Billion-dollar Babies: The Story of Beanie Babies

The following is an article from Uncle John's Slightly Irregular Bathroom Reader.

(Image credit: Flickr user Dominique Godbout) 

How does a fad start? What makes millions of people all jump on the same bandwagon at the same time? Is it coincidence… or careful planning? Here’s a look at an interesting craze of the late 1990s.

TOYCOON

In 1980 Ty Warner left his sales job at a San Francisco stuffed animal company to start one of his own. He named it after himself- Ty, Inc. The business did well from the start, but it wasn’t until 1993 that Warner hit on the idea that would put it on the map. Why not make a stuffed animal so affordable that kids could buy it with one week’s worth of allowance?

So he came up with tiny stuffed animals made of polyester plush fabric that could sell for about $5. The critters came with a heart-shaped paper tag that gave the animal’s name, its “birth date,” and a four-line poem describing it. He called them “Beanie Babies.”

The Beanie Babies’ most novel feature was their filling -as the name suggests, they were loosely filled with plastic “beans” that gave them the feel of a beanbag instead of a stuffed animal. They looked slightly deflated, not stuffed, and when Warner showed his tiny slumping cats, dogs, bears, and other animals to people in the toy industry, they thought he was nuts. “Everyone called them roadkill,” Warner told a reporter in 1996. “They didn’t get it. The whole idea was that they looked real because they moved.”

(Image credit: Flickr user FUMITOL)

GET ‘EM WHILE THEY’RE HOT

To help boost sales, Warner adopted a clever “strategy of scarcity”:

* He avoided giant retailers and toy store chains in favor of small gift shops and specialty toy stores, and he limited sales to these stores, too. No store was able to buy all the Beanie Baby characters that were available, and those they did get were limited to 36 of each character per month. Collectors came to perceive them as scarce- they had to buy them quickly before they were gone.

* Instead of manufacturing as many as he could sell, Warner regularly “retired” Beanie Baby characters by posting a notice on the company website: Some were retired only after a long run; others were retired quickly. There was no logic to it, so when a new character appeared in stores people had to act fast if they wanted one.

* Warner made small changes in each character. If the first production run of Shasta the Bear had an orange ribbon around its neck, Warner would then change the ribbon to yellow, and then green on the next runs. Or he might change the color of the bear from white to red, and then to blue. Hardcore collectors felt compelled to buy several versions of each character.

* But Warner’s most brilliant stroke of all: a near-total information blackout on his company, so that nobody had a complete picture of what was going on. How many Seaweed the Otters was the company going to produce? In how many versions? Which stores would get them? How soon would they be retired? He wouldn’t divulge his plans, which further fueled the frenzy to buy.

FROM BEANS TO NUTS

Warner’s clever marketing paid off. Kids spending their allowance money on Beanie Babies were quickly overtaken by crazed adult collectors racing from store to store looking for newly retired Beanie Babies before they disappeared forever. Since no information was coming, Ty collectors organized phone and email networks to compare notes and keep up to date.

New Beanie Baby characters came out all the time priced at $5 to $7, but as the fad grew, the price of the oldest and rarest of the retired Beanie Babies began to soar on the collectors’ market. Skyrocketing prices drew more people into the craze, which in turn pushed the prices even higher. People bought every character they could get their hands on, in the hope that, like the royal blue Peanut the Elephant, one or more of them might one day be worth $5,000.

NOTHING LIKE IT IN THE WORLD

So how crazy did it get? Collectors made daily calls to their local toy stores to see when new shipments were expected, then on delivery day lined up before the store opened to be the first to buy whatever new Beanie Babies might be in the shipment. But why wait? Some people drove around looking for UPS trucks that might be carrying Beanie Babies. People fought over stuffed frogs and crabs in the parking lots of strip malls, and in West Virginia a security guard named Harry Simmons was shot and killed by his “business partner” during an argument over their Beanie Babies.

In 1997 McDonald’s announced that it would include a “Teenie Beanie Baby” prize with each Happy Meal. The giveaway turned into the company’s most successful sales promotion ever: Crazed collectors stampeded the restaurants, buying dozens of Happy meals at a time, tossing out the food and getting back in line to buy more. The promotion was supposed to last a month, but the company ended up giving away all 100 million Teenie Beanie Babies -one for every child in America- in ten days.

(Image credit: Flickr user deovolenti)

And over the course of the Beanie Baby craze, Ty Warner, a man who basically sells little bean bags for a living, pocketed about $6 billion. In 2003 Forbes magazine listed him as the world’s 44th richest person -in league with software giants, media moguls, and Arab sheiks.

WHAT GOES UP…

Nothing could postpone the inevitable: With factories in Asia churning out Beanie Babies by the hundreds of millions, sooner or later people were bound to get bored and even the most diehard collectors would despair of ever collecting them all. By mid-1999 Beanie Babies were beginning to pile up on store shelves, so Warner announced that the company was retiring all of its remaining Beanie Babies on December 31. The “last” Beanie Baby ever? A black bear named “The End.” Sales shot up again.

Then on Christmas Eve he announced that he would put it to a vote: Beanie Baby fans could phone in (at 50¢ a call) and vote on whether Beanie Babies should be saved. Guess what happened!

(Image credit: Flickr user daniel)

The fake retirement boosted sales in the short run, but in the long run it probably killed the craze. The Ty company still manufactures Beanie Babies, but today they’re what they should have been all along: toys for kids. New ones sell for about $6 in toy stores, but when the bubble burst in the new century, shell-shocked collectors who’d hoped to pay for their kids’ educations by hoarding Beanie Babies were dumping them in bulk on eBay. Even when offered for a penny apiece, they didn’t always attract bidders.

Moral of the story: Beanbags are great toys. They’re just not good investments.

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The article above is reprinted with permission from Uncle John's Slightly Irregular Bathroom Reader, a fantastic book by the Bathroom Readers' Institute. The 17th book in this the Bathroom Reader series is filled to the brim with facts, fun, and fascination, including articles about the Origin of Kung Fu, How to Kill a Zombie, Women in Space and more!

Since 1988, the Bathroom Reader Institute had published a series of popular books containing irresistible bits of trivia and obscure yet fascinating facts. If you like Neatorama, you'll love the Bathroom Reader Institute's books - go ahead and check 'em out!