If you’re a #90skid you totally remember the Beanie Baby craze that swept the nation. People were buying up these plush toys and selling them like crack to eager buyers who were willing to pay top dollar. But how did a small stuffed toy become the world’s first internet sensation? Let’s find out.
A Salesman’s Start
After dropping out of college and trying his hand at acting, Beanie Baby creator Ty Warner moved back to his native Chicago. Warner began working as a salesman for the company Dakin, arguably the most successful plush toy maker at the time. While at Dakin, Warner demonstrated a knack for sales. He found success selling to retail shops as he had the ability to predict which items would sell the best. However, it wasn’t long before Warner found himself in hot water with Dakin and was eventually fired in 1980 for selling his own competing products to the company’s customers. After parting ways with Dakin, Warner decided to move to Italy for three years. If you’ve never been to Italy, let me tell you it is not the worst place you could go if you were blowing off some steam.
Development of Ty Inc.
After Warner’s return to Chicago, he decided to put it all on the line. He put everything he had into starting Ty Inc. The first plush toy released under his own company was a line of Himalayan cats inspired by a similar toy that he had seen in Italy. These did well, with Ty Inc’s sales doubling every year and reaching $6million in 1992. There was one key element of innovation in these cats that would pave the way for Beanie Babies future astronomical success: beans. Warner discovered that understuffing the plush toys with beans made them poseable and able to “wave, dance, and cuddle”. At the time, his rival’s stuffed toys were stiff and hard so Warner’s more ‘lovable’ designs were a welcome change.
Beanie Babies Hit the Scene
Ty Inc was doing well, but it was about to do even better. In November of 1993 the 9 original Beanie Babies were launched. Ever the businessman, Ty Warner used several tactics in order to increase demand. Prices were kept low (the Beanie Babies cost between $5-$10) and sales were focused on smaller Mom and Pop type stores. When the store would place an order, Ty Inc would deliberately send less items than what was ordered. Older Beanie Babies were also randomly retired and replaced with new ones in order to create stock shortages. In order to get their hands on discontinued items, fans happily paid well over retail price on the resale market.
The Rise of the Internet
During this time, a college student named Lina Trivedi brought a rising new invention to Ty Warner’s attention–The Internet. Trivedi demonstrated how the new tool worked and suggested that the company make a website in order to capitalize on this novel opportunity. With Warner’s blessing, Trivedi got to work and in 1995 the Ty Inc website was born. When published, it became the first retail website released by a company. To put things in perspective, when their site first entered the World Wide Web only about 1.4% of Americans were using the Information Superhighway. At the time, the internet was primarily used as a research tool. However, that was about to change. The number of users on the internet soon grew exponentially–as did the views on the Ty Inc website. The company soon began printing tags with the website’s URL with a message asking the customer to visit it. As the popularity of the internet grew, so did that of the Beanie Babies. The rise of the internet is one of the key factors that contributed to the Beanie Baby Craze.
Height of the Beanie Baby Craze
1999 marked the height of the Beanie Baby Craze. People were spending money hand over fist for these toys, especially for rare collectibles. Think of it kind of like Beatlemania but instead of obsessing over humans, people were head over heels for small, plush toys. It is estimated that during that year alone Ty Inc raked in over $700 million in profit, elevating Ty Warner’s net worth to over $1 billion. During the craze, the company wasn’t the only one profiting. With resale websites such as Ebay, it was easier than ever for entrepreneurs to buy and sell their stock. My Mom actually had a side business reselling Beanie Babies during this time–and she wasn’t the only one. With fans of the toys willing to pay over ten times the original price for certain items, business was good. Many people easily made thousands of dollars in the Beanie Baby resale game. Some regarded their collections as so valuable that they insured them for tens of thousands of dollars. There was even a case reported on by the LA Times about a couple needing court mediation in order to split up their joint Beanie Baby collection. Yes, seriously.
A summary of key moves that led to the Beanie Baby Craze
- Stuffing the bears with beans to make them poseable and therefore more ‘loveable’, a design favored over the stiff toys of his competitors
- Focusing on selling to smaller independent shops as opposed to corporate chains. Smaller stores had smaller inventory so the bears weren’t as likely to get lost in a sea of options like at Toys R Us or WalMart. I speculate that this also helped drive word of mouth traffic.
- Underfilling store orders to increase demand by promoting scarcity of the product
- Seemingly randomly retiring old designs and introducing new ones which was a contrast to introducing one or two new designs every year like his competitors. This also drove demand since every item was essentially a ‘limited edition’ item that the customer may never be able to buy again.
- Releasing notable limited edition designs that coincided with historical events such as the deaths of Princess Diana and Jerry Garcia of The Grateful Dead. Some of these notable bears still fetch high dollar on the resale market more than twenty years after their release.
- Becoming the first company to publish a retail website during the internet’s infancy. This allowed Ty Inc to reach a whole new set of customers as the internet rose in popularity. The company also drove traffic to their website by printing the URL on Beanie Baby tags with the call to action “Visit our web page!!!”
- Heart-shaped ‘swing tags’ on the ears of the bears and ‘tush tags’ on their tushes. These were inscribed with dates of birth and unique poems for each model. This gave a sense of personalization and emphasized collectibleness.
- Temporarily ceasing production at the height of the craze, once again enforcing the principle of scarcity.
- Resale websites such as Ebay which allowed for easy access to a secondary market that placed emphasis on buying ‘limited edition’ items before it was too late. This also reinforced Beanie Baby’s popularity and collectible-ness.
Sources/Where to head to learn more:
Ex-Spouses Go to Court to Split Beanie Babies, Associated Press Los Angeles Times
Beanie Babies, Wikipedia
Plush Life: Why did people lose their minds over Beanie Babies? Mark Joseph Stern at Slate.com
Ty Warner, Wikipedia
3 Business Lessons From Ty Warner, the Beanie Babies Billionaire, Steve Symington at The Motley Fool https://www.fool.com/investing/general/2015/06/07/3-business-lessons-from-ty-warner-the-beanie-babie.aspx