Slashdot Mirror
Retail Store Scalping Wii Consoles on eBay
C0rinthian writes "ArsTechnica reports that the games retailer Slackers has been keeping their stock of the Nintendo Wii off their store shelves, and is instead selling the system on eBay for $400-500. (A $150-$250 markup)" This follows their look at the other side of the coin: why some retailers insist on Wii Bundles.
Are they not allowed to do to sell them on eBay? Legally it's fine. Nintendo doesn't want them to, but they have to be very careful about cutting off shipments or Nintendo could get busted for price fixing.
... suckers
Honestly if they're only making just below $4 I can't blame them for requiring bundles. In the article it says they're losing money if a customer uses a credit card but even if they don't you have to wonder how they can keep the doors open.
I kind of feel a little bit bad for small games stores right now even if I'm just a consumer with no real vested interest in making the prices higher.
In a capatilist society it should be possible to buy any item, no matter how rare, with rarer items being more expensive. Should we blame retailers for doing what economic theory expects them to do? When supply is low and demand is high price should rise until supply = demand.
2. Why doesn't the stores sell it for more than MSRP? The "S" does stand for "Suggested"
[Fuck Beta]
o0t!
Does anyone have the inside scoop on why -- over a year after introducing this product -- Nintendo has not been able to ramp production up to meet demand? It wasn't a surprise that they couldn't meet demand last Christmas. But, this time around they've had a full year to get the production line up to speed.
What's up? Is their a particular component that is hard to come by or has a real low yield?
I just searched, there's at least 10 brand new consoles, perfectly functional with at least one controller on ebay BUY IT NOW for under $325. So if they have them listed for more, they're not selling them are they?
Google's Super Secret Search Algorithm: SELECT @search_results FROM internet WHERE @search_results = 'good'
The story here is that the Wii is worth so much money to some people. For that kind of money one could get a Playstation. But I have no idea how the world works. I still can't understand why some parent would spend $100+ to have their kids see some girl pretend to sing. At some pooint it seems that you tell the kids 'no', the market dries up, and the scalpers go away. But in reality there are enough compulsive people who will pay anything to be part of the in crowd so these scalpers will always have customers.
In the free world we have the right to make choices, and as well as a basic education is offered, then I say let the adults make the choices(although it has been clear that when cash is too easy to get, the system tends to break down, and more responsible people end up picking up the pieces for the less responsible).
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Need a Wii? Walmart has them, but you have to buy a $677 bundle of console + a crappy accessory + six games. All of this, for shipping some time between December 27 and January 25.
Personally, I'm waiting for the Christmas rush to pass so I can get the console without a forced bundle.
The man who does not read good books has no advantage over the man who cannot read them. - Mark Twain
I have to buy a console and games? Boo hoo!
Why even bother selling the Wii's on ebay (and paying ebay fees)? These things are in such great demand why not price them based on what the market will stand. They've proven that a market is there for Wii's at $399 - why not sell them for that in the store? Oh, and the reason that retailers only make $4 margin of each Wii is that they make it back in other ways (same way car dealers make money even when they sell cars for way under sticker price and will happily show you paperwork that they only make $100 over dealer invoice - facory incentives that are accounted for in many other ways). How - the margin on games is much deeper. Sell the console for cost and then make out like bandits on games (razor and razor blades; printers and cartridges etc)
Rich people are eccentric. Poor people are strange. Me, I'd be happy with odd.
They most certainly can dictate a *maximum*.
And Nintendo has the freedom not to sell to the scalpers.
Bulk baby, bulk. Higher volume == greater discounts. That's why the mega-chains eat the lunch of the smaller outfits (on price at least) they can negotiate volume discounts.
Rich people are eccentric. Poor people are strange. Me, I'd be happy with odd.
