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On Money

The Rise of the Fidget Spinner and the Fall of the Well-Managed Fad

Credit...Illustration by Andrew Rae

Earlier this year, when Christine Osborne first realized that fidget spinners — those small devices that have, seemingly overnight, colonized playgrounds and classrooms — were going to become a huge hit, she felt a deep anxiety. This was surprising, because Osborne owns multiple toy stores in South Carolina. Twenty years ago, she would have greeted a new fad like fidget spinners with glee. But the economy has changed quite a bit in the last two decades, and so when Osborne began first noticing the spinner craze, all she could think was: This seems like trouble.

A fad changed Osborne’s life, much for the better, shortly after she opened her original toy store, named Wonder Works, in the 1990s. In those early days, Osborne tried selling board games and science kits, but she was struggling to find customers. Then, in 1994, a family visiting from Chicago walked through her doors and asked if she had any Beanie Babies.

Osborne had never even heard of them. But almost immediately, she started hearing about nothing else. Later that week, someone called asking if she had Quackers the Duck. The next day someone inquired about Happy the Hippo. Osborne quickly learned that Beanie Babies were stuffed animals that, truth be told, weren’t all that distinguishable from other stuffed animals. But for some reason, they had become playground must-haves. ‘‘And that’s when I knew,’’ Osborne told me, ‘‘if we could just get our hands on Beanies, it would be our ticket.’’

Talking to her suppliers, Osborne eventually figured out that Beanie Babies were made by Ty, a company in Westmont, Ill. Ty didn’t actually manufacture Beanie Babies — that was outsourced to China — but it did everything else. The previous year, Ty’s executives began an extensive campaign to identify the nation’s most influential specialty gift and toy stores. Then, rather than advertise Beanie Babies to the public, executives quietly distributed small numbers of them to these retailers, often extracting a promise they would not sell more than a few Beanies to any single customer.

Ty fiercely controlled retailers’ inventory of Beanies based on a complicated formula that was updated with each day’s sales and trends. If a store degraded the Beanie brand by discounting the toy or employing unfriendly salespeople, Ty would cut them off. As particular animals — like Peanut the Elephant — became popular, Ty ceased manufacturing them altogether. When Wal-Mart and Toys ‘‘R’’ Us asked to carry Beanie Babies, Ty refused.

Osborne was accustomed to toy manufacturers begging her to carry their products in her store. With Beanie Babies, everything was reversed. Osborne tracked down a Ty sales rep named Joyce and pleaded with her. ‘‘I started in with the charm,’’ Osborne told me. ‘‘I would telephone nearly every afternoon and tell her we would do anything to get some stock.’’ Eventually, Joyce relented, and Wonder Works began earning thousands of dollars a week from Beanie Baby sales.

But as the months passed and the women continued talking, Joyce began asking for favors of her own. Ty’s executives wanted to know Osborne’s opinion on her customers’ tastes. Did they respond to primary colors? To sparkly bows? Why was Manny the Manatee so popular, but Darling the Dog a bust? Based on such conversations with Osborne and countless other toy-store owners, Ty’s executives made hundreds of tiny shifts in their manufacturing, marketing and distribution over the years, turning what began as a fad into a perennial best-seller, one that earned hundreds of millions of dollars each year and helped Ty employ thousands of people. As for Osborne, she used her Beanie profits to expand Wonder Works to four locations. Today, more than two decades later, Beanie Boos, one of Ty’s latest iterations, are still among her top-grossing items.

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Credit...Illustration by Andrew Rae

This spring, when Osborne started getting phone calls about a new playground must-have — the fidget spinner — she was apprehensive instead of excited. ‘‘Everything is different now,’’ Osborne told me. ‘‘My goal was to get in and get out as fast as I could.’’

