's incorporated into the cost of our product. We call that the landed cost. If an item costs us $10, but all of the associated costs with getting it to our door cost another 20% on top of that, then that really costs us $12. That's the landed cost of the item that we make our price off of.

We don't always account for a customs exam, but we leave ourselves some wiggle room so that if there is over the course of a year, if there's an exam, if there are a few exams, we can absorb that cost because it's a little bit incorporated into the price on average.

Dan: It's amazing just to think about our hypothetical Chinese model train. In its life, it goes from the factory to a truck, to a port, to a ship that goes halfway around the world or more once you tack on through the Panama Canal to the East Coast and then on another truck to your warehouse, then you've got to reship it to the ultimate hobby shop where it will be sold. It's a miracle that that's even economically possible. You would think that would be so fantastically expensive that a model train would have to cost like $5,000.

Alan: Right. That's the thing. When you do a certain amount of volume, obviously the costs go down a little bit relative to the shipment. If you've got a $2,000 shipment leaving China, the freight cost is going to be enormous. It might be more than the cost of the product. If you've got a $100,000 shipment leaving, the freight cost is going to be a very small percentage of that container. It's a matter of finding your volume savings where you can, negotiating your best rates all across between the trucker and the ocean freight or the air freight if it's coming by plane. It's such a hectic part of our job. Honestly, that takes up a lot of our days here.

Dan: Let's talk a little bit about the relationships in the business. You've been doing this a long time. I imagine you have a lot of longstanding relationships with both the stores and the manufacturers. Maybe let's start with the stores. Is it typically the owners of the stores that you're working with?

Alan: Generally, yes. Sometimes if the store is large enough, you'll be dealing with a buyer. Especially for a small hobby shop, you're generally dealing with the owner. Some of these relationships go back generations. I happen to be third generation in my family in this business. My grandparents started in this industry in the 1950s with their first hobby distributor.

Dan: Wow.

Alan: We're still here today, fortunately. There are customers whose parents and grandparents did business with my parents and grandparents. The fact that you've got that longstanding, decades-long relationship certainly helps, especially when there's a problem because there's a little bit more of a layer of trust than there would be otherwise with some generic company you might do business with.

Dan: On the hobby shop side, if you're talking to the owner of a hobby shop, what are you likely to be talking about?

Alan: We're likely talking about how business is, what's selling right now. To use this year as an example, the economy's been weak this year, despite what a lot of the data is showing. People are struggling this year. Sales have been a little soft relative to the strength we saw during the pandemic years. We're talking to our customers, the owners of the store. What's selling right now? Is it the big-ticket items? Is it the small items? What categories are still selling for you? Are there any categories that are weaker?

Dan: What about on the manufacturer side? I guess my mental model would be that that would be somewhat faceless and transactional. You're just giving a quantity to some Chinese or German or South Korean factory or something. It sounds like I may have the wrong mental model. Do you have warmer, longstanding relationships on that side as well?

Alan: It depends. There are certainly manufacturers we deal with where it is a 100% faceless relationship. We send an order. They request payment. We send payment. They send a shipment. Then there are manufacturers that have longstanding relationships with us. There's a very large annual trade show in Nuremberg, Germany. It's called Spielwarenmesse, which translates to Toy Fair. It's a massive, massive expo right outside the main city. My family used to go every year. We switched to every other year. Then the pandemic hit. Unfortunately, the show has taken a bit of a hit. We haven't been there since.

We would go for five days and morning till night meet with manufacturers. You're not just talking about business and the new items that are coming out. You're sitting down and you're having a snack. You're having a drink with them. You're discussing each other's families. You're discussing what's going on in the world. I do love that part of the business. As we move forward, there is certainly less of that. The newer companies that pop up are definitely more faceless. You do lose a little bit of that face-to-face relationship, especially when trade shows start to disappear. You don't want it to become faceless. A lot of it does become faceless over time.

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Dan: Hey, folks, Dan here. This is our last episode of 2024. Happy New Year, first of all. Second of all, thank you for coming with us on this ride. The laws of nature do not favor this podcast. Let's be honest. It is not true crime. It does not feature celebrities interviewing other celebrities. There's no meditation, no practical tips, no investment schemes, no political tribalism. It's just normal people talking about why they like their work. That's it. I'm amazed and grateful that all of you find that as valuable and soul nourishing as I do. Thank you sincerely for listening.

Let me tell you, we have some bangers coming in 2025, including a great show with a homicide detective. Yes, I am aware of the irony of what I just said. What can I say? We're still jealous of true crime. Now, back to the show.

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How many items would you guess are in your warehouse right now? Distinct products, not as-

Alan: Skews. How many skews?

Dan: Yes, exactly.

Alan: I believe we have about 40,000 skews at this moment.

Dan: Wow. Then how many items accounting for multiple of each skew?

Alan: That can vary. Some items are very, very slow and we'll carry them in twos and threes. Some of them will carry in hundreds at a time. Like I said, it's breadth, not depth. We're not carrying 10,000 each of all of these items. We're carrying 40,000 items at a smaller quantity to offer as many choices as possible for our customers.

Dan: That is amazing. If a customer places an order today for 12 of this and 6 of this and 4 of that, walk me through what has to happen for that order to get fulfilled on your side.