I think much more frequent is the case where store employees are buying wiis before they ever reach the floor and selling them either on ebay or other places. I know of at least one person who does this. They buy them for their discounted value and then sell it for a $100 msrp markup. I really don't know why Games...errr...said company doesn't put a stop to it. They are losing a lot of money by letting them go at employee discount. I'm sure these places have rules to try to stop this, but they obviously aren't enforced or the people who have the ability to cover turn the other cheek are part of it (ie store managers don't stop it, and for whatever reason the regional/corporate isn't looking close enough at the numbers).
Why doesn't Nintendo set up a dummy company and sell them themselves on ebay?
This may be the most ambitious thing ever done by anyone called "Slacker".
"Win treats sysadmins better than users. Mac treats users better than sysadmins. Linux treats everyone like sysadmins."
Wouldn't affect the Wii and its 512M of flash. I think the key is that they've exhausted all their existing suppliers and assemblers. Any new contractor would require hands-on quality assurance time in addition to the usual ramp-up time.
What sound do people on rollercoasters make? Hint: it's not Xbox 360.
"Why even bother selling the Wii's on ebay (and paying ebay fees)? These things are in such great demand why not price them based on what the market will stand."
You mean like this: www.wiisellwiis.com
They are calling foul. http://slackers.com/
Hmmm. I have a business idea. Buy a product that costs $100 and sell it to people who know it costs $100 for $500. Pocket the extra $400. Oh, wait, that's been done already.
Ok, let's try again. Sell people a cup of coffee, which everyone knows is worth about 5 cents, for 5 dollars instead. Oh, wait. That, too, has already been done.
Ok, ok, now I got it. Because everyone has faucets in their homes and businesses, why not open a storefront where people will drive to you and then pay a dollar per gallon to fill bottles of water from a faucet?
What?! That's been done already too?!?! Ok, I give up.
I walked into a local independent game shop the other day, just as they unboxed 6 new Wii consoles that had arrived that day. I asked "Do you have any Wiis in stock?" and an employee stepped in front of the stack of Wiis and said "Nnnnnnooooo.... th..these aren't for sale. I mean they are, but we sell them online. No one wants to pay the $450 we are asking in the store." Frickin' jerkwads.
I have a friend who was a manager of a computer retail store, including a full line of Apple products. iPods are *exactly* the same situation as Wii consoles are -- retailers make absolutely nothing on them, and either you play by Apple's pricing rules or you get cut off.
I forget exactly how much he said the profit was, but IIRC it was $2-3 on a top-end iPod (which was the 60 or 80GB model at the time). By the time you pay your staff to deal with the customer to explain features, etc, and make the sale, he'd already lost money. If the customer paid by credit card, he lost a lot more.
However, third-party accessories (skins/cases, FM tuners, headphones, etc) had significantly higher markup, and that's where the money is for retailers, just like games are for the Wii.
Calm down.
"Win treats sysadmins better than users. Mac treats users better than sysadmins. Linux treats everyone like sysadmins."
Nintendo sets the MSRP, but not the Wholesale price. The distributors (the wholesalers) do that. If the distributors are buying them from Nintendo for $200 each and selling them to the small stores for $255, the small stores don't have much choice. Nintendo probably sells units in 1000 lot batches or something similar, and only large retail chains can afford to buy whole lots at a time. So, not only do the large retail stores get more units, they also get higher profits.
This is the way almost all products are handled. The difference here seems to be that the wholesalers small game stores have to go through are being major asshats. Nintendo doesn't get to change that, though. I'd imagine that if Nintendo raised the MSRP, the distributors would just raise their prices, too. For a product in this high demand and low supply, there is no price competition going on at all, not among retailers or wholesalers.
Are those like, Nintendo Tomahawks?
See the accused's website: http://slackers.com/
"Thanks for all the money you paid to us. We've used it to buy off ISO among other things" -Microsoft
Retailers are free to charge whatever they like. However, the claim that retailers are somehow not making money on a product sold at MSRP is complete and utter bullshit.
