Zhu Zhu Pets, the battery-powered hamsters that became a huge kiddie craze this holiday season.
(Credit: Cepia LLC)With toy store shelves and television commercials chock full of eye-popping video games and fancy tech playthings, it came as a surprise to many that some of the hottest toys this holiday season were inexpensive, relatively low-tech battery-powered hamsters imported from China called Zhu Zhu Pets. The fuzzy toy rodents manufactured by Cepia LLC, which came in models with names like "Num Nums" and "Mr. Squiggles," could barely stay on shelves for most of the end of 2009, and nobody really saw it coming.
For avid eBay sellers, it was the perfect recipe for profits--if they managed to jump on the trend early enough.
Jorge, a field inspector for a Southern California insurance company, had no idea what Zhu Zhu Pets were when his daughter asked for one for her seventh birthday late in the summer. "She saw the commercial on TV and asked me for a Zhu Zhu Pet," Jorge, who asked that his last name be withheld, told CNET via phone. "I went to my local Toys-R-Us, where I have friends who work there. I asked for the Zhu Zhu Pets. They didn't even know what it was. They had four of them, but they'd promised them to some lady in LA."
This is what piqued Jorge's interest: He, and his local Toys-R-Us, are hundreds of miles away from Los Angeles. Someone far away was looking for these toys, which signaled to him that they must have been, for one reason or another, difficult to obtain. This was relevant to Jorge because, as a side project, he'd been selling toys on eBay for about a year.
The story began, as so many do these days, with unfortunate circumstances induced by the recent recession. "The reason why I got into eBay was that I was laid off from work. I was off work for about 10 months," he related to CNET. As the parent of a young child, he had an in-house market research indicator. And when he found a new full-time job, he had to accept a significant salary cut, so he kept selling toys. "Going through eBay has afforded me to survive."
He ended up buying seven Zhu Zhu Pets, all for the market price of about $8. He kept one for his daughter's birthday. The rest, he put on eBay. They were sold the same day. For the next few months, Jorge's e-commerce hobby turned into a combination of an intense strategy game and the low-grade '90s comedy "Jingle All The Way," about the hyper-competition over a hard-to-get holiday toy (which starred, somewhat ironically, the actor who is now governor of the state where Jorge was undertaking his Zhu Zhu Pets retail operation).
"That week, I started picking them up, buying them anywhere I could--Wal-Mart and Toys-R-Us were the only two that were carrying them at the time," Jorge said. "I never held any of them for more than a day. I would find out when Toys-R-Us was getting their next shipment. Wal-Mart would get their trucks later at night, so I'd go at 10, 11, 12 o'clock at night to Wal-Mart, go home, and put them on eBay. By the time I woke up in the morning, they were sold."
This is right about when the trend began to take off. eBay says that from August to September, sales of Zhu Zhu Pets and related items (that is, "accessories" for the little furballs) escalated 1,500 percent. Between October 15 and November 15, four times as many Zhu Zhu Pets were sold as had been sold in the entire year to date. At the beginning of Thanksgiving week, they became the top searched term on the site. Over 100,000 were sold in the first week of December. A scare over potential recalls and toxic materials in "Mr. Squiggles" didn't do a thing to slow down the momentum.
Gambling on boom times
Jorge, for one, began to focus his eBay operations almost exclusively on Zhu Zhu Pets, though he said he did keep selling a few other surefire holiday hits, like the Mattel brain-game system MindFlex. Other products were relegated to the back burner as the average price for a Zhu Zhu Pet on eBay started to skyrocket from somewhere around $20 to a peak between $40 and $50. This is the reality of being a certain breed of e-commerce seller: You have to be ready for the rush, and equally ready for the day when a retail fad will suddenly fall back down to earth.
Remember back in high school or college biology class, when the curriculum turned to evolution and explained the competing theories of gradualism versus punctuated equilibrium? It's not all that different from the disparate strategies that eBay merchants can pursue. E-commerce sellers can opt to maintain a steady, fairly traditional electronic storefront with a wide selection of goods. Plenty of them make a very stable living this way, though it can take snails-pace growth to get there.
For someone like Jorge, capitalizing on the hottest trend of the moment, profits can come quick if you're lucky. But it's a far riskier gamble, and boom times can be interspersed with long periods of stagnation before the seller in question manages to seize the proper timing and supply-chain structure again.
But wait, there's more! Power sellers of Zhu Zhu Pets also profited from selling accessories for the little robotic hamsters, like this 'adventure ball.'
