When Ryan Weaver was laid off from his job on an oil rig in Alaska last year, he says he turned to God to give him “just one idea” to pay back the $160,000 (€143,000) he he owed in student debt.
The 26-year-old’s salvation came in the form of a decades-old spinning propeller toy. In October, his wife, a special education teacher, asked him to order “fidget” gadgets for his class. Noticing that similar toys designed to relieve stress were all over YouTube, he decided to try his luck selling them on Amazon. Now he sells 500 to 1,000 spinners a day for $17.95 each.
“As soon as I got them in stock, they sold like crazy,” says Weaver. “Literally all the debt has been paid off now…it was really cool because we love Jesus.”
Mr. Weaver is one of the first enterprising adults to notice a viral craze that has rocked the $90 billion global toy industry. When it first listed fidget spinners in December under the EWR Products company, there were only one or two other sellers on Amazon.
Four months on, Walmart, the world’s largest retailer, is rushing to airfreight spinners directly from Chinese factories to get them to stores faster, while high street retailers in Ireland and elsewhere are taking advantage of shortages in the official product.
In terms of customer demand, fidget spinners are “the biggest craze” for any product Walmart has seen in the past five years, says Michelle Malashock, a spokeswoman. The company is bypassing its distribution centers to quickly replenish inventory at its 3,500 supercenters.
Unlike previous consumption patterns, the fidget spinner craze has arisen from the bowels of the internet. The first version emerged in 1997 from Catherine Hettinger, an engineer, who let the patent expire on her invention in 2005. After more than a decade of lull, new versions of fidget spinners have recently been revived in relevance among schoolchildren on YouTube and Instagram, producing a cottage industry of anonymous individuals and small toymakers who shipped the gadgets from Chinese factories to American convenience stores and gas stations.
‘Free for all’
“It’s the Wild West,” says Josh Loerzel, vice president of marketing at Zing, a toymaker that ships to Walmart and Toys R Us. “The biggest toy I’ve seen in at least 10 years, and it’s been a free-for-all game. It’s not a premeditated thing motivated by big bucks. It exploded in the opposite direction.
It is difficult to assess the size of the fidget spinner market. NPD, a data group, doesn’t have numbers yet because big companies like Walmart and Target only started selling them in the past few weeks, and most sales have been in a fragmented market. and more troubled. Major retailers do not disclose sales of individual products, although one said it sells 100,000 spinners a week. Zing expects to ship 4 or 5 million fidget spinners this year.
Observers say the buzz around fidget spinners underscores how much the toy industry, and the wider retail world, has changed. Toy industry sales have grown by around 3% per year since 2011, although toymakers have been hurt by ever-shorter product life cycles – reflecting the boom in fast fashion sold by H&M and Zara – and the emergence of Amazon as the top destination for online shopping.
“It really proves the ability of smaller players to make a big financial impact, through Amazon,” says Matt Quint, professor of marketing at Columbia Business School. “It shows the power of platforms like Amazon and YouTube. When there is consumer demand, it doesn’t matter who the suppliers are.
With spinners wholesale for $0.50 to $1.50 from Chinese factories, and no patents or licensing fees to pay, “margins are astronomical,” says Chris Byrne, a 30-year toy veteran and editor of Toys, Tots, Pets & More, a trade edition. “Right now the toy industry is in full reactive mode because they don’t want to miss out on those sales. They don’t want to cede ground to Amazon.
While historic brands such as Star Wars have retained their cache in the toy market, newer ones such as Frozen and Finding Dory have much shorter lifespans, and Internet fads such as fidget spinners present an even more challenging bigger.
Loerzel says fast-moving trends favor small businesses that can work with more agility.
“The Great Giants [Hasbro and Mattel] typically occupy 90-95% of the activity and all others are dropped. It flipped the script…it’s about how quickly you can react. Mr Loerzel said that in recent meetings with Walmart management in Hong Kong, “everyone was talking about spinners”, even though the companies were there to plan products for spring 2018.
“Things take a while to get to each Walmart, and toys usually have a longer delivery time,” says Malashock. “We are already planning [the autumn season] That much. But when these things come up, it’s all about going through vendors to jump on them quickly.
Manufacturers said the vast majority of supply came from factories in China, which already produce about two-thirds of output from industry leaders such as Hasbro and Mattel. Chinese manufacturers that traditionally make smartphone accessories have also jumped on the trend. 7-11 said it sources spinners from “several suppliers”, but declined to comment on which countries they came from. Toys R Us said it ships them by air from China.
The buzz around fidget spinners also highlights the new power of YouTube and Instagram over traditional business marketing schemes.
“In our modern age, an internet meme can become a manufacturing meme,” says Quint. “There is no famous brand pushing this. It’s for a generation that grew up on YouTube. It’s all kind of a mystery…it’s a real lesson for retailers and manufacturers.
Copyright The Financial Times Limited 2017