First of all, companies trying to sell products all have to pay for shelf space, at least in the US. This is something I was educated about first hand by software developer. It's not for nothing Adobe and Microsoft get all the attention they do on the shelf. They have to pay for that space. It's not likely a second tier item will ever be featured prominently. To get that kind of presence in big retailers all over the United States is very expensive.
Now, the tables might turn when a product becomes a big fad with consumers clamoring over the item, like the Wii. Nintendo has had a long history of manipulating retailers. They were brutal during the NES era in particular because there was no real competition. However, retailers put up with it because they were making loads of money.
Manufacturer's suggested retail price is set so that the retailers earns a comfortable sum of money for each sale. That price takes into account manufacturing cost, obviously, packaging and shipping expenses, and potential expenses on the retailer's end. What's left over is profit for the various parties involved. I'd argue that most of the time that profit is quite generous. When reading about how Sony, for example, is losing money on every PS3 sold bear in mind that it's Sony losing that money, not the retailer.
No retailer in their right mind would carry a product they'd lose money on. What would be the point? Sony, on the other hand, has a reason to do so. They're trying to build a brand, they're trying to generate interest in the console.
Retailers love to spread that old lie that they're barely making a profit on a product. Like somehow the MSRP is how much it cost to make the thing. And shockingly, people fall for it.
Those bundles exist to take advantage of these people. This is a clever way of turning extra profit on that one consumer. If they had just purchased the console they could have then gone to any one of a dozen other stores to buy additional games and controllers. There's no need to rely on customer loyalty.
And once emotions take control people are willing to go to excessive lengths to get whatever they want. If these people were to slow down a bit and think about their situation they'd realize that they'd save a good bit of money and unnecessary hassle if they just were patient and waited a few months. It's not like the Wii is going to disappear next year.
And you're suggesting that if Nintendo insists on a lower price they'll be convicted of price fixing?
Quack, quack.
But Nintendo does know about these scalpers, and is well within its rights not to send them any more product.
I was at Media Markt yesterday (and another one of their chain the day before, coincidentally) and they have PLENTY of Wiis on the shelves, ditto at another store I was. I heard from some friends in the UK they had problems getting Nintendo DS Lite so they had to eBay one - again, never seen a shortage where I live.
:-).
I can't explain why there is a shortage in the US and UK, other than that they have obviously shipped too many our way
Insert
Good to see retailers being responsible by not creating inflationary pressure.
Deleted
i bought a Wii online from Circuit City for my wife's birthday... of course, it took a couple months of hitting CC's web site to check for 'in-stock' status, but i was able to buy one at $249 w/free shipping...
... no biggie...
:-)
i just bookmarked wii pages from a number of on-line retailers and then would check each site while i had my coffee at the kitchen table early every morning
(there was *no* way i was going to phone or drive around looking for a wii - i'm not a gamer - i just think it's a fun console to play w/friends when they come over for happy hour)
The Supreme Court of the US ruled earlier this year that a manufacturer can set pricing for their product, and enforce retailers to sell at that price. This ruling was primarily to protect 'high end' products from discounters, but goes both ways.
The case was 'Leegin v. PSKS', and is summarized on the docket here:
http://docket.medill.northwestern.edu/archives/004185.php
This ruling is intended to protect a manufacturers brand by keeping discounters from undercutting (and subsequently devaluing) the perception of the brand to the public. Think of Rolex - do you REALLY think it costs them $5,000 to make a Rolex? Of course not, but you aren't buying a Rolex, you are buying the name and the perceived social capital that comes with it.
Let's assume that the manufacturing cost of a Rolex watch is $1250. This watch is sold at wholesale to a retailer for $2500, and has an MSRP of $5000. This is a pretty common pattern (although less so for hi-tech devices).
Now, if Joe's Discount Watch Kiosk in the crappy mall at the other end of town started selling Rolex for $1279, the Rolex name gets diluted, the social prestige goes down, and when Joe's Discount Watch Kiosk closes, the long-term business who has invested in the community, the Rolex brand name, in employing people, and has built the business from the ground up can no longer sell the Rolex for $5000. They end up with reduced cash flow, have to cut their staff, dogs and cats start living together, and all hell breaks lose.
