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Hatchimal craze sends parents on a hunt for the elusive toy

It was 6 a.m. when Youngstown mom Nicole Mombrea emerged from her car in the freezing dark of a Target parking lot one recent Saturday morning. The home care nurse heard the store was getting a shipment of the season’s elusive Hatchimal toys and she hoped to get one for her daughter, Claire, in time for Christmas.

Mombrea wasn’t the only one. By the time she arrived, more than two dozen people were already in line. She left empty handed.

"It's annoying to be honest – a toy that has mediocre reviews and could be made in China by the thousands," Mombrea said.

Welcome to the Hatchimal Hunt, where parents line up outside stores and, in some cases, shell out hundreds of dollars on eBay and Craigslist for a toy listed at $59.99.

If you’re the parent of a preteen, you’re likely already immersed in the season’s holiday toy craze. For everyone else, there may be a little explaining to do.

[Gallery: Ten toys we had to have!]

How did the Hatchimal craze get so big? And how does such a huge shortage happen?

The answer includes some savvy marketing, a YouTube craze called “unboxing” and a big dose of luck.

The furry, animatronic birds come in a shell and peck their way out as kids cuddle and pat them. Once they're out, the child continues to care for the robotic animal as it grows older.

Its creators at Toronto-based Spin Master Corp. said they were inspired by viral "unboxing" videos on YouTube. The insanely popular videos show people opening boxes, eggs, blind bags, balls of Play-Doh and other containers to reveal toys or other surprises inside.

Hatchimals are the ultimate in unboxing, the company said, because they unbox themselves. To keep kids playing past the hatching stage, Spin Master programmed the Hatchimal to cycle through different life stages.

"It has that feel and excitement of the unboxing, but then it has the toy that you can play with and nurture and it can grow with you, so I think it's a combination of that," said Adrienne Appell, of the Toy Industry Association.

In a rare move for a toymaker, Spin Master launched its marketing campaign nearly a year before its product launch. It built buzz on social media and with YouTube videos, as well as with commercials on Nickelodeon and the Disney Channel, before unveiling the toy Oct. 7.

As the toys started disappearing from shelves, that fed the frenzy. Now certificates are circulating online that can be given to children to explain that Santa and Mrs. Claus are still waiting for the eggs to be laid and that an elf will deliver the Hatchimals as soon as they're ready.

Also complicating things, Spin Master expected the toy to be popular only with little girls ages 6 through 8. But it ended up being popular with boys and older kids as well. That wider audience ratcheted up demand.

As demand increased, supply inevitably shrank. Spin Master stopped shipping inventory by freight from China to its markets in the U.S., Canada, Europe, Australia and Asia, and is instead flying Hatchimals orders in by plane to get them on shelves faster, the company told Bloomberg. Even so, as of this week, stores were receiving just two Hatchimals per location, which were gone immediately.

Stores such as Walmart have limited sales of the toy to one per customer. When Toys R' Us got a larger-than-usual shipment last week, it had lines out the door. Target has announced it will roll out a limited supply of Hatchimal inventory starting Sunday.

[Related: Looking for Hatchimals? Try here.]

Even as stores have become more sophisticated about forecasting retail sales, using software to crunch historical data about the performance of similar toys, the old adage remains true – no one can predict a fad.

"It's very difficult to anticipate that a product is going to be a huge hit like Hatchimals," said Juli Lennett, U.S. toys industry analyst at the marketing research company NPD Group. "They're clearly outperforming the typical toy."

It's the latest in a long tradition of Tickle-Me-Elmos and Cabbage Patch Kids – red hot toys that sold out early and left parents scrambling to get must-have gifts in time for Christmas.

Toy companies, like Spin Master, base the number of toys they manufacture on the number of orders placed by stores. Orders are usually placed six months to a year in advance, with complicated logistics that impact shipping, receiving, marketing and merchandising. When many more people buy a toy than expected, it can be impossible to catch up with demand.

"It’s unlikely you’re going to see inventory replenishment before the New Year," said Charles Lindsey, a marketing professor at the University at Buffalo School of Management.

That's where resellers come in.

They buy, then re-sell the originally $60 Hatchimals on sites such as eBay and Craigslist for a profit. Locally on Craigslist, Hatchimals have been listed for as much as $300 from a seller in South Buffalo.

That's how Michelle Chastain scored two Hatchimals for her son Sam, 7, and her niece Maria, 6. She paid about $130 each last month and said it was worth it to do something special for the kids.

"My son really wanted one, so I knew Santa had to get him one," Chastain said. "As for my niece, it was the first thing on her list and I know my brother really doesn't have the extra money to spend."

Megan Sholtz is sitting pretty this Christmas. She nabbed her Hatchimal the day they hit the shelves, when her daughter Callie, 10, saw a YouTube video and asked for it. Sholtz ran to Walmart and put it on layaway.

"I start shopping early because I have three children," Sholtz said. "So a lot of times, I'll have the hot toy before I even know it's the hot toy."



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