However, some educational toys need to be physically played with to be considered fun, something that can be difficult through electronic retail, according to Matt MacBeth, CEO and co-founder of Edwin. His company makes an Internet-connected rubber ducky.
The issue with selling purely online is "you're selling to the parent and the kid," who may not be shopping online, MacBeth said.
"Where is the right place to sell them? I'm not yet sure that consumers know. Searching on Amazon for 'toys' brings up a million things. We're trying to find out where to meet the consumers," MacBeth told the audience.
The Red Balloon Toy Store was once a "screen-free" zone filled with wooden blocks and yo-yos, but recently, they've embraced technology. Amazon can be a useful indicator of when a toy goes viral in a location where there's no physical stores, according to David Castillo, vice president of The Red Balloon Toy Store.
"A certain product will get hot in our own Amazon store," Castillo said. "We know that it will be just a few months before it catches on in Utah is well."
But places like children's museums — where kids can interact with the toy outside of its box, and parents can read about the educational features — can drive more sales in some cases, Gupta said.
Krissa Watry said that her company, Dynepic, works with aquariums, zoos and museums to do things like creating apps that send coupons to parents whose children enjoyed toys at certain exhibits.
Watry said it can be safer for kids to play with technology this way — rather than using adult gadgets, like a smartphone or an Amazon Echo, as a toy.
There could be an opportunity there for independent, local toy stores to step in where big box stores can't, by creating experiences like a high-tech birthday party, said Kimberly Mosley, president of the American Specialty Toy Retailing Association.
"When you think about the traditional toy store, you think about the traditional toy," Mosley said. "But our members are always looking for a quality product…they're looking at, not so much how the technology interacts with the toy, but how does the child interact with the toy?"