(Credit: Cepia LLC)Though he's been involved in eBay sales for over a year now, Jorge said he hasn't become actively involved in the e-commerce site's "power seller" community. He did, however, say that competitors started to encroach upon him quickly. "At first, I was the only one buying [Zhu Zhu Pets], so that was nice, and no one was paying attention to them, but there were other collectors in the area who saw what these things were going for, and it became kind of hectic," he told CNET.
It got ugly. "I had at least 5 to 10 collectors that I had to compete with just in my city," Jorge said. "It got to the point that they knew who I worked for and started complaining. (My employer said) that whatever I do on my lunch time and my break time is my business." He even encountered a local Wal-Mart employee who would buy up Zhu Zhu Pets with an employee discount and then put them on eBay--they're allowed to do this, he said, as long as they aren't on the clock; Toys-R-Us, on the other hand, doesn't permit employees to purchase inventory and then resell it online.
Jorge said that he never purchased Zhu Zhu Pets online to resell, saying it simply wasn't profitable. The only way that he could make money off the sales was by purchasing the hamsters in brick-and-mortar stores, but that was growing increasingly difficult as toy stores started to impose limits on how many hamsters a single customer could buy in a day.
So Jorge got even more strategic. "I recruited some friends. I had, any week, between 5 and 10 friends. I'd give them the money and they'd get what I needed," he said, adding that in return he offered them compensation but that most turned it down. "I think they enjoyed the rush. They're very competitive individuals." He added that another friend works as a truck driver who regularly makes cross-country trips, and that he would check for Zhu Zhu Pets in the cities where he stopped., bringing them back to Jorge.
Ruthless? Maybe. Jorge's tactics proved controversial to some.
"I got hate mail from moms who bad-mouthed me for picking up Zhu Zhu Pets when they weren't able to pick them up for their children during Christmas," he said. "I e-mailed them back and let them know to find out when their stores were receiving the shipments. I told them Toys-R-Us is pretty good about telling you when they receive their shipment and that they know 24 hours ahead of time what's going to be on the truck. You just need to show up early."
He said that Zhu Zhu Pets must have been more difficult to obtain on the East Coast, particularly New York, as that's where he shipped the vast majority of the toy hamsters. His top buyer was actually the owner of a store in Brooklyn who wanted to be able to restock his shelves. But eBay says that the Zhu Zhu Pets trend was nationwide: The region that bought the most Zhu Zhu Pets off the site was actually the Bay Area city of Alameda, Calif. In second place was Stillwater, Minn., followed by Shelton, Conn.; St. Paul, Minn; and Bethlehem, Penn.
When CNET spoke to Jorge late in December, he'd sold as many as 500 Zhu Zhu Pets and pocketed as much as $6,000 in profits from the hamsters and accessories. But now that the holidays are over, the demand has more or less vaporized. "It's kind of died down right now, so I'm not selling them," he said. "I have my eye on them to see if they'll come back up."
The cutthroat competition didn't faze him, either; in fact, Jorge said, he'd love to do it again. He's hoping to be ready for the next big retail fad. "I constantly try to monitor through newspapers or through the Internet to see what's hot and what's not," he explained. "Then I go to my local stores to see if they're selling. I have friends who work at Toys-R-Us and Wal-Mart, and I always ask them what people are asking for."
It's not clear whether someone like Jorge, who experienced big-time success with a hot holiday gift trend, will immediately be able to seize another hit before it happens--the numbers of factors that have to be in a seller's favor is more or less on a par with total planetary alignment. That said, because being an eBay merchant isn't his full-time job, Jorge is able to operate on the fast, anticipate-the-demand principles that could prove too risky for someone whose e-commerce storefront is a primary source of income. But regardless of the uncertainty, he's looking forward to keeping it up.
"It pays the bills," Jorge said.
This ticked-off cat isn't too thrilled about the snow, but plenty of online retailers are.
(Credit: Caroline McCarthy/CNET)A blizzard that pelted much of the Eastern Seaboard with over a foot of snow also led to a spike in last-minute online holiday shopping last weekend, traffic firm ComScore said Tuesday.
Online shopping continues to eat up a bigger chunk of holiday retail each year, but this season, with roads snowbound and temperatures well below freezing in some of the most populous areas of the country at the tail end of the holiday season, it was even more than usual. (Several cities in the mid-Atlantic, like Philadelphia and Washington, D.C., pulled in more snow in a single snowfall than they typically do in an entire season.) For the weekend of December 19-20, U.S. traffic to non-travel retail sites was up 13 percent from the equivalent weekend last year--and on Tuesday, December 15, right when the storms started hitting weather forecasts, it was up 21 percent.
