Waving Bye to Webkinz?

For months, America's toy stores endured a near-hourly ritual: the phone would ring, and a tiny voice would ask: "Do you have any raccoon Webkinz?" Parents drove from store to store, hunting for the bullfrog or the alley cat. Such was the frenzy for Webkinz, a collection of plush animal toys with a shrewd Web 2.0 hook: each one comes with a code that gives kids access to a Web site where they can play games and interact with fellow connoisseurs. Since taking off in 2006, Webkinz performed like a worthy successor to Beanie Babies and Tickle Me Elmo as the country's gotta-have-it toy.

But as the holiday season begins, retailers say Webkinz has begun to wane. Some of this cooling off is part of the inevitable life cycle of fad toys, but retailers cite other factors. Competitors like Shining Stars have launched similar products. Webkinz distribution has widened dramatically—they're now showing up in warehouse clubs and gas stations—and that ubiquity eliminates the thrill of the chase. Many retailers are also fed up with Webkinz's manufacturer, Ganz, which they blame for late deliveries and rising minimum-order sizes. "The collectible market is all about scarcity, and [Ganz] has just put too much out there," says toy consultant Richard Gottlieb.

A spokeswoman for Ganz admits to "challenges" when demand skyrocketed this year, but adds that the problem has been corrected and business exceeds expectations. "We see Webkinz as one of the new 'classic' toys that will continue to delight kids well past the 'frenzy' stage," she says. And if kids disagree, they can always follow the lead of one Wisconsin family who insisted on anonymity when speaking with NEWSWEEK. Their child received an unwanted Webkinz for a recent birthday—and it's already rewrapped for Christmas regifting.

© 2007