Tuesday, December 22, 2009

The party is over for the rodents and the scalpers

By now everyone knows the runaway hot toy of Christmas 2010 has been the Zhu Zhu Pet Hamsters.

Every year the media, mass retailers and ebay scalpers need at least one in-demand toy to drive interest and profits. And every time one is crowed the season's hottest of hot toys, there is always an endless army of dumb parents and grandparents that are willing to pay way too much on the secondary market just to have both the item itself and a story to tell their friends and family about how difficult or expensive it was to land the prize. Or the toy is gifted with the misguided hopes that this grail will provide a life altering moment for a kid who will most likely play with the mass-produced hunk of plastic and faux fur for maybe an hour on Christmas day then disregard it for their Wii games and ipods.

In the meantime, the hot holiday toy is a profit center primarily for the professional toy scalper (yes, there are pro toy scalpers, thousands of them), or any informed shopper with an ebay account who gets lucky enough to come across the rare prize on a store peg hook. During the heart of the shopping season, a Zhu Zhu Pets hamster that costs an average of $10 apiece, easily netted a ebay sale price of $50 or more. Beyond the profitability, you could sell the item and be paid within minutes of listing it online. It's the greatest example of supply and demand in U.S. consumerism.

Here in the final week of shopping week prior to Christmas, everyone is learning the other side of the lessons of supply and demand as Wal-Mart, Toys-R-Us and even Target are finally flooding their stores with Zhu Zhu Pets inventory. A quick visit to my local Target this morning confirmed a large supply of hamster inventory on their shelves. And while the toy section was busy, no one was making any mad grab for the rodents. While standing there I did a quick check on ebay with my phone and confirmed secondary market prices have crashed back to earth. Completed auction searches confirmed the rodents were not even selling for a few dollars mark up over store prices. Now that they can found with little effort, few actually need them anymore. Another example of scalpers driving demand more than those who want to buy the toys as gifts.

So another Christmas toy fad abruptly and officially ends. Everyone will begin to find Zhu Zhu Pets and accessories all over the place and store inventory will begin to pile up as all the scalpers who stayed at the table and gambled too long now discover they cannot make a profit much less any investment back will return the toys in droves on Dec 26th when retailers return policies are more lax. Now the realization will be made, as it is every year, that the "hot toy" was not really in demand because it was something children actually wanted, it was a only easy money for ebay scalpers and driven by a lazy media who repeat the same ‘hardest to find’ toy story weekly all during the season.

Of course by next November this lesson is forgotten, the next hot toy is crowned and the dance begins all over again.

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