I have been asked many times by collectors and retailers to
address the secondary market. I have even had retailers tell me
to get my head out of the sand and speak up. I have recently been
reluctant to speak for or against this market. It resembles a
"Catch 22"; you either love it or hate it. Recently
there have been a lot of mixed feelings about Beanie experts selling
Beanies on the secondary market. There has also been many reports
and concerns about retailers selling directly to the Secondary
Market. For this reason and others, I have decided to address
this issue once and for all.
For the past couple of months I have gathered information
pertaining to the secondary market. This information has not only
fascinated me, it has helped me understand the different phases
which must take place before a item can be labeled secondary.
My intent will be to educate you on this market and to interview
a secondary market dealer.
I would like to make the following comment before I start.
I DO understand supply versus demand! While in school, I took
two years of business and economics. I can only contribute my
blind side towards this market to one reason and one reason only.
I have two children who are avid Beanie collectors. It is very
difficult to remind them that their sets will never be complete
due to high prices and demand on the secondary market.
If I were Ty Warner, I would feel as if I were walking a tight
rope the majority of the time. Ty has got to concentrate on keeping
both markets happy in order for his Beanie Babies to have continued
success. These two markets combined are probably why Ty Warner
keeps a low profile.
Phase 1 - Originating an idea.
In originating an idea, a few questions should be asked.
What will motivate a customer to buy my product?
Who is my competition ?
What types of changes are likely to occur with either
the product or the market?
Determine availability of the product.
What age group will be targeted?
Ty Warner has cleverly captured the kid in all of us.
Ty’s original idea of pricing a toy which would allow a child
to purchase it with allowance money is ingenious.
Ty, Inc. has had many companies try and compete with their
Beanie Babies. The bottom line is, consumers know their product
and will not except anything less than a original Ty Beanie Baby.
Phase 2 - Marketing
An important influence in marketing theory is the continuous
and rapid change in consumer interests and desires. Today’s
consumers are more educated and sophisticated than those in past
generations. Consumer demands are more exact, and their taste
changes are more volatile.
Marketing research and surveys also play a big role in how
a product will be marketed. Marketing research involves the use
of surveys, tests, and statistical studies to analyze consumer
trends and to forecast the quantity and locale of a market favorable
to the profitable sale of products or services. The social sciences
are increasingly utilized in customer research. Psychology and
sociology, for example, by providing clues to people’s activities,
circumstances, wants, desires, and general motivation, are keys
to understanding the various behavioral patterns of consumers.
Ty had originally marketed Beanie Babies in small mom &
pop stores, gift shops, card shops, etc. The original marketing
strategy for Beanie Babies proved not to be enough. Although Beanie
Babies had been on the market for a while, it wasn’t until
December 1996 before they started gaining popularity.
Today, Beanies are the number one selling kids toy on the
market. Ty’s popularity continues to grow in leaps and bounds.
Phase 3 - Advertising
Advertising history began many centuries ago. One of the first
well known forms of advertising was use of outdoor displays. Merchants
or retailers would have large eye-catching signs painted on the
front or back side of buildings.
In medieval times, word-of-mouth was how much advertising
was done. Town’s people commonly known as criers would stand
in the middle of market squares and sing the praises of their
company's product.
Advertising made its greatest advances in the United States.
American nationwide promotion was impractical because the nation
itself was underdeveloped. Today America offers the strongest
networking of advertising available.
It has always fascinated me how a company can have a number
#1 product and not advertise. The Ty company has received a tremendous
amount of FREE advertising. Ty’ Inc. has been known for their
LACK of advertising. Mr. Warner has been featured in Forbes magazine
and some of Ty’s employees have been interviewed by various
sources. To the best of my knowledge, Ty has only purchased one
(1) newspaper ad in reference to their Beanie Babies. This ad
was written for retailers and collectors. The ad contained information
which explained how Ty was trying to keep up with demand for their
product.
The Internet is the fastest growing information source available.
Ty has captured the Internet Beanie market with their own website
- www.ty.com - This is without a doubt, Ty’s biggest form
of advertising. Who needs newspapers, when you have the net?
The Internet has also attracted many individuals to post their
own websites featuring Ty’s Beanie Babies. The media and
radio have not fallen by the way side; they too have gained Ty
attention. Beanie Baby shows nationwide have sparked interest
and Beanie publications have enhanced Beanie Baby sales.
Phase 4 - Supply versus Demand
According to the theory of supply and demand, the market prices
of goods and services are determined by the relationship of supply
to demand. Example - when supply exceeds the demand, sellers must
lower their price to encourage sales. Changes in consumption habits
also affect supply and demand.
In short - If Ty flooded the market, Beanies would lose their
popularity. Trying to locate that hard to find retired is what
keeps the secondary market alive.
Phase 5 - Sociology
Behavioral patterns play a large role in the secondary market.