Alan: That order, it's actually a very simple process. It's probably one of the simplest parts of our business. The order comes in, the pick ticket gets printed out and put in our fulfillment center. A staff member picks the items, it gets double-checked, it gets packed into a box, shipping label slapped onto it, and it's out the door usually within a few hours.

Dan: This is all like human driven, no like robotics, AI, blah, blah?

Alan: No, old fashioned, old school. We do it manually.

Dan: There's a human being walking the aisles of the warehouse, finding the item, bringing it over, putting it in a box and so forth.?

Alan: Absolutely. We are not automated at all.

Dan: Here's a twist. Alan isn't just a distributor. He actually owns a hobby shop, too. He says that having a brick-and-mortar store helps him keep his finger on the pulse of the market.

Alan: Even though selling to consumers is a very small part of our business, it's crucial for us to be able to have success as the middleman. It gives us incredible market research to understand what the consumers are doing. One of the things I really love is just seeing young kids in the store with a big smile on their face. It really grounds you. We've got a big train layout in our store. It's got all these buttons around it so that kids can push it, and something will move and then a train whistle will sound and something else will happen, some other animation we've created.

To watch them there pushing the button and giggling to their parent and pointing at the thing that just happened, it's really heartwarming because, again, when you're in an office all day, you're dealing with logistics, you're dealing with an angry customer or a problem supplier, you're not thinking about the fun side of the business. We sell fun. We're not insurance agents. We're not selling something that people have to buy but don't want to buy. They're coming into our store and our customer stores because they want to have fun. To watch that happen in real time, it really grounds you and it's something I try to do as often as possible.

Dan: Any customers come to mind that you can remember even if you never actually met them?

Alan: There's a customer of ours in our retail store and she brings her son with her and the son has some sort of disability. I don't know if it's autism or something similar. He's very shy, very introverted. When he comes in and he walks up to the train counter, suddenly the eyes widen and he's telling us about the train that he has at home and he's explaining which car he has, and he wants to buy this one day when he saves up enough. You just see, again, like the bright-eyed kid, just loving something that we happen to have in our store. It's really nice to see that.

Dan: What's been the most stressful time that you can remember in your work?

Alan: Definitely the pandemic. When COVID hit, we're in New Jersey and we knew that companies were about to be shut down and my family, we would be on a conference call together watching our governor's press conferences to find out what the rules were going to be for the next day. Were we going to be shutting down our business? Were we going to be sending employees home? This was before the PPP loans existed. How are we going to pay our employees? How are we going to pay our bills? That was extremely stressful. We were making contingency plans to pretty much shut down our business.

Then you flip that. When we realized that our distributor company was allowed to remain open because it was a warehouse not open to the public, suddenly business skyrocketed because everybody was stuck home and needed leisure products. Suddenly our business almost quadrupled overnight, and we no longer had the staff to handle that volume. Nobody was looking for work in the middle of a pandemic. It was two distinctly opposite levels of stress.

Dan: That is crazy. Going from like the cusp of just disappearing as a business to quadrupling in size in a matter of what I assume was months.

Alan: It was less than that. It was almost overnight. It was unbelievable how quickly it happened. We were working seven days a week. Many of our staff worked seven days. I give all credit to our staff. They were unbelievable. We would never have survived without them.

Dan: Was your family in the warehouse taping up packages to send out? Was it an all hands-on deck kind of thing

Alan: Oh, 100%. We have another mantra that nobody is too good for any job. If the toilet needs scrubbing, happy to scrub the toilet. If we need to vacuum the office, we'll vacuum the office. Just because we're in charge, just because someone's a manager, supervisor, doesn't mean they're too good to do any job. When we're busy, everybody goes outside into our warehouse and is packing orders, picking orders, unpacking a truck. I remember my first day on the job full-time after I graduated college. I walked into the building and my dad said, "Great to have you here. There's a container of toys in the back. Go help them unload it." I said, "Yes, sir."

Dan: Good for you. That's good manners. You didn't come in with an entitled perspective.

Alan: No, you can't. You can't at all.

Dan: What was it like growing up with your dad in the toy business?

Alan: It was interesting, because while most people go on vacations during the winter, we never had a winter vacation. December was the month that I barely saw my dad. We might have dinner at 8:30 when he gets home from the office, and I certainly don't see him the next morning when I wake up to go to school. There is no vacation around the holidays. We've never taken a week in an island in December, we've never gone to someplace warm in the middle of the holiday season. We're obviously a little bit more secure now than we were then, but that's always been the mantra in our business. It's a small business. It's all hands-on deck. It's whatever you need to do to get done on any given day. Just because something is not your job, doesn't mean you don't do it.

Dan: Did you have like the best toys on the block growing up? Did everyone want to come to your house to play?