That Tuesday marked the biggest online spending day in history, ComScore says.
"The major snowstorms hitting the eastern seaboard over the weekend appear to have given holiday e-commerce an additional boost, resulting in the heaviest online spending week on record at $4.8 billion," ComScore chair Gian Fulgoni said in a release. "Consumers have clearly continued to spend online later into the season this year, with several very strong spending days in the most recent week including the heaviest online spending day in history--Tuesday, December 15, with $913 million. Retailers have been very aggressive with late season promotions while informing consumers that they could still get their purchases shipped in time for Christmas, and these tactics seem to be paying off."
A survey from Coremetrics said that sales for "Cyber Monday," the Monday after Thanksgiving and typically a day for big online deals, showed healthy gains this year.
The annual NORAD Santa Tracker will not be tracking 'Santacon' events like this one last year in San Francisco, unfortunately.
(Credit: Flickr user Steve Rhodes (licensed under Creative Commons))The North American Aerospace Defense Command isn't messing around this year.
Each year since 1955, the military agency--a joint U.S. and Canada operation--has been providing data on Santa Claus' annual trek around the world for kids (and non-kids, I guess) who really, really, really want to know when those coveted electric hamsters or whatever the big material sensation of the year will be getting shoved under their Christmas trees.
For 2009, the NORAD Santa Web site will also have offshoots on Facebook, Twitter, YouTube, Google Earth, and Flickr. A partnership with navigation company OnStar also means that subscribers will be able to get live Santa updates on their in-car GPS system.
The whole process doesn't actually start until December 24, so you can't run out to your car just yet and start stalking him. It also, regrettably, doesn't have any clever tie-ins with various global "Santacon" or "Santarchy" events, in which loads of drunk people dressed up as Santa Claus run amok in entire cities. Hey, maybe next year (or not).
No word yet on whether NORAD will share any GPS data with Santa so that he can put you on the "naughty" list if you get pulled over for speeding.
Not only is this Super Mario costume homemade and hilarious, the guy sure can boogie.
(Credit: Caroline McCarthy/CNET)Really, America? Can we talk?
You see, I received this press release from Experian Hitwise in my in-box about the most-searched-for Halloween costumes in the U.S., based on searches in the month ending October 24 that ended in "costume." And the ranking was led by "Michael Jackson costume" and "Balloon Boy costume." OK, so those are timely, albeit a little bit more than unimaginative.
But it doesn't stop there. Following that were "Tinkerbell," "Catwoman," and "Poison Ivy," indicating that most costume searches are either on behalf of women or men who really want to make a fool of themselves. Among the top costume searches beginning with the word "sexy" were "sexy sailor costume," "sexy nurse costume," "sexy witch costume," and "sexy Queen of Hearts costume." (What would Lewis Carroll think?) And high-ranking costume searches beginning with "adult" include "adult cat costume," "adult Snow White costume," and "adult Care Bear costume."
I don't care what you dress up as for Halloween. Have fun with it. But just think about it. Adult Care Bear costume. Really. It's a costume that's probably itchy and uncomfortable, unflattering, and will embarrass the heck out of your kids if you have any. Not to mention that there's no obvious relevance to current events or pop culture that would negate the creepiness factor, considering the last time I checked the Care Bears have been around since 1981. Whatever happened to cowboys and pirates and disgraced politicians? Hitwise stats have officially weirded me out.
More depressing figures: Compared with the same time period last year, Hitwise found a 97 percent jump in searches for "pet costumes" this year. Those poor dogs.
(Credit:
Twitter)
In observance of Good Friday, a New York church has been Twittering the story of the Passion--the biblical tale of the hours leading up to Jesus' crucifixion. This means that subscribers will receive 140-character updates coming from a set of Twitter accounts run by people playing characters in the story.
Trinity Wall Street is an Episcopal church in Manhattan's Financial District that live-streams its services on the Web, encourages members of the congregation to send video e-postcards to friends and family, and produces its own podcasts. The church's thinking behind offering a Twitter feed of the Passion is to offer a way to bring the day of observance into modern life and technology: While Good Friday is one of the most important days of the church year for many Christian denominations, there are plenty of devout Americans who don't take the day off from work.
But edgy interpretations of the Passion are nothing new. This is the same subject matter depicted in "The Passion of the Christ," the controversial Mel Gibson movie from a few years ago in which the dialogue was presented in the languages of the time without subtitles.
Also worth noting this week: a Passover haggadah depicted in the form of a Facebook news feed.