If an item is retired or no longer available, the secondary market
is the place to look for it. Many collectors turn to this market
to obtain pieces or sets of collectable merchandise. Others turn
to this market for monetary values. If an item is popular and
then suddenly is no longer manufactured, collectors purchase on
the secondary market to resell the item to make a larger profit.
Many collectors obtain items on the secondary market just to be
able to say they have it.
Now that we have experienced a crash course in economics,
let's move on to some questions.
Before I wrote this article, I came up with a list of questions
which I expected myself to answer after the article was complete.
The following are the results:
Why are people attracted to the secondary market?
Individuals purchase from the secondary market because
items which are no longer available on the retail market can be
found on the secondary market.
What keeps the secondary Beanie market alive?
In order for any market to profit, advertising and social
behavior must play a role. It has already been determined that
Beanies do not lack advertising. With books, magazines, websites,
media and radio, Beanies have become a common household name.
Social behavior has been established with everyone wanting what
others can not have.
What other secondary markets are as strong as Beanies?
Government securities, gems, Oil painting, etc. etc.
etc.
How long will the Beanie secondary market be around?
As previously stated, if Ty floods the retail market
with Beanies, the secondary market will die. If the secondary
market dies and Beanies can be located everywhere, chances are,
Beanies would most definitely lose their popularity and become
a collectible of the past.
Imagine not being able to have to hunt your favorite Beanie,
stalking the UPS driver, making your 101 daily phone calls to
retailers, no more meeting the girls for a good Beanie hunt and
winding up the day with a relaxing lunch and sharing your finds.
All of this would cease to exist. The existence of the secondary
market DOES depend on supply versus demand. As long as the demand
outweighs the supply, the secondary market will continue.
What are the Advantages to the secondary market.
Easily locate an item which is no longer in circulation.
Normally, the secondary market will also encourage price increase
on many products.
What are the Disadvantages to the secondary market?
It’s a vicious circle. With inflated prices and
lower quantities, this can definitely be a big disadvantage to
this market. BUT if you must have an item for your collection,
the secondary market is the place to go!
Can the secondary market be controlled?
Recently many collectors have had concerns about this
market being controlled. Collectors have started to question whether
pricing guides, magazines and Beanie experts selling Beanies is
a form of control. This was probably one of the toughest questions
I had to ask myself. While in some cases pricing guides are only
worth the paper they are written on, other experts have gathered
different pricing materials to combine and make their guesstimates.
In short - quick retirements, limited quantities and some pricing
guides may be accused of controlling the market, but there is
NO real way to completely control the secondary market.
In regards to Beanie experts selling Beanies - I will say
that I receive approximately 25 - 30 Emails a week from collectors
asking this same question. I have even asked of others to gather
their opinions.
Many collectors have mixed feelings on this subject. I DO
consider myself a Beanie expert, and have even labeled myself
as a Beanieologist. I have been studying Beanies for a while and
have been credited for my knowledge, reporting, reputation, charities,
and for answering hundreds of e-mail’s a day, but I do not
sell Beanies. DO NOT MISUNDERSTAND ME! I’m not saying it’s
wrong for Beanie experts to sell Beanies on the secondary market,
I’m just saying I do not allow myself to get involved with
this practice.
First off, I’ve never had the luxury of
having extra supplies of Beanies. Secondly, I don’t have
the time. Third and finally, it’s their business to buy and
sell, and I try my best to stay out of other people’s business.
When a collector asked for my opinion on a secondary market
item, I ALWAYS repeat the same thing:
A Beanie is
only worth what someone else is willing to pay for it. No more,
no less.
It’s a free country, and in our world of economics, everything
goes!!
While posting articles and answering e-mails, I have met a
lot of wonderful people. I met a very pleasant lady who sells
on the secondary market. I told her about my research and my hopes
to write an article on this market. I asked Katie to send me a
short Bio on herself. Katie has been very kind in her words and
support and has agreed to allow me to interview her. I found her
story to be enlightening.
"I am the mother of 8 children, all but one born by
the time I was 28 years old. I adopted the 8th, my sister's son.
She died when he was 2 1/2 years old, and he fit perfectly onto
the tail-end of my family as my natural youngest child was 5 at
the time. I raised my large family and then my husband and I opened
a male-chauvinist hobby shop 15 years ago. Radio-control models,
trains, plastics, slot cars, etc. Beanie Babies came into the
picture when my California-based daughter sent me some because
she thought they were "so cute". It kind of snow-balled
from there because there are so many people that work full-time
and can't be standing in lines and I had so many of the current
ones. I bought them from "beanie hunters" and paid them
a bit more than they paid to compensate for their time and then
charged a dollar or more to make a little profit and generate
some traffic into our store.
Being the head-hunter that I am, I've since spent a lot of
time finding the rare ones and have gained a reputation for having
a lot of hard-to-finds. If I don't have it, I can find it if you
are willing to wait. This has given our store a boost, brought
the female into the shop and generally been a lot of fun.
