Business

28 July 2017

Spinning profit 

Just a few months ago, hardly anyone had heard of a “fidget spinner,” a three-pronged toy originally marketed as a stress-reliever, particularly for children suffering from Attention Deficit Disorder.

Just a few months ago, hardly anyone had heard of a “fidget spinner,” a three-pronged toy originally marketed as a stress-reliever, particularly for children suffering from Attention Deficit Disorder.

While such health claims were quickly debunked, worldwide sales nevertheless skyrocketed – reaching $500 million between March and early May, when the craze hit its peak.

Accounting for nearly 20% of total online toy and game sales, independent sellers on sites like Amazon.com were shipping between 500-1,000 units per day as the knick-knack became one of the fastest-growing high-volume product lines ever for major e-commerce retailers.

While the fad has been largely driven by social media, especially Instagram, it remains difficult to explain why something so utterly useless became an overnight global sensation. Less hard to understand is the commercial logic underlying the fidget-spinner boom.

No one owns the patent for the fidget spinner – and it remains unclear who, exactly, produced the very first one. Consequently, any factory can churn out the toy by the thousands or even millions, as many in China have been doing.

Typically, each unit costs roughly $0.50 to produce, although a search on Alibaba.com – the Chinese e-commerce giant – revealed plenty of Chinese firms offering unit prices as low as $0.16. While one Russian manufacturer is marketing a gold-plated hand spinner for $17,000, they usually retail for about $5, representing a markup of approximately 1,000%.

While the fidget-spinner market remains too small to affect plastic prices, it has had a major impact on the toy’s only other component: ball bearings. According to media reports, Asian ball-bearing manufacturers have recently increased prices by between 50-200%.

Such extortionate pricing may soon be a thing of the past, however.

By late July, only one fidget-spinner model remained on Amazon.com’s top 10 list of bestselling toys and games, outranked by old-fashioned sources of amusement like Play-Doh and Crayola colored pencils. Perhaps even more telling, that particular model – the UFO spinner – was marked down 67% to just $2.97.