Fidget spinners had been around for years, marketed as aids for kids with attention problems (a claim that has little scientific backing). But they were never particularly popular. That changed last year, after a rash of videos appeared on YouTube featuring teenagers performing fidget-spinner tricks. That caught the attention of Chinese factories, many of which have begun to employ squadrons of workers to monitor social media and Google Trends, allowing them to jump on the next big consumer-product craze as soon as it starts materializing. By the time Osborne became aware of the fad, all she had to do was go to DHgate.com, a chaotic online marketplace where overseas factories offer everything from fake eyelashes ($1.27 a pair, shipping within four days) to automobile engines (minimum order $50,000, full delivery in six weeks). There were dozens of manu­facturers offering fidget spinners in whatever quantity a buyer desired. With help from a colleague, Osborne ordered her stock from a factory where, as far as she could tell, no one spoke English, and five days later, the boxes started arriving. Soon she was selling tens of thousands of dollars’ worth of spinners each month. Her biggest competitors were gas stations and people selling from collapsible tables in a nearby park. Most of them also got their spinners through sites like DHgate.com.

For fidget spinners, as Osborne well knew, no one was going to manage the buzz, strategize about inventory and plan marketing the way Ty had for Beanie Babies. ‘‘Now, in less than half a year, spinners are done,’’ Osborne says. ‘‘I’m moving on to squishies’’ — squishable toys that are also (questionably) marketed as attention aids. ‘‘I think they’ll last at least a few months.’’

Within economics, this transition to direct selling — of cutting out sales reps like Joyce in lieu of websites like DHgate.com — is known as disintermediation, and it’s one of the defining characteristics of the internet age. Companies like Uber, Amazon and Priceline have succeeded by disintermediating enormous industries (taxi dispatchers, brick-and-mortar retailers, travel agents). The logic of disintermediation seems self-evident: By putting factories directly in contact with stores, by helping customers order directly from manufacturers, by letting riders coordinate with drivers, you cut out a needless source of waste and inefficiency. Middlemen (and middlewomen), so this theory goes, have simply been gobbling a slice of the pie they never really deserved.

In reality, though, all these middlemen were often crucial to ensuring that the pie was baked at all. As Osborne learned when she started selling Beanie Babies, middlemen like Joyce are often the ones who turn a fad into a sustainable business that creates jobs. You might think a company’s main function is to make stuff. But that’s usually wrong. Making stuff is often the easiest part of what a company does. It’s everything else — marketing and defending intellectual property, coming up with distribution strategies and knowing when to stop manufacturing Peanut the Elephant — that’s the hard part. That’s what middlemen do.

Or, at least, it’s what they did, before the digital economy made their jobs disappear. Take, for instance, the travel industry: As Youcheng Wang of the University of Central Florida notes, the industry as we know it was built, over decades, by hundreds of thousands of middlemen at travel agencies, tour operators, hotels and airline bucket shops. ‘‘There were layers of jobs and experts,’’ Wang says. ‘‘They convinced people to visit new places and helped resorts find new customers.’’ Today, however, many of those jobs and experts are gone, replaced by disintermediators like Trip­Advisor (3,000 employees) and Priceline (18,500 employees), which are built on what middlemen created, but which employ far fewer people. And the impact of losing all those jobs will have ripple effects that we can’t even predict. Who, in the absence of those middlemen, is today persuading travelers to dream bigger about their vacations, to open their wallets to support off-the-beaten-track destinations, to help new hotels find their clienteles? ‘‘Without intermediaries,’’ Wang points out, ‘‘it can be difficult to get discovered.’’

Around the same time Osborne was first hearing about fidget spinners, she visited a big toy fair in New York and stopped by the booth of Zing, a toy manufacturer that jumped on the craze early. At the fair, Zing executives were testing out an idea: What did retailers like Osborne think about a fidget spinner with LED lights that kids could program from their iPhone, so that it would spell out words as it spun?

It was a fun idea, retailers said. It could probably help fidget spinners make the transition from a fad into a sustainable product. If it worked, it would create jobs and help toy stores prosper. But Osborne and others cautioned Zing against making the investment. It would take at least six months to design and manufacture the new item, and by then, the fidget spinner craze would most likely be over. So Zing shelved the idea — and the new hiring it would have triggered.

‘‘Now a fad is just a fad,’’ Osborne says. ‘‘And that makes things harder for all of us.’’

Charles Duhigg is the author of ‘‘Smarter Faster Better’’ and ‘‘The Power of Habit.’’ He last wrote for the magazine on Google’s quest to build the perfect team.

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A version of this article appears in print on  , Page 12 of the Sunday Magazine. Order Reprints | Today’s Paper | Subscribe

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