I also believe it has generated a lot of interest in the Beanie
Baby phenomenon for new collectors. Just seeing all the cool old
ones gets people excited.
I now have a 9th grandchild on the way. One more recipient
for those cool Beanies!"
From:
To: Janie Daniels
Subject: Re: Interview
Date: Tuesday, March 03, 1998 1:36 AM
What influenced you to sell Beanies on the secondary market?
My daughter in California started this whole thing when she
sent me some because she thought they were so cute. I sold them
for $8 apiece
the first day I had them. I only got 14 from her so I asked her
to get me some more when she could. People were so glad to see
them where they didn't have to stand in line and I thought they
were a nice addition in my otherwise male chauvinist hobby shop.
How do you obtain your Beanies to sell?
Virtually all of the current beanies I sell I get from customers
that get lucky at the Hallmarks, etc. and bring them to me. I
pay them $1 more than they pay and then sell them for $7 or more
depending on how hard that particular beanie is to get. This has
been a great way for some of my very young customers to get the
ones they want (retired or hard-to-find currents) because I trade
the ones they find for me for the ones they want.
Do you advertise your Beanies for sale on the secondary
market?
I have ads in the small local papers for my hobby shop and
have a Line in that we sell beanies at $7.99 and up. Also that
we have many retireds.
What determines your secondary market price for Beanies
and is there research involved?
I use the Beaniemom page for the retireds. Current's pricing
depends on how much I have to pay for them. My profit margin is
very slim, but just to have them all in stock all the time is
a boon for customers.
What advantages are there for buying on the secondary market?
The advantages for the secondary market are mainly that it
allows those people that don' t have the time or ability to go
out and beanie hunt to get anything they want. I make sure that
everyone that comes in is aware that I sell strictly secondary-market
and do not get them wholesale.
What disadvantages could result from buying from the secondary
market?
The only disadvantage I see is the ability for dishonest dealers
to peddle counterfeit. It's very important for any consumer in
any market
to know who they're buying from. I would be very leery buying
from someone that is selling outside of a legitimate business.
How do your customers respond to secondary market Beanie
prices?
I have the rare person (not really what I'd call a customer)
that indignantly says I should be shot for selling for more than
the retail price. I just smile and explain that I pay more than
the retail price myself. What I really want to say is that the
ones that should be in their line of fire is the Ty franchises
that sell for more than the suggested price. Suggested is just
what it says: suggested! Price-fixing is against the law in this
country.
I do have a funny story to tell. I was helping my daughter
at a craft Show last fall and we brought some beanies to sell
with us. A lady came up to the table and said there was going
to be a law passed that you couldn't sell Beanie Babies for more
than $5.99. All we could picture was the Beanie Police coming
in and arresting all of us!
Please give up a example of your secondary market pricing?
I have a Beanie Baby tree set up in my store with 20 or so
varieties for $7.99. These are the ones that are pretty plentiful.
The rest of them are priced at $10 to $15 depending on the beanie.
Valentino is $25 right now and so is Peace.
I have a store that has been in business for 15 years. We
are listed in the yellow pages.
To add a few comments: I truly believe
that the secondary market for Beanie Babies is what has made this
what it is. Everyone can get the beanies. You pay a little for
the convenience as with anything else on the market. Anyone can
mail-order anything we have in our store at a lower cost, but
they don't have the advantage of seeing what they are buying and
they don't have the customer relationship they get at my store
either.
I have a fantastic selection of retired beanies. Lots of the
really hard-to-finds that most people have only seen in books
and magazines and it gets them excited about the whole industry.
I can name at least 10 people that started collecting them because
they saw them in my store and fell in love with one of them and
it snowballed from there.
Janie,
I want to thank you for the opportunity to do this with you.
Love Ya!
Katie
Ar-Jay's Hobbies
1430 S B Gratiot, Mt Clemens, Mi
(Unavailable from 3/16 thru 3/19/98)
In closing I would like to offer the following suggestions:
If you decide to deal on the secondary market, make sure
you know who you are dealing with.
If your secondary market source is a individual, ask a
lot of questions.
Try to obtain as much information on the dealer as possible.
Always ask for references.
Try to avoid PO box addresses.
It would be wise to also remember
one other important factor.
In closing I will add the following!
We all should consider ourselves lucky enough
to be living and experiencing a phenomena such as Beanies. This
sort of occurrence does not happen very often. Let's enjoy it
while we can and try and understand Ty Warner's position. After
reading this article and understanding how the different phases
work before an item appears on the secondary market, ask yourself,
one question.
If you manufactured a product, would you want it to eventually
end up on the secondary market?
I’d venture to say that many of you, if not all of you,
would say YES.
This article was written by:
Janie E. Daniels
March 7, l998