Alan: I had some very interesting toys and it's actually a very funny story that very often my dad would come home one day, and he'd have a different toy or a craft kit or some interesting thing. Be like, "Hey, I got you this." When you're five or six or seven, "Wow, thanks, dad," and you rip it open and you're putting it together and you're having a blast with it. Your parents hang it on the wall, and you move on. You never think anything of it. The first time that I went to this giant toy fair in Germany, I believe I was 23 at the time, I was there with my dad and my mother, and I believe my grandmother at the time. We were walking down the aisles of this massive expo center, and I'm starting to see familiar toys that I remembered from my childhood. I'm like, "Oh, I remember that. I did that when I was a kid. Oh, hey, I remember that too." I see my dad smirking and it stopped in the aisle. I said, "Wait, all of those gifts you gave me were just samples for you to test out?" He was like, "Of course, how else would I know what to buy?"

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Dan: The scales fell from your eyes.

Alan: Yes, but I still appreciated it.

Dan: Of all the things you could be a guinea pig for, like that was a pretty good roll of the dice.

Alan: Oh, I have no complaints at all.

Dan: Are you a hobbyist?

Alan: I am not a hobbyist myself, but I have put together many model kits, many train sets, many model rockets in my day.

Dan: You never caught the bug.

Alan: I never caught the bug, and I think it's safer that way. I think if you're running a business like this-

Dan: You start consuming your own products.

Alan: You also wind up getting sidetracked by what you are personally interested in instead of what consumers are interested in.

Dan: Alan, we always end our episodes with a quick lightning round of questions. Here we go. What is a word or phrase that only someone from your profession would be likely to know, and what does it mean?

Alan: TSCA form. TSCA form. That would be T-S-C-A, which stands for Toxic Substance Control Act. What that means is when you're bringing an item in through US customs, if there is a chance that the item might be hazardous, you need to sign this form to either specify to them, yes, it might be hazardous, but it complies with all US. regulations, or no, it is not hazardous. If we're bringing in model paint from across the ocean, we need to identify exactly what that paint is on the form so that they know whether or not it's eligible to be brought into this country under the regulations.

Dan: What's the most insulting thing you could say about a toy distributor's work?

Alan: Anything that lumps us and other small businesses, specifically in the toy industry, anything that lumps us in with some of the giant corporations. It's always fashionable to hate giant corporations. I'm not going to name the major toy companies. Everyone knows them. To suggest that, oh, if you're in the toy industry, you must be on their level in terms of ethics and morals. That's always bothersome because, we're a small family business. All we want to do is support our staff, support our customers the best we can. The money you give to our company is not going to a multimillion-dollar executive bonus. It's helping people put food on their table and helping kids go to college. That's lost in translation a lot because the small business often gets glossed over in discussions in the public realm.

Dan: What's a tool specific to your profession that you really like using?

Alan: I have an account with my customs broker, which allows me to track any shipments and ships enroute to our building, which means at any given time, I can take the exact ship that a shipment is on, and I can see where it is in the Pacific or where it is in the Atlantic, its ETA to port, what other types of stuff might be on that ship within reason. That's a great visibility tool for, if nothing else, knowing internally what's going to be coming in the next few weeks or months, but also for letting our customers know what's going to be coming out soon.

Dan: Just out of curiosity, why would it be helpful to know what else is on the ship?

Alan: That's more just for fun.

Dan: Yes, but if it was carrying shoes or something, like you would know that?

Alan: Potentially. It sometimes gives you the, there's something called an HS code, which is basically every commodity has a corresponding code in the customs book that tells you what the product is. You can sometimes see on bills of lading on other shipments, the HS code for the product that's on there. The HS code on my shipments might be for paint or model kits or trains and The HS code on another bill of lading on that ship might be for shoes. It could be for something else. That's more just for fun.

Dan: What phrase or sentence strikes fear in the heart of a toy distributor?

Alan: Short holiday season. Yes.

Dan: We're talking about the number of shopping days between Thanksgiving and Christmas. This year it is, I believe, as short as it can be and-

Alan: Oh, because Thanksgiving's on the fourth Thursday of November, and sometimes that can be quite late in the month.

Dan: Correct.

Alan: I never thought about that. Yes, and what's interesting is you would think that the average person would say, "Okay, I'm going to spend $500 on holiday gifts this year, or whatever dollar amount they want," and then they're going to spend that money. In reality, the more shopping days there are between Thanksgiving and Christmas, the more business we do. It's not static to what people are planning to spend, they just will spend on those days between the two holidays. If you have 35 shopping days between the two holidays, or if you have, like this year, 25 shopping days between the holidays, you do that many fewer days of holiday sales.

Dan: I've got an idea for the retailers. Band together and lobby for Thanksgiving to be the third Thursday in November.

Alan: I will be the first to sign on. [laughter]

Dan: What's a sound specific to your profession that you're likely to hear?

Alan: A tape gun in our warehouse. It's a cacophonous symphony of, I can't even do the sound justice, but you just hear there, as everyone's taping up boxes outside.

Dan: That's got to be all day, every day?

Alan: Oh, all day, every day. The busier you are, the more you hear it.

Dan: Looking back, what would you say is the proudest moment of your career to date?

Alan: I don't know if there's a specific moment that I think of, but I'm very fortunate that my grandmother is still alive. She is, I believe, 93 she turned this year, and she's in pretty good health for that age. She is mentally as smart as she's ever been. The fact that I've had her around, as well as my dad, of course, but to get the experience from her, some of the old stories, and to keep her as involved as she physically can. We had a 40th anniversary celebration for our store earlier this year, and she was able to show up for a few hours and to have all three generations there, her, my dad, myself, it gives you such immense pride because, my grandparents were immigrants to this country, and they started with nothing. They put everything they owned into this fledgling business a long time ago. To see what it has become now, it fills me with immense pride knowing what was put into it, both from a labor perspective and from a financial perspective and it makes you all that much more motivated to make sure that it endures.