It's been a long time since I was this cynical about Valentine's Day. I guess it's not as bad as the year when it was freezing cold and I had the flu, or the year when I had a blind date with that pretentious guy who thought he was destined to be a famous economist. But this year, I'm kind of bitter about the advent of everyone's favorite love-to-hate-it holiday for a different reason, and I blame my job.
I write about the Web. I'm used to an in-box full of press releases from Web 2.0's famous and not-so-famous. But in the week leading up to Valentine's Day, the barrage has reached a fever pitch with all kinds of themed gimmicks, promotions, and other syrupy pitches geared toward the tech bloggers of the world. You'd think it were third grade again, except instead of sparkly pink-and-red cards with bad puns printed inside, I'm dealing with e-mails with bad puns in the subject lines. Unlike third grade, none of them come from the cute boy with the freckles and the missing front tooth who put a mouse in my desk that one time.
Timeliness is usually a decent PR strategy. But the problem with Valentine's Day is that everyone else is trying to use the same holiday theme to get press. Here's just a sample of what's been fluttering into my in-box over the past few days.
There is, as one of my CNET colleagues already highlighted, a new "Blow a Kiss" app for the iPhone. SpeedDate.com. also has a new iPhone app, in case you have been putting all this madness off until the last minute. A price comparison site called DealNews sent out an e-mail with some recommended V-Day gift tips.
The big guys are in on it, too. Facebook not only configured its virtual-gift feature so that you can send "wrapped" Valentine's gifts in advance and then reveal them to your recipients on the big day, but it chose February 12 as the day to announce that the New York City municipal government had chosen a Facebook fan page as the promotional hub for its "Get Some" condom distribution campaign. (Hmmm.) There's even a new promotion out of Redmond that attempts to promote the maxim that "Microsoft is a super romantic love machine of a company."
Oh, it gets better.
A representative from a mobile photo-sharing service called SnapMyLife sent me an e-mail suggesting that camera phones were a great way to share photos from Valentine's Day excursions (so, I suppose, like "Check out this pic of our booth at White Castle. This guy is such a cheapskate.") And in a possible attempt to stand out, e-card and invitation service MyPunchbowl sent out separate pitches highlighting both its Valentine cards and its anti-Valentine's Day cards.
In perhaps the trippiest of the bunch, one e-mail announced to me that the normally invitation-only role-playing game Hello Kitty Online (yes, that Hello Kitty) would be open to the public on Valentine's Day. Great news for those of you who don't have dates!
To be fair, gimmicky holiday pitches are by no means exclusive to Valentine's Day. Journalists and bloggers are, by now, familiar with the Halloween pitch (big with photo-sharing sites), the call-it-anything-but-Christmas holiday pitch (gadget gift guides, anyone?), the quadrennial election angle, and this year we've all become familiar with the recession pitch. But it's February 14 that really gets on my nerves. Maybe it's because the holiday is all about being told how to tell people that you care about them. Or maybe it's just an easy target.
That said, in recent years we've seen some Web 2.0 holiday campaigns that have been spot-on. OfficeMax created that "Elf Yourself" e-card campaign for the holiday season a while back, gaining a massive cult following by encouraging users to turn their co-workers and bosses into dancing elves. None of these Web 2.0 Valentine's campaigns--no, not even Hello Kitty!--really strike me as anywhere near as creative. Is it possible that all possibility for innovative marketing has already been siphoned out of this saccharine occasion? Maybe that's the real reason so many of us get so annoyed when it rolls around every year.
Besides, if you're really clever, you won't be trawling the Web for the best e-cards to shoot off to your significant other. You'll be like that guy who created his own iPhone app in order to propose to his girlfriend. Dweeby, but impressive.
The annual Macy's Thanksgiving Day Parade in New York got "Rickrolled" on Thursday.
If you weren't watching the parade live or on TV, you probably saw the mass influx of Twitter messages: '80s pop singer Rick Astley, whose cheesy song "Never Gonna Give You Up" became the center of a corny Internet meme called "Rickrolling,", gave a surprise performance. "Rickrolling" originally started as tricking someone into clicking on a link to the "Never Gonna Give You Up" music video by claiming it was something else, like a highly anticipated movie trailer.
From what about a zillion Twitterers said, Astley emerged from a parade float sponsored by cable channel Cartoon Network, and started singing "Never Gonna Give You Up" live. The singer was recently honored at the MTV Europe Awards, but contrary to rumors, he did not perform.
Qik user Steve Garfield streamed the whole thing. Click here for a video (embedded above).
