From...

November 24, 1998
Web posted at: 11:45 AM EST

by Todd Woody

(IDG) -- Striding into a San Francisco branch of Toys 'R' Us, a harried mom collars a clerk. "I read on the Web that you're getting a shipment of Furbys today," she says breathlessly, referring to the gremlin-like electronic critter that is this holiday season's hottest toy. "My 6-year-old daughter has to have a Furby. I've looked everywhere, on the Web, in the stores."

The clerk shakes her head. Alas, the tip, like others on the busy Usenet news group alt.toys.furby, proves a dud.

For many tykes, it's beginning to look a lot like a Furby-less Christmas. With consumers taking their holiday shopping lists online in an effort to avoid the crowds at the mall, visions of fat profits have been dancing in Web merchants' heads.

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And yet, neither hide nor hair of the year's most-sought-after toy can be found at most Internet toy stores. For all the marketing and distribution advantages Web retailers hold over their brick-and-mortar counterparts, the law of supply and demand stills reigns supreme. When consumer frenzy for a product like Furby takes a toy maker by surprise, the scarcity hits everyone.

"It's a crazy industry," says Phil Polishook, a marketing executive with eToys, a popular online toy store. "Manufacturers would rather have a huge shortage of products than bet way wrong on an item. As far as physically getting the toys, we don't have an advantage. We have the same supply problems."

You'd think the bug-eyed interactive fur balls and the Net would be made for each other. Parents, still suffering from flashbacks of toy-aisle fistfights over Tickle Me Elmo dolls and other hot toys of Christmases past, would love to click their way to a happier holiday. And with shoppers from Switzerland to Singapore clamoring for Furbys on Net message boards, Web retailers should be raking in big bucks.

Tiger Electronics, now a division of Hasbro, unveiled the talking, dancing Furby at the annual American International Toy Fair in New York last February. Equipped with a computer chip, sensors and a vocabulary of 200 words of a nonsense language called "Furbish," the slightly sinister-looking animatronic pet responds to touch, sound and movement. Furbys can communicate with each other through infrared signals and can be taught to speak English. Spooky.

The huge demand for Furbys seems to have caught Tiger off guard. EToys, for instance, placed a large order but received just a fraction of what it wanted. The company then decided to give away its small allocation via an online "Furby a Day" sweepstakes.

Toys 'R' Us ordered a half million Furbys, according to company spokesperson Rebecca Caruso. "As fast as we can get them, they go," she says. "The more the media writes about them, the more people want them." And the Toys R' Us Web site doesn't offer any help. For now, the site is out of Furbys and refers customers to the chain's stores.

At FAO Schwarz's "Ultimate Online Toy Store," kids can watch a Furby video. Cruelly, the site has been sold out for weeks. "We have a waiting list of 2,000 people," says a saleswoman at the upscale chain's San Francisco outpost, as Furby-starved shoppers turn instead to Microsoft Barney and other interactive toys.

Tiger Electronics spokeswoman Lana Simon says a late production start and Furby's technological complexity limited availability. The good news, she says, is that a million of the Chinese-manufactured toys will be shipped by the end of the year.

"We worked very hard to make Furby an affordable toy," says Simon. At least, theoretically affordable. Furby's $30 suggested retail price is as scarce as the toy itself.

CyberShop's recently launched Egift site has a warehouse bursting with Furbys. And it knows a good thing when it sees one. Egift initially offered its Furbys at $99.95; three days after the toys went on sale, the site boosted the price to $123.95. (Although, through Nov. 29, it's selling all products at 25 percent off list price.)

Jeffrey Tauber, CEO of the New Jersey-based company, says his buyers placed an order for "many thousands" of Furbys early in the year. "We're thrilled with the timing," Tauber says. "It's unreal. Never in my entire retail career have I seen anything like this. There seems to be unbelievable scarcity out there. I can see why consumers want to get their hands on it. And I'm happy to say Egift has got them."

However, getting your hands on one of Egift's Furbys could be a struggle. Egift promises next-day Federal Express delivery – but when The Standard purchased a Furby on the site, the critter took four days to makes its way from a Memphis, Tenn., warehouse to San Francisco.

"We're in Furby hell," Tauber says by way of explanation. "We're literally shipping out thousands of these things."

Some desperate Furby hunters have turned to online auctions. At both eBay and Yahoo Auctions, business has been brisk, with some Furbys commanding as much as $400. On eBay, says spokeswoman Kristen Seuell, 3,500 Furbys have been put on the block. "This happened to us when Sing & Snore Ernie was hard to find," she says of one of last year's most popular toys. "[Auction sites] could be the place where parents go to find the hot gift right up until the holiday."

Do-it-yourself auctions have sprung up on alt.toys.furby and other online discussion groups, where shoppers gather to trade leads about the latest Furby shipments to Wal-Mart and other retailers. "Furby Tom" recently was offering one of the interactive pets for $150. "The Furby King" offered to trade Furbys for Beanie Babies.

As Christmas draws closer, prices will undoubtedly rise. But Furby's future may be glimpsed at FAO Schwarz. As shoppers pull out their credit cards to secure a place on the Furby waiting list, they brush by stacks of Tickle Me Elmo dolls – the hot toy of 1996 – with hardly a glance.