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In recent years, it's become an annual ritual. In the months leading up to Christmas, marketing experts and the media crown one particular toy as that year's "must have" toy. Then the hype starts building. Every child wants that toy under their Christmas tree. Every parent desperately searches high and low to put it there. Many are even willing to pay a king's ransom for it. And the toy's success often continues long after the holidays are over. Hot toys from past years like the Furby, the Tickle Me Elmo, and the Tamagotchi have all become household names.
Without a doubt, the 2016 holiday season's hot toy was the Hatchimal. Hatchimals are interactive fuzzy toy creatures that hatch out of an egg after coaxing, and require nurturing and training afterwards (see the video). Ever since Hatchimals were launched on October 7, 2016 , shoppers were desperate to get their hands on one before Christmas. The Hatchimal is priced at $60 in stores, but there were media stories of sellers asking for hundreds, or even thousands of dollars for one in the secondary market.
Buying a must-have toy like the Hatchimals for a reasonable price can be a serious challenge. The first problem is they are virtually impossible to find in a store. Every time a new shipment arrives, it literally disappears within minutes. And sometimes even fistfights break out during the toy grab.
The only feasible avenue for most shoppers is a secondary market like eBay. However prices on eBay can vary a lot over the course of the holiday season. What is the best time to buy a must-have toy like the Hatchimal on eBay?
In this post, I want to answer this specific question, by describing the results of an analysis that I conducted of 34,000 plus eBay auctions. (The entire report detailing the method, the analysis, and all the results is available on SSRN here).
Study of Hatchimal prices on eBay
To collect data, I used a web scraping program, and gathered information on all successful completed eBay auctions of Hatchimals listed by US-based sellers between October 13 and December 24, 2016. There were a total of 34,657 auctions in my dataset. (It seems a lot of Hatchimals were sold on eBay)!
The figure below shows average Hatchimal prices (including shipping charges) on eBay for each day between October 13, 2016, to December 24, 2016. Many auctions were for Hatchimals lots, so I calculated price per Hatchimal. I also factored in shipping charges.
In the chart, the bold line shows the average price on each day, and the thin line shows the number of auctions that ended on that day. The error bars around the bold price line are at +1 and -1 standard deviation. Basically they show that on any given day, there was quite a lot of variability in prices shoppers paid for Hatchimals. So what useful information does this chart give us?
1) Over the study period, eBay shoppers paid an average price of $143.67 for a Hatchimal. Since shoppers could have purchased the toy in Walmart or Target for 60 bucks (if they got lucky), those who bought the toy on eBay paid an average of 139% more than the Hatchimal's normal $60 price.
2) But as the graph also shows, the average price doesn't really mean all that much. Shoppers paid dramatically different prices depending on when they bought the toy during the two month period. If they had bought the Hatchimal on October 16, they would have paid only $65.24, or just $5 more than the normal price (and that includes shipping). This was the lowest price they would have paid on eBay at any time during the holiday season. On the other hand, if they had shopped on Thanksgiving day, November 24, they would have paid a whopping $185.22, or a price premium of $125 over normal. This was the highest price.
3) If you look at the price trend, it is clear that prices in the week before Thanksgiving were the highest. This was the worst week to buy a Hatchimal on eBay, and even within that week, Thanksgiving day was the worse day. After that, Hatchimal prices dropped steadily. By Christmas Eve, they were well below $100. Sellers looking to make a quick score, on the other hand, continued to list more and more Hatchimals on eBay all the way through December 18. It is easy to imagine that many people were going to the retailers and buying Hatchimals, not for themselves or to give as gifts, but to sell them on eBay and make some money. This sort of thing tends to happen when a product's demand is far greater than its supply.
This next graphic is a histogram. It shows the frequency of prices that Hatchimal shoppers in my dataset paid.
The data in the chart shows that a majority of eBay shoppers, or more precisely 62.1%, paid between $125 and $175 per Hatchimal. Less than 2% got a really good deal and paid less than $90. On the flip side, just over 3% paid more than $200. Hardly anyone paid "several hundred dollars" as media stories have portrayed.
So based on these charts, now we have the answer to the question "When is the best time to buy the holiday season's hot toy?" My analysis of Hatchimal eBay auctions suggests that the best times to buy a Hatchimal on eBay would have been either any time during October or in early November. It would have worked equally well to be patient and wait to buy until after December 15. The toy would still have arrived in time for Christmas gifting. The worst time to buy was the week before Thanksgiving, and within this week, the worst day was Thanksgiving day.
In my next post, I will share some more findings from my study, that give other useful tips to shoppers on how to shop smartly and spend the least possible amount of money for a must-have toy during the holiday shopping season.
About Me
I teach marketing and pricing to MBA students at Rice University. You can find more information about me on my website or follow me on LinkedIn, Facebook, or Twitter @ud.
