Billion Dollar Babies: The History of Ty Beanie Babies
The first step in the creation of the Beanie Baby began in 1983 when 39 year old former aspiring actor H Ty Warner, who had recently either been fired from or simply chose to leave the Dakin toy company he’d worked for during much of his adult life, opened his own toy company that manufactured small stuffed animals.
Modeling the “go big or go home” creed, he invested pretty much every dime he had in it, including $50,000 in inheritance from his father who’d just died.
He called his first toys the Himalayan Cats, which quickly sold out in local stores. What set Warner’s stuffed animals apart was that plastic pellets were used instead of conventional stuffing materials, so the toy had a more life-like and less stiff feel to it. His competitors thought he was nuts, and compared his product to “roadkill.”
Ty had the last laugh by selling 30,000 units of “roadkill” at the Atlanta toy fair, and by 1992 his company’s catalog included dozens of animals. As successful as this endeavor was, Warner was still not satisfied. He wanted to create a collectible toy that kids could purchase with their own pocket money for under five dollars. At the time, according to Ty, there were no toys “in the $5 range that weren’t real garbage.” So he got to work and made it happen.
The “original nine,” as collectors call them, was rolled out in Chicago in 1994. They are, in no particular order: Spot the Dog, Squealer the Pig, Patti the Platypus, Cubbie the Bear, Chocolate the Moose, Pinchers the Lobster, Splash the Killer Whale, Legs the Frog and Splash the Dolphin.
There were 50 official Beanie Babies for sale within a year, but none of them were available at large retail outlets. Ty instead chose to market his product solely at small gift shops and specialty stores, lending the items a certain air of exclusivity, regardless of their low price.
By utilizing certain marketing techniques, Ty Warner was able to create a product that was highly desirable not only to children, but also to collectors who were willing to pay thousands of dollars on secondary markets for certain Beanie Babies. These marketing tricks included:
- Word of Mouth: Most popular toys bombard you with advertising, especially on TV. Beanie Babies sold with no traditional advertising, and relied solely on customer word of mouth, the most powerful of all advertising, to spread the word about the product. This gave it an element of mystery that in turn added to the toy’s popularity.
- Retirement: Beanie Babies were often suddenly “retired,” leading to desperate searches for the ones remaining on store shelves. This also ensured that collectors felt compelled to hunt down every available Beanie Baby, because you never knew when it would suddenly become unavailable. As sales began to wane in the later part of the Beanie bubble, Ty even made people think there would be the ultimate retirement, commenting on December 31, 1999 that all Beanie Babies would stop being manufactured. All hell broke loose among collectors, making Y2K look like a sedate garden party. Then Ty slyly amended his statement to say he’d let collectors vote on the fate of Beanies Babies. Yeah, this guy is a marketing genius. Of course, even that trick only provided a brief surge before the inevitable death spiral of the Beanie Baby as an ultra-popular toy fad.
- Small Stores: As stated earlier, Ty only authorized Beanie Babies to be sold in small gift shops or specialty stores as opposed to large chain retail outlets. This strategy afforded his product an image of class and attracted customers of all ages, which wouldn’t be possible in a large toy store like Toys R Us. This also allowed him more fine grained control over distribution, which as you’ll see in a moment, was key.
- Perceived Limited Production and Scarcity: People love the thrill of the hunt, and the idea that they have something that not many other people have. To kick up the exclusivity factor even further, besides making sure no one store ever had all the Beanie Baby designs, there were even Beanie Babies that were only available in certain countries. Of course, in most cases, there really wasn’t a real scarcity as long as a specific design was in production. The Ty factories were churning them out at incredible rates- as quick as people would buy the, they made new ones. But thanks to clever marketing tricks, such as only selling them in small stores and not giving any store the full stock, it seemed like they were rare.
- Individuality: Personification is a way collectors are encouraged to individualize their Beanie Babies. Each Beanie has its own name, birthday and accompanying poem. Collectors could even go online to Ty’s official website to discover their particular Beanie Baby’s personality traits. This was yet another way to try to make a specific Beanie seem unique and rare, as well as seem more than just a stuffed animal.
Of course, the thing that killed the Beanie Baby’s popularity ended up being that it became too popular at which point they no longer seemed so unique and special, so people quickly lost their enthusiasm for them. As collector Kelly Cabral stated just after the bubble burst, “My husband’s like, ‘Where did we get all these?’ Then you realize you spent way too much time on this insanity.”
Ty Warner took some pretty sizable risks when he launched Ty Inc., dropping every dime he had into a product most in the industry thought was crap. Considering at the peak of the Beanie Baby bubble about a little over a decade ago his net-worth rose to around $6 billion, and even today it’s around $2.6 billion thanks to some savvy business moves during the bubble, it’s pretty safe to say that the self-made billionaire’s risks definitely paid off.
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