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Dan: Alan Bass is a hobby kit and toy distributor at Stevens International. You can find him online at megahobby.com. After the interview with Alan, I kept thinking about that model train set coming off the end of a Chinese factory line. If there is one thing that 21st century humanity has mastered, it is stamping out the same item again and again with such miraculous hyper-efficiency that it is actually cheaper to ship it around the world, from a truck to a ship, back to a truck, to a warehouse, to a plane, to a van, and ultimately to you, than it is to try to recreate that factory's efficiency right down the street. That is just wild. Note that it's also inefficiency that creates the opportunity for a business like Alan's.

Because, if a factory could afford to sell a one-off train set to a hobby shop in Phoenix, you wouldn't need a distributor at all. To get the efficiencies that drive down the per-unit cost you've got to deal in the kinds of bulk volumes that make it inefficient to deal with the little players, thus opening up a space for some middle-sized players that slot neatly between the bigs and the smalls. Efficiency begets inefficiency, which begets efficiency.

Capitalism, man. Forecasting the demand for model trains and planes, stocking just enough product, not too much, not too little, keeping tabs on what people are buying, shaving dollars off your transport costs, and tracking ships as they navigate the seven seas. Folks, that's what it's like to be a toy distributor. A shout-out to recent commenters on Spotify, Barbie, Trevor, and Althea. Happy New Year, everyone, from Matt Purdy and me. See you back in 2025.

Dan Heath: Alan Bass is a toy distributor. He buys products directly from hobby kit and toy manufacturers. Plastic model kits, model train sets, model rockets that most of us shot off when we were kids. He sells them to brick-and-mortar hobby and toy stores in the US. The stores that we deal with are generally small. The smallest ones we deal with are about 1,000 square feet, which is about the size of a very small one-bedroom apartment. We're servicing any independent store that does not need to buy in depth. We offer breadth, not depth.

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Now, being the middleman exposes Alan to some risk. Once he's bought goods from the manufacturer, there he is. There are no refunds. If his customers stop buying, it's his problem.

Alan Bass: There was a mass-market customer that was purchasing an item from us that we had manufactured specifically for us in China. They were buying thousands at a time. We were stocking multiple thousands at a time. Then one day, with no notice, they told us they found another supplier, probably their own factory. I believe we are still working on getting rid of that inventory. I think that was about 15 years ago.

Dan: What was the toy or product?

Alan: It was a custom play set, like a plastic play set for kids. It's like a castle and knights play set. It's a really awesome item. We just had about 10,000 of them.

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Dan: I'm Dan Heath, and this is what it's like to be. In every episode, we walk in the shoes of someone from a different profession, a couple's therapist, a stand-up comedian, a piano teacher. We want to know, what do they do all day at work? Today, we'll ask Alan Bass what it's like to be a toy distributor. We'll talk about what happens when your goods get stopped by customs, how his business went from the brink of shutting down to quadrupling in size almost overnight, and what it's like to carry on the family business. Stay with us.

Shankar Vedantam: I'm Shankar Vedantam, here to tell you about a great mystery. That mystery is you. As the host of a podcast called Hidden Brain, I explore big questions about what it means to be human. Questions like, where do our emotions come from? Why do so many of us feel overwhelmed by modern life? How can we better understand the people around us? Discover your hidden brain. Find us wherever you get your podcasts.

Dan: Alan sells to hobby shops whose customers are people who like model trains and model airplanes and that kind of thing. Often, they are middle-aged men rather than kids. I asked him why those shops couldn't just buy their items straight from the manufacturers and cut him out altogether.

Alan: That's an excellent question, and some of them do. Some of the larger independent stores in the country do and try to buy direct from the manufacturer. Suppliers are set up to ship case packs. You want to buy a model kit or a toy or a train set, you can't buy one from a manufacturer. You have to buy a pack of 12 or a case of 24, especially when you're talking about suppliers overseas who are shipping directly from a factory. If a store is large enough that they can sell that volume, they will certainly buy direct because it's cheaper. Where a distributor comes in is when you're servicing an actual small business store, someone who says, "Well, I can't sell 12 of them, but I can sell one or two of them." They'll buy one of this and two of that, and they'll combine a bunch of different items into one order that we ship out of our warehouse.

Our expertise is putting all of those items together into a carton for those stores so that they don't have to buy 12 deep of one item or 100 deep of a small item. That allows a store to be more profitable, especially when it's a small business because they can worry about turning over the inventory as opposed to I'm stuck with this many items on the shelf and I have to get through it.

Dan: A big part of what Alan does is anticipate what retail stores are going to want before they need it and to get it to them as quickly as possible.

Alan: We have everything in stock in our warehouse. When they order from us, that order is getting put together and shipped out the same day most likely. That would be the benefit of buying from a distributor from their perspective because from a manufacturer, you're going to wait a while until they get around to shipping it. From a distributor, it's right then and there. You're getting that shipped to you immediately.

