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.
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?
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
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.
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?
My guess is that the going eBay price has just drastically dropped because right now chances slim that it's going to make it to your doorstep by Xmas morning.
"I have to buy a console and games? Boo hoo!"
Wow. Way to miss the point. Okay, here's a metaphor to help you comprehend the idea: Let's say you want to purchase an HD-DVD player. They sell for $200, but demand is high, so you cannot find them. Suddenly, you find one but it's $400 and comes with Gigli, Eps. 1-3, TMNT 3, King Kong, White Noise, and Deuce Bigalow.
Boo hoo.
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
They are calling foul. http://slackers.com/
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.
Personally, I'm waiting for the Christmas rush to pass so I can get the console without a forced bundle.
Yes, you and about a million others!
"If anything can go wrong, it will." - Murphy
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
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. -
"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. -