Grey Markets Compared - PS3 vs. Wii

Kotaku has a follow-up feature to their earlier look at the declining PS3 market on EBay. Post author Michael Fahey has now gone back and looked at Ebay sales, comparing the PS3 and the Wii. Unlike the sharp dips and spikes the PS3 market has suffered, the price seems to be fairly constant for the Wii console. From the article: "Considering the small window that the PlayStation 3 auctions had to turn a truly amazing profit, prospectors would have been better off in the long run purchasing a couple of Wiis, which have maintained an average profit margin of 45-50% since preorders became available. Definitely not a windfall, but a much more financially sound investment in the long run. Unfortunately these launches weren't about being sound financially. They were about betting on the big bucks, and the majority of the PS3 prospectors out there played the tables and lost."

Comments

Scalpers hurt game sales

[Telepathetic Man]

I suppose not one of these console scalpers cares that they hurt the market for the games on these machines. That extra $50-100 in price that is being forced on early adopters of the new consoles hurts the game publishers and in turn the consoles and the market for those consoles.

I mean really, would someone please think of the profits?!?

Re:Scalpers hurt game sales

[Chris Burke]

I mean really, would someone please think of the profits?!?

Yeah, Isaiah was really hoping to get a PS3, too, but couldn't afford the scalped prices. Mohammed managed to get one standing in line and was making fun of Isaiah all through December.

No I can't spell, why do you ask?

Economics 101, courtesy of Sony and E-Bay

[lpangelrob]

Funny, I was just looking at the PS3 sellers on e-Bay. This particular story is a funny read if you have some time at the office (and who doesn't, if you're reading this?) I couldn't help but think of Nelson and "ha ha!"

Speculators, meet the hard rock of economics.

Re:Economics 101, courtesy of Sony and E-Bay

[AK Marc]

There are not enough systems to satisfy demand. Thus, the price is going to rise. Some people pay this additional price in time tracking down shipments and waiting for hours outside stores, others pay in money to scalpers (who themselves paid in time). I fail to see why one is worse than the other.

In Simpsons episode "Homer Loves Flanders" Homer stand in line to get tickets. He is second in line, and thinks he has a good chance. The person in front is a scalper that buys them all and it is sold out with the first purchase. That's what happens here. If the scalpers didn't buy them in large numbers from the stores, then the availablility would be better and the price of those sold would be at a lower price. The bottom fell out because scalpers were hoarding them, and when the price got to the point where they had to liquidate to ensure they didn't take a loss, the prices dropped very quickly. The shortage was more like the "sold out" situation in the Simpsons. It was artifically created by the scalpers.

When the cause of the problem gets screwed by the problem that they created, "good" is the thought running through my head. They were profiteering off a shortage they helped create.

What grey market?

[Andy Dodd]

eBay scalping of systems bought in the U.S. to U.S. customers isn't grey market. It's just plain scalping.

Grey market is stuff like Lik-Sang and similar companies selling Japanese versions of consoles to U.S. customers for the purpose of playing import games.

The most common example of "grey market" sales is in the photography industry, where "grey market" imports of cameras are often cheaper than the U.S. version of that camera. Of course, you get what you pay for, and in this case there is no warranty support for the "grey market" cameras and often repair shops will refuse to even touch the grey market units (because they'll lose their certification as an authorized repair shop for that particular manufacturer if they do.)

Re:What grey market?

[UbuntuDupe]

eBay scalping of systems bought in the U.S. to U.S. customers isn't grey market. It's just plain scalping.

So what would you say is the appropriate metaphorical color of the ebay resale market? Would you be happy with calling ebay sales "off-white"? Beige? Light green for that tinge of capitalism?

Re:On the bright side of things

[Joe Random]

Even if you bought a PS3 to sell and couldn't find the righter buyer, at least you have a PS3. :)

So what you're saying is that it's a lose-lose scenario?

A seller's interesting strategy.

[Puchie_D]

I won a Wii on eBay for $40. Yes, forty dollars. And the seller actually made double what he bought the Wii for. Here's what he did:

Instead of selling the Wii for $450-$500 and (Zelda:TP thrown in), the seller was instead selling cards from a 52 card deck. Each card cost $20.00. When you bought a card, the seller would write your ebay name on the card and put it in a sack.

At the end of the auction, if at least 26 cards had been sold, he'd pick a card out of the sack and they would then be shipped the Wii. If he hadn't sold 26, he would have refunded all the money.

So I bought two cards because I had some spare cash, won, and I recieved my Wii in 3 days. All but one person left positive feedback for the seller's unique selling strategy.

Instead of selling a Wii and game for 450-500 (retail 250 + 50 = 300 ), he ended up selling 30 cards for $20 each. He got $600 and I only spent $40. Win-Win situation, if you ask me (except for those who lost $20 with nothing, but hey, that's gambling).

Re:A seller's interesting strategy.

[Lehk228]

that's called a raffle, unless it's to raise funds for a non-profit org it is illegal in most of the country.