Dan: This has got to be such a huge part of your profitability is just getting those predictions right. What have you learned over the years about how to order well, how to forecast well?

Alan: Again, in exact science, one of the things that we do is we order regularly and often. Instead of placing one giant order once a year with a manufacturer, we will place an order every month with them. It allows us to keep on top of our inventory counts a little bit more. It allows us to adjust our inventory level based on the whims of the economy, the supply and demand at any given point, and that allows us to stay fairly flexible from that perspective and to not be stuck with too many items that we have to close out. If we only bought once or twice a year, you have to buy more so that you can stock 12 months that's usually a recipe for disaster.

Dan: I want to talk through the logistics chain that gets toys to you. A train set made in a Chinese factory, it comes off the end of a factory line. Can you talk us through the steps and the process that get it from the end of the factory line into your warehouse?

Alan: Sure. Most of what I do on any given day is logistics. Taking your example of a train set being made in a Chinese factory, the manufacturer informs us that our order will be ready to ship on this date. We inform our customs broker and our freight forwarder. They arrange some shipping options for us. We haggle on price, of course, as does everyone. You try to find the quickest yet cheapest way to get it to your door. Then usually for a large order, it'll get on a ship. If it's coming from China, we're on the East Coast of the United States. We actually bring our ships through the Panama Canal to the East Coast. Alternatively, you can bring it into the West Coast and truck it across the country.

That process from the time it gets on a boat till the time it arrives at the dock closest to us is probably five to six weeks. At that point, you're waiting for your customs broker to clear that shipment. That involves working with Customs and Border Patrol, declaring what the item is. If there's an associated tariff, you're paying that tariff.

Dand: How often do things get held up in customs?

Alan: Oh, you're just getting there. [laughs] What happens after that is customs has the right to say, "We want to take another look at this." That means that Customs is going to take your container or maybe you have a few pallets of items and they're going to bring it to their facility separate from the port. They are going to go through it with a fine-tooth comb. They might x-ray it. They might open up cartons and take things out. It's usually random. We've been doing this a very long time and we have never found a pattern as to what does and doesn't get taken for an intensive exam.

Dan: They're just searching for fentanyl or something. Is that the deal?

Alan: They could be searching for anything. They could be making sure that items are labeled properly. We once got hit because, unbeknownst to us, our manufacturer forgot to put the made in Taiwan on the box. They were not allowed to be brought into the US. We had to work with customs to get a fix for it. Things like that they're looking for. Of course, they're also looking for illegal stuff like that. That's nothing that we've ever experienced. That will sit in the customs warehouse for a week or two while they wait for it to be examined. It waits in line with everything else. It gets examined. Then it sits and waits for a week or two before a trucker can come pick it up. Then they eventually deliver it to our door. A customs exam can add about three to four weeks to the time frame. Then they also bill you anywhere from a few hundred dollars to up to $5,000 for the pleasure.

Dan: Wait, they bill you because they chose to monkey around with it and check it out?

Alan: Absolutely. Customs and Border Patrol is financed by all of our tax dollars, but also the exam charges that they do at port. Honestly, stuff like that is incorporated into the costs. We're not getting political on the show, but a lot of the discussions about who pays for tariffs over the last few months, obviously, the importer pays the tariff, not the country that's exporting the product. Tariffs, the shipping costs, any associated fees, that's incorporated into the cost of our product. We call that the landed cost. If an item costs us $10, but all of the associated costs with getting it to our door cost another 20% on top of that, then that really costs us $12. That's the landed cost of the item that we make our price off of.

We don't always account for a customs exam, but we leave ourselves some wiggle room so that if there is over the course of a year, if there's an exam, if there are a few exams, we can absorb that cost because it's a little bit incorporated into the price on average.

Dan: It's amazing just to think about our hypothetical Chinese model train. In its life, it goes from the factory to a truck, to a port, to a ship that goes halfway around the world or more once you tack on through the Panama Canal to the East Coast and then on another truck to your warehouse, then you've got to reship it to the ultimate hobby shop where it will be sold. It's a miracle that that's even economically possible. You would think that would be so fantastically expensive that a model train would have to cost like $5,000.

Alan: Right. That's the thing. When you do a certain amount of volume, obviously the costs go down a little bit relative to the shipment. If you've got a $2,000 shipment leaving China, the freight cost is going to be enormous. It might be more than the cost of the product. If you've got a $100,000 shipment leaving, the freight cost is going to be a very small percentage of that container. It's a matter of finding your volume savings where you can, negotiating your best rates all across between the trucker and the ocean freight or the air freight if it's coming by plane. It's such a hectic part of our job. Honestly, that takes up a lot of our days here.

Dan: Let's talk a little bit about the relationships in the business. You've been doing this a long time. I imagine you have a lot of longstanding relationships with both the stores and the manufacturers. Maybe let's start with the stores. Is it typically the owners of the stores that you're working with?

Alan: Generally, yes. Sometimes if the store is large enough, you'll be dealing with a buyer. Especially for a small hobby shop, you're generally dealing with the owner. Some of these relationships go back generations. I happen to be third generation in my family in this business. My grandparents started in this industry in the 1950s with their first hobby distributor.

