Retailer Selling Wii Stock Via eBay Store

[Andy Chalk]

Retailer Selling Wii Stock Via eBay Store

A retail chain in the U.S. is taking advantage of the Nintendo eBay [http://www.wii.com]at grossly inflated prices.

According to an Slackers [http://arstechnica.com/news.ars/post/20071220-exclusive-retail-chain-scalping-wii-allotment-on-ebay.html], a regional chain based in Illinois and Missouri, has been selling all its stock of the Wii via its eBay store at a price of $399.99, $150 more than the regular retail price. The systems had originally been priced at $499.99, but weren't selling at that price. A Slackers employee who provided the story to Ars claimed that over the past year, the retailer has only sold Wii systems through its normal storefront once, during a promotional offer. "The real crime is that we get Wii shipments regularly. In fact, right now we have about 20, but none of them make it to the store front," he said.

Ars Technica contacted a Slackers location in St. Louis to ask about the practice, and were referred to the company's owner. At last report, they have not been able to contact him, and Nintendo has also refused to comment. expressed his displeasure [http://www.nintendo.com] with companies who take advantage of the demand for the Wii to drive up their own profits by forcing people to buy them in unofficial bundles.

The full Ars Technica report is available here [http://arstechnica.com/news.ars/post/20071220-exclusive-retail-chain-scalping-wii-allotment-on-ebay.html].


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[Kaisharga]

Supply and demand. This is the market in action. As long as people are buying, they will sell. Presuming there is no agreement otherwise between Nintendo and Slackers, there is nothing wrong going on here.

 

[Andy Chalk]

"Nothing wrong" doesn't mean it's not greasy.

 

[rawlight]

Sorry, there is nothing going wrong here? That's not true. Granted that there is a shortage of Wiis and the most profitable thing for retailers to do in that case is to move units off the retail market (where they have to charge the retail price) and into the "grey market" (where they can charge whatever they can get away with). This actually hurts the Wii market in the sense that it redirects income from consumers to these retailers who engage in these practices.

This is not an economically efficient outcome, so don't try to pass off some lame "markets in action" nonsense. This is actually a classic example of a market FAILURE in action. No economist would ever say that all markets are efficient, and this is certainly an example of one that is not. Supply and demand will only clear markets when the price can change freely and there is sufficient information available to make informed purchasing decisions. Neither of these is true in this case.

This is a shortage created by Nintendo (purposely or not, who knows?) being made worse by greedy retailers. With this story breaking, I have a feeling that Slacker's might be in trouble.

Oh, I have an idea, someone send this story to the Consumerist, then they will really get it.

 

[Arbre]

Huh, a retailer decides to sell product X at an increased price for a short period, because there's a huge demand (and it does sell even at that price), instead of putting them on the store front at normal price (stupid in this case), and people act surprised and complain?
Again: business. Demand is the exact same reason which enabled Nintendo maintaining the same price for a whole year.

 

[Kaisharga]

Is it greasy? Sure. Is it shady? Absolutely. Is it necessary? Probably not.

Is anyone actually forcing the buyers to pay nearly double the MSRP for the units? Nope.

The information is out there. Emptors' lack of caveatitude does not imply a lack of choice.

 

[Andy Chalk]

Does this mean you're condoning the action? Or is this just devil's advocatitude?

 

[Arbre]

I don't see what's devil about that. It would be stupid for them not to increase the price of an (plastic) item that is so rare, which people are willing to acquire at a higher price.

It may suck for the consumer, but c'est la vie.

 

[Joe]

Huh, a retailer decides to sell product X at an increased price for a short period, because there's a huge demand (and it does sell even at that price), instead of putting them on the store front at normal price (stupid in this case), and people act surprised and complain?
Again: business. Demand is the exact same reason which enabled Nintendo maintaining the same price for a whole year.

Apply that to gas, because hay guyz you can always walk, and people burn down gas stations in more consumer-friendly countries. Price fixing's price fixing, dude.

 

[rawlight]

I don't see what's devil about that. It would be stupid for them not to increase the price of an (plastic) item that is so rare, which people are willing to acquire at a higher price.

It may suck for the consumer, but c'est la vie.

So when movie theaters show a popular movie and they think they may sell out, they should scalp their own tickets outside to make more money? That doesn't sound very good to me, I certainly wouldn't go to that movie theater.

I don't think this is illegal, but I'm sort of confused as to why there isn't some kind of contractual obligation from the distributor as to where they can sell the Wiis. Is Ebay off the radar when it comes to that type of thing?

This is Yankee capitalism at it's worst (not