“The Beanie craze was a lifeline…to mom-and-pop retailers who were struggling the late 1990s”, according to Zac Bissonnette in his recent book entitled The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute (Portfolio/Penguin, 2015).  Our shop was among the thousands who benefited from Ty Warner’s decision to only sell Beanie Babies through independent retailers and a few high end toy chains.  I had always wondered why he supported smaller stores, and thanks to Bissonnette’s fascinating and well-researched book I now know the answer.

It wasn’t a love of independent retail that drove Warner’s decision — it was the fact that keeping his market small prevented the market from flooding. He also knew from his days as a high-grossing Dakin rep that the buyers for smaller shops could be more easily influenced (once might even say controlled), and that the personnel in these stores could be counted on to be knowledgable and enthusiastic about the details of introductions and retirements.

Avoiding big box stores meant a lack of efficiency for Ty, and in fact at the peak the company was generating 8,000 – 10,000 packing slips a day. But accord to a quote from 1996, Ty Warner said “This thing could grow and be around for many years just as long as I don’t take the easy road and sell it to a mass merchant who is going to put it in bins.”

Keeping the number of Beanies in stores low, and limiting their availability to only smaller stores, fueled the demand that saw some Beanies (now often worth less than their original $2.50 wholesale price) to sell for thousands of dollars on the secondary market.  And although our shop never sold a Beanie for more than standard markup, we were able to spin straw into gold with the Princess Bears — the dozen we purchased for $33 earned about $4,000 for charity.

This bubble was bound to burst, of course, although it did get a second wind when McDonald’s offered Minis in their Happy Meals. And frankly, we were not sorry to see the craze end. We’d been deluged with phone calls from collectors, and these cute toys were being targeted exclusively by adult speculators.  But is there a lesson to be learned from the craze, aside from the fact that wealth can’t bring you happiness? (Founder Ty Warner, who is worth billions, was recently convicted of tax fraud.) 

I think that Warner’s decision to limit distribution of his product in order to maintain its value could resonate with other vendors in the gift market today.  Making a product available on Amazon and through big box and discount retailers floods the market, which can lower the perceived value of a product. And the sales personnel in an independent retailer can be counted on to learn the story behind a line, and to take care to convey that information to the consumer.  Because whether he used this information for good or bad, Ty Warner had come to the important realization that in many cases, independent retailers are the key to direct interaction with the shoppers. Hopefully other companies will consider this important edge when deciding on placement for their products — and will experience slow and steady growth rather than the crazy speculative ride that was the Beanie craze.

Happy Retailing,

Carol “Orange” Schroeder

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