Dan: Wow.

Alan: We're still here today, fortunately. There are customers whose parents and grandparents did business with my parents and grandparents. The fact that you've got that longstanding, decades-long relationship certainly helps, especially when there's a problem because there's a little bit more of a layer of trust than there would be otherwise with some generic company you might do business with.

Dan: On the hobby shop side, if you're talking to the owner of a hobby shop, what are you likely to be talking about?

Alan: We're likely talking about how business is, what's selling right now. To use this year as an example, the economy's been weak this year, despite what a lot of the data is showing. People are struggling this year. Sales have been a little soft relative to the strength we saw during the pandemic years. We're talking to our customers, the owners of the store. What's selling right now? Is it the big-ticket items? Is it the small items? What categories are still selling for you? Are there any categories that are weaker?

Dan: What about on the manufacturer side? I guess my mental model would be that that would be somewhat faceless and transactional. You're just giving a quantity to some Chinese or German or South Korean factory or something. It sounds like I may have the wrong mental model. Do you have warmer, longstanding relationships on that side as well?

Alan: It depends. There are certainly manufacturers we deal with where it is a 100% faceless relationship. We send an order. They request payment. We send payment. They send a shipment. Then there are manufacturers that have longstanding relationships with us. There's a very large annual trade show in Nuremberg, Germany. It's called Spielwarenmesse, which translates to Toy Fair. It's a massive, massive expo right outside the main city. My family used to go every year. We switched to every other year. Then the pandemic hit. Unfortunately, the show has taken a bit of a hit. We haven't been there since.

We would go for five days and morning till night meet with manufacturers. You're not just talking about business and the new items that are coming out. You're sitting down and you're having a snack. You're having a drink with them. You're discussing each other's families. You're discussing what's going on in the world. I do love that part of the business. As we move forward, there is certainly less of that. The newer companies that pop up are definitely more faceless. You do lose a little bit of that face-to-face relationship, especially when trade shows start to disappear. You don't want it to become faceless. A lot of it does become faceless over time.

[music]

Dan: Hey, folks, Dan here. This is our last episode of 2024. Happy New Year, first of all. Second of all, thank you for coming with us on this ride. The laws of nature do not favor this podcast. Let's be honest. It is not true crime. It does not feature celebrities interviewing other celebrities. There's no meditation, no practical tips, no investment schemes, no political tribalism. It's just normal people talking about why they like their work. That's it. I'm amazed and grateful that all of you find that as valuable and soul nourishing as I do. Thank you sincerely for listening.

Let me tell you, we have some bangers coming in 2025, including a great show with a homicide detective. Yes, I am aware of the irony of what I just said. What can I say? We're still jealous of true crime. Now, back to the show.

[music]

How many items would you guess are in your warehouse right now? Distinct products, not as-

Alan: Skews. How many skews?

Dan: Yes, exactly.

Alan: I believe we have about 40,000 skews at this moment.

Dan: Wow. Then how many items accounting for multiple of each skew?

Alan: That can vary. Some items are very, very slow and we'll carry them in twos and threes. Some of them will carry in hundreds at a time. Like I said, it's breadth, not depth. We're not carrying 10,000 each of all of these items. We're carrying 40,000 items at a smaller quantity to offer as many choices as possible for our customers.

Dan: That is amazing. If a customer places an order today for 12 of this and 6 of this and 4 of that, walk me through what has to happen for that order to get fulfilled on your side.

Alan: That order, it's actually a very simple process. It's probably one of the simplest parts of our business. The order comes in, the pick ticket gets printed out and put in our fulfillment center. A staff member picks the items, it gets double-checked, it gets packed into a box, shipping label slapped onto it, and it's out the door usually within a few hours.

Dan: This is all like human driven, no like robotics, AI, blah, blah?

Alan: No, old fashioned, old school. We do it manually.

Dan: There's a human being walking the aisles of the warehouse, finding the item, bringing it over, putting it in a box and so forth.?

Alan: Absolutely. We are not automated at all.

Dan: Here's a twist. Alan isn't just a distributor. He actually owns a hobby shop, too. He says that having a brick-and-mortar store helps him keep his finger on the pulse of the market.

Alan: Even though selling to consumers is a very small part of our business, it's crucial for us to be able to have success as the middleman. It gives us incredible market research to understand what the consumers are doing. One of the things I really love is just seeing young kids in the store with a big smile on their face. It really grounds you. We've got a big train layout in our store. It's got all these buttons around it so that kids can push it, and something will move and then a train whistle will sound and something else will happen, some other animation we've created.

To watch them there pushing the button and giggling to their parent and pointing at the thing that just happened, it's really heartwarming because, again, when you're in an office all day, you're dealing with logistics, you're dealing with an angry customer or a problem supplier, you're not thinking about the fun side of the business. We sell fun. We're not insurance agents. We're not selling something that people have to buy but don't want to buy. They're coming into our store and our customer stores because they want to have fun. To watch that happen in real time, it really grounds you and it's something I try to do as often as possible.

Dan: Any customers come to mind that you can remember even if you never actually met them?