Singer Jonathan Coulton reacts to the 'live Rickroll' at the Macy's Thanksgiving Day Parade.
(Credit: Twitter)For a company that's cutting costs these days, the annual holiday party is an easy target. But there have been fewer cancellations in the tech industry than one might think.
True, eliminating an evening of eggnog and sugar cookies won't help an ailing balance sheet that much; in the current financial downturn, it has a lot to do with appearances, too. "It's the economy, definitely, but it's also a lot of public perception," said Celia Chen, a New York-based event planner who runs the blog Notes on a Party.
"People don't want to seem like they're being gratuitous or over-the-top when their colleagues have lost their jobs. It's more of a responsible way to run your company," she said.
On the other hand, there's a delicate balance between appearing prudent in the face of hard times, and keeping employee morale afloat. Many tech companies are in trouble, but for the most part they are not in meltdown mode like financial services companies or in a continued downward spiral like print media companies. Perhaps because of this, event planners say they haven't seen the same cancel-everything attitude when it comes to tech companies that they've seen in other industries.
"In the financial industry, their budgets are significantly lower than last year. In the tech world it really depends on the company," said Nate Valentine, a partner in the San Francisco events firm Vintage415. "You're seeing companies that are new, emerging companies that are doing events that haven't done events in the past, because they have the budget (now)."
Things are very different in traditional media companies, many of which have acquired tech start-ups and recently expanded their digital divisions--they're hurting, badly. Hearst Publications, which shuttered three magazines, canceled its party. So did Viacom, which is rumored to have layoffs coming before the end of the year. But many smaller media companies and tech start-ups have never had a large-scale holiday party, and probably aren't hiring high-end caterers or renting out big nightclubs for open bars.
The appearances factor comes into play here, too: employees of some smaller companies say they haven't even heard yet about whether the holiday party is on the books or not, indicating that a few executives are still vacillating on how appropriate it would be to throw a company party amid layoffs. "I haven't actually heard either way yet (about a cancellation)," said a representative from one San Francisco-based start-up that recently cut several dozen employees.
"I can't see us not having (a party)," said an employee of one New York-based blog company that also went through a fresh round of layoffs. "It'll suck, but we'll have it, I'm sure."
For larger companies, scaling back a holiday party can be particularly appearances-driven because there's a good chance they've already paid for much of it. "If you're a really big company, you're putting a deposit down on a Christmas party probably in September, if not August, because you have to accommodate a large group and it's been allocated in the budget for the year," Chen said.
There are signs of cost-consciousness everywhere: Valentine said that recently a group of several dozen Google employees in the Bay Area had arranged for an open bar at one of Vintage415's venues without actually booking the club. In New York, news outlet The Daily Beast reported that Google was renting less glitzy venues for its Gotham holiday parties. (Representatives from Google were not immediately available to confirm the report.)
"They'll still find a way to celebrate," Valentine commented. "It's just a different way to celebrate."
Viacom, for example, canceled its companywide party as well as parties for big divisions like MTV Networks and Paramount. "All employees across the country are getting two extra vacation days in exchange," company spokesman Jeremy Zweig told CNET News.
One member of Viacom's MTV Networks said that he speculates individual divisions of companies may come up with their own smaller celebration plans. "I'm sure we'll have drinks somewhere, at some point," said the Viacom employee, "even if it's just my team."
But a bigger complication arises when it comes to companies that have traditionally invited clients, media, or analysts to holiday parties. Canceling a party to which non-employees, particularly non-employees with an indirect stake in the company, are invited, could skew perceptions about that company's health. Both Google and Facebook, for example, have already sent out the invitations to their holiday media parties, fairly low-key affairs at company headquarters where handfuls of bloggers and journalists show up to schmooze with executives.
That said, the image issues work in the other direction, too. Chen said that a new-media company might want to think twice before throwing a big holiday party where one of the goals is to get loyal advertisers nice and tipsy. "Advertisers, I think they want to know that the companies they're advertising in are fiscally responsible," she speculated. "I think advertising is taking a hit in its own light, so I think the general feeling is that we have to be respectful of what's happening with so many people being laid off. And people really admire companies that are trying to do the right thing."
In the end, it's a tough executive decision. Unlike, say, the financial services industry, there really is no clear-cut answer in the tech sector to the question of whether a holiday party should stay on, scale back, or get the ax altogether. But event planners agree: it's never a good idea to throw a party just to act like things are all right.
"It's very difficult to celebrate with your senior executives when you have to look your staff in the face and say, 'We just had to let half of you go,'" Chen said.
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