OK, it's not THAT bad, but from the 'real world' (tm) department, I own a specialty toy store. No really, I do. I employ about 15 people, sell at or near MSRP, invest in my community, and build social equity.
When a specialty brand that I have invested in sells to Amazon or Target, I can no longer sell the product, because they discount. So, I have to mark down to sell what I have already purchased. With my reduced margins, I cannot employ 15 people, I have to cut to 12 and make do. I am not selling $5000 watches, I am selling $25 dolls, $40 wooden blocks, etc. My net margins in a good year are about 12% after all expenses, which allows me to pay my mortgage and keep the kids fed and the lights on. When Target, for example, comes in, woos a brand, buys their product, and then discounts the crap out of it, I lose, the manufacturer loses, and the consumers win - for a few months. Then, the brand goes out of business, I have lost margin and as a small locally owned business have to lay off staff, and there is direct damage to the consumer because next year, Target has moved on, the brand is no longer in business, and I can't get it for my loyal customers.
I am 100% in favor of competition, good pricing, fairness to customers, but consumers also have to realize the high cost of discounting overall. This is why the SCOTUS ruling is actually good for business, and good for consumers in the LONG TERM.
Now, how does this apply to the Wii?
Well, the SCOTUS ruling, as I understand it (IANAL) does not specify just minimum pricing, but that a manufacturer can set PRICING. So, if Nintendo says $249.99, it's $249.99 for the console.
Whether or not the retailer is able to stay in business is between the retailer and Nintendo, but one would hope that Nintendo would eat some of the costs of the console to get it out to the public.
Just my pre-coffee, pre-busiest toy shopping day of the year rant.
Weaseling out of things is important to learn. It's what separates us from the animals... except the weasel. -
If the price is "too" high, then don't buy the product. A 'toy' should have an infinite price-elasticity ... you are NOT entitled to be amuzed.
If you are a store and you sell items in a building people come to then I feel it is wrong. Refusing to sell them to people so you can make up to $250 markup on Ebay is wrong!!!
One is not required to sell a product at the maximum price the market will bear. It is also acceptable to sell below cost to build demand (although by all accounts, Nintendo is not doing this). "Dumping" is offering a product in a foreign market at a price lower than you charge in the domestic market.
Then don't sell that product anymore.
No, most like only you lose. Most manufacturers aren't going to be so stupid to discount their product to Target enough to kill themselves. There might be a few that stupid, but as a general rule a manufacturer discounts their product in return for sales volume which is in their interest.
Personally, it's not my problem whether you can hire 15 or 12 people. To suggest that that's a good reason for maintaining high prices is basically forcing me to be charitable with my purchasing dollars against my will. I expect products to be priced competitively and if Target can sell the same product as you for 15% less, yes, I'm going to buy it at Target. A small shop can't compete on price, it must compete on service or something else. And even then, you might still lose. Such is life.
Artificially pumping up prices might be great for you and the manufacturers but it is NOT great for the customers. Saying that a $5000 Rolex could be "undersold" for $1250 and that's somehow some kind of travesty is nonsense. It means that Rolex is way overvalued an the consumers are being duped. Of course we know that, it's no secret. But there's certainly no reason to defend the practice.
Ok, so name some names. What brands have actually gone out of business because of this?
nothing new, when I worked at CC managers did this for many products. some managers would make profits of 700K a year plus their salaries off ebay sales.
BTW, I like Target, they have reasonable prices, and I would much rather buy from them than deal with the high markups at a specialty store unless they were adding some value-added services that Target doesn't supply (ie: Custom installation of A/V equipment, rare or out of stock games, etc.)
Help! I'm a slashdot refugee.
Hexabits is the first one to come to mind.
It's common for small mom/pop manufacturers to see dollar signs, sell to a big box, and be gone the following year. In specialty toys, it happens about half a dozen times a year.