Alan: There's a customer of ours in our retail store and she brings her son with her and the son has some sort of disability. I don't know if it's autism or something similar. He's very shy, very introverted. When he comes in and he walks up to the train counter, suddenly the eyes widen and he's telling us about the train that he has at home and he's explaining which car he has, and he wants to buy this one day when he saves up enough. You just see, again, like the bright-eyed kid, just loving something that we happen to have in our store. It's really nice to see that.

Dan: What's been the most stressful time that you can remember in your work?

Alan: Definitely the pandemic. When COVID hit, we're in New Jersey and we knew that companies were about to be shut down and my family, we would be on a conference call together watching our governor's press conferences to find out what the rules were going to be for the next day. Were we going to be shutting down our business? Were we going to be sending employees home? This was before the PPP loans existed. How are we going to pay our employees? How are we going to pay our bills? That was extremely stressful. We were making contingency plans to pretty much shut down our business.

Then you flip that. When we realized that our distributor company was allowed to remain open because it was a warehouse not open to the public, suddenly business skyrocketed because everybody was stuck home and needed leisure products. Suddenly our business almost quadrupled overnight, and we no longer had the staff to handle that volume. Nobody was looking for work in the middle of a pandemic. It was two distinctly opposite levels of stress.

Dan: That is crazy. Going from like the cusp of just disappearing as a business to quadrupling in size in a matter of what I assume was months.

Alan: It was less than that. It was almost overnight. It was unbelievable how quickly it happened. We were working seven days a week. Many of our staff worked seven days. I give all credit to our staff. They were unbelievable. We would never have survived without them.

Dan: Was your family in the warehouse taping up packages to send out? Was it an all hands-on deck kind of thing

Alan: Oh, 100%. We have another mantra that nobody is too good for any job. If the toilet needs scrubbing, happy to scrub the toilet. If we need to vacuum the office, we'll vacuum the office. Just because we're in charge, just because someone's a manager, supervisor, doesn't mean they're too good to do any job. When we're busy, everybody goes outside into our warehouse and is packing orders, picking orders, unpacking a truck. I remember my first day on the job full-time after I graduated college. I walked into the building and my dad said, "Great to have you here. There's a container of toys in the back. Go help them unload it." I said, "Yes, sir."

Dan: Good for you. That's good manners. You didn't come in with an entitled perspective.

Alan: No, you can't. You can't at all.

Dan: What was it like growing up with your dad in the toy business?

Alan: It was interesting, because while most people go on vacations during the winter, we never had a winter vacation. December was the month that I barely saw my dad. We might have dinner at 8:30 when he gets home from the office, and I certainly don't see him the next morning when I wake up to go to school. There is no vacation around the holidays. We've never taken a week in an island in December, we've never gone to someplace warm in the middle of the holiday season. We're obviously a little bit more secure now than we were then, but that's always been the mantra in our business. It's a small business. It's all hands-on deck. It's whatever you need to do to get done on any given day. Just because something is not your job, doesn't mean you don't do it.

Dan: Did you have like the best toys on the block growing up? Did everyone want to come to your house to play?

Alan: I had some very interesting toys and it's actually a very funny story that very often my dad would come home one day, and he'd have a different toy or a craft kit or some interesting thing. Be like, "Hey, I got you this." When you're five or six or seven, "Wow, thanks, dad," and you rip it open and you're putting it together and you're having a blast with it. Your parents hang it on the wall, and you move on. You never think anything of it. The first time that I went to this giant toy fair in Germany, I believe I was 23 at the time, I was there with my dad and my mother, and I believe my grandmother at the time. We were walking down the aisles of this massive expo center, and I'm starting to see familiar toys that I remembered from my childhood. I'm like, "Oh, I remember that. I did that when I was a kid. Oh, hey, I remember that too." I see my dad smirking and it stopped in the aisle. I said, "Wait, all of those gifts you gave me were just samples for you to test out?" He was like, "Of course, how else would I know what to buy?"

[laughter]

Dan: The scales fell from your eyes.

Alan: Yes, but I still appreciated it.

Dan: Of all the things you could be a guinea pig for, like that was a pretty good roll of the dice.

Alan: Oh, I have no complaints at all.

Dan: Are you a hobbyist?

Alan: I am not a hobbyist myself, but I have put together many model kits, many train sets, many model rockets in my day.

Dan: You never caught the bug.

Alan: I never caught the bug, and I think it's safer that way. I think if you're running a business like this-

Dan: You start consuming your own products.

Alan: You also wind up getting sidetracked by what you are personally interested in instead of what consumers are interested in.

Dan: Alan, we always end our episodes with a quick lightning round of questions. Here we go. What is a word or phrase that only someone from your profession would be likely to know, and what does it mean?

Alan: TSCA form. TSCA form. That would be T-S-C-A, which stands for Toxic Substance Control Act. What that means is when you're bringing an item in through US customs, if there is a chance that the item might be hazardous, you need to sign this form to either specify to them, yes, it might be hazardous, but it complies with all US. regulations, or no, it is not hazardous. If we're bringing in model paint from across the ocean, we need to identify exactly what that paint is on the form so that they know whether or not it's eligible to be brought into this country under the regulations.

Dan: What's the most insulting thing you could say about a toy distributor's work?

Alan: Anything that lumps us and other small businesses, specifically in the toy industry, anything that lumps us in with some of the giant corporations. It's always fashionable to hate giant corporations. I'm not going to name the major toy companies. Everyone knows them. To suggest that, oh, if you're in the toy industry, you must be on their level in terms of ethics and morals. That's always bothersome because, we're a small family business. All we want to do is support our staff, support our customers the best we can. The money you give to our company is not going to a multimillion-dollar executive bonus. It's helping people put food on their table and helping kids go to college. That's lost in translation a lot because the small business often gets glossed over in discussions in the public realm.

Dan: What's a tool specific to your profession that you really like using?

Alan: I have an account with my customs broker, which allows me to track any shipments and ships enroute to our building, which means at any given time, I can take the exact ship that a shipment is on, and I can see where it is in the Pacific or where it is in the Atlantic, its ETA to port, what other types of stuff might be on that ship within reason. That's a great visibility tool for, if nothing else, knowing internally what's going to be coming in the next few weeks or months, but also for letting our customers know what's going to be coming out soon.

Dan: Just out of curiosity, why would it be helpful to know what else is on the ship?

Alan: That's more just for fun.

Dan: Yes, but if it was carrying shoes or something, like you would know that?

Alan: Potentially. It sometimes gives you the, there's something called an HS code, which is basically every commodity has a corresponding code in the customs book that tells you what the product is. You can sometimes see on bills of lading on other shipments, the HS code for the product that's on there. The HS code on my shipments might be for paint or model kits or trains and The HS code on another bill of lading on that ship might be for shoes. It could be for something else. That's more just for fun.

Dan: What phrase or sentence strikes fear in the heart of a toy distributor?

Alan: Short holiday season. Yes.

Dan: We're talking about the number of shopping days between Thanksgiving and Christmas. This year it is, I believe, as short as it can be and-

Alan: Oh, because Thanksgiving's on the fourth Thursday of November, and sometimes that can be quite late in the month.

Dan: Correct.

Alan: I never thought about that. Yes, and what's interesting is you would think that the average person would say, "Okay, I'm going to spend $500 on holiday gifts this year, or whatever dollar amount they want," and then they're going to spend that money. In reality, the more shopping days there are between Thanksgiving and Christmas, the more business we do. It's not static to what people are planning to spend, they just will spend on those days between the two holidays. If you have 35 shopping days between the two holidays, or if you have, like this year, 25 shopping days between the holidays, you do that many fewer days of holiday sales.

Dan: I've got an idea for the retailers. Band together and lobby for Thanksgiving to be the third Thursday in November.

Alan: I will be the first to sign on. [laughter]

Dan: What's a sound specific to your profession that you're likely to hear?

Alan: A tape gun in our warehouse. It's a cacophonous symphony of, I can't even do the sound justice, but you just hear there, as everyone's taping up boxes outside.

Dan: That's got to be all day, every day?

Alan: Oh, all day, every day. The busier you are, the more you hear it.

Dan: Looking back, what would you say is the proudest moment of your career to date?

Alan: I don't know if there's a specific moment that I think of, but I'm very fortunate that my grandmother is still alive. She is, I believe, 93 she turned this year, and she's in pretty good health for that age. She is mentally as smart as she's ever been. The fact that I've had her around, as well as my dad, of course, but to get the experience from her, some of the old stories, and to keep her as involved as she physically can. We had a 40th anniversary celebration for our store earlier this year, and she was able to show up for a few hours and to have all three generations there, her, my dad, myself, it gives you such immense pride because, my grandparents were immigrants to this country, and they started with nothing. They put everything they owned into this fledgling business a long time ago. To see what it has become now, it fills me with immense pride knowing what was put into it, both from a labor perspective and from a financial perspective and it makes you all that much more motivated to make sure that it endures.

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Dan: Alan Bass is a hobby kit and toy distributor at Stevens International. You can find him online at megahobby.com. After the interview with Alan, I kept thinking about that model train set coming off the end of a Chinese factory line. If there is one thing that 21st century humanity has mastered, it is stamping out the same item again and again with such miraculous hyper-efficiency that it is actually cheaper to ship it around the world, from a truck to a ship, back to a truck, to a warehouse, to a plane, to a van, and ultimately to you, than it is to try to recreate that factory's efficiency right down the street. That is just wild. Note that it's also inefficiency that creates the opportunity for a business like Alan's.

Because, if a factory could afford to sell a one-off train set to a hobby shop in Phoenix, you wouldn't need a distributor at all. To get the efficiencies that drive down the per-unit cost you've got to deal in the kinds of bulk volumes that make it inefficient to deal with the little players, thus opening up a space for some middle-sized players that slot neatly between the bigs and the smalls. Efficiency begets inefficiency, which begets efficiency.

Capitalism, man. Forecasting the demand for model trains and planes, stocking just enough product, not too much, not too little, keeping tabs on what people are buying, shaving dollars off your transport costs, and tracking ships as they navigate the seven seas. Folks, that's what it's like to be a toy distributor. A shout-out to recent commenters on Spotify, Barbie, Trevor, and Althea. Happy New Year, everyone, from Matt Purdy and me. See you back in 2025.