Weaseling out of things is important to learn. It's what separates us from the animals... except the weasel. -
"Target has moved on" refers to them finding other brands, not closing.
I like Target, too - they are the least offensive of the big box stores.
Consumers are strange beasts.
A great example of this is the recent furor over 'lead tainted toys'.
So, people complain that lead is in toys - rightfully - and that toys are made in China, etc, etc, and we are all going to hell in a handbasket.
I had a customer come in to our toy store in late November. Was very vocally complaining about how we sell toys made in China. She is carrying around a $14.99 Thomas the Tank Engine product, and pointing out that it's made in China, and why can't she get a good set of trains made in the USA.
I quietly point out to her that in the next rack, we proudly carry Whittle Stop Railroad, a 100% USA made product. She pulls out an engine from the peg, looks at the price, and starts complaining even LOUDER, '$29.99! This is over DOUBLE the cost of this one! That's highway robbery, how can you charge prices like this?'
This is, unfortunately, the conundrum that small business like mine are in - it's the classic triad.
Cheap, quality, or fast.
You can pick two and only two.
If it's made in the USA, labor and material costs are higher. Period, that's the way it is.
If it's made in China, it isn't necessarily dangerous, but you get a lower price.
The SCOTUS ruling allows specialty brands to remain specialty. It allows Nintendo to set the price of their gaming console, and not allow people to undercut or devalue the brand.
The 'high markup of specialty stores' is also a misnomer. I typically sell at MSRP. Target typically discounts, online discounts even more.
Many people at this point pull the 'if you can't compete, get out of the business' card (like a submitter above). People that say that obviously don't get free enterprise. It's not all about price, it's about choice, supply/demand, quality, and a myriad of other aspects that go beyond the simple product.
Weaseling out of things is important to learn. It's what separates us from the animals... except the weasel. -
1) Energy prices increasing. It will become more expensive to ship products over on cargo ships.
2) The yuan beginning to float. It's gonna happen sometime, sooner would be better then later though.
At least from what I have heard of from Walmart. People have ordered the bundle, then returned the crap they don't want in a retail store, and get their money back.
Those who live by the sword, get shot by those who live by the gun...
As a retailer in another arena, I can tell you that I have run up against threats from the manufacturers to cut me off simply because I was selling products on the internet, even if it is the same cost as selling in the stores ... The thing that pissed me off the most was that they threatened to cut me off for selling on the internet while Amazon and several other big name online e-tailers were selling the exact same products with apparent impunity.
Historically it is not uncommon to select retailers on a regional basis and to restrict them to their region. If they fail to comply they get dropped. Read your contract with Nintendo to see if there is something along those lines.
Given the shortage of units they may be trying to make sure what they do have is fairly distributed by region. If you divert local brick and mortar to the internet you are interfering with that. Therefore they do have at least one fair and valid rational for not wanting you to continue. Again, it all depends on what is in your contract.
Apologies for the second post, regional rationing came to mind immediately after posting the first response.
I quietly point out to her that in the next rack, we proudly carry Whittle Stop Railroad, a 100% USA made product. She pulls out an engine from the peg, looks at the price, and starts complaining even LOUDER, '$29.99! This is over DOUBLE the cost of this one! That's highway robbery, how can you charge prices like this?'
This is why I couldn't work retail. I'd say something like "That extra money pays for people who give a damn that their toys aren't poisonous."
R: That voice. Where have I heard that voice before? B: In about 365 other episodes. But I don't know who it is either.
you really have no idea how the retail world works, at all.
...as this problem disappears right after Christmas is over.
Support a great indie game: http://www.abaddon360.com
Just thought I'd drop in amongst all you Wii fans to say that I, a former PC snob, am happy as can be with my new PS3. Its gaming excellence is such that I feel embarrassed on behalf of people who have / want a Wii, because they aren't even in the same league as far as quality of games (yes I have played both). The only person to whom I would recommend a Wii is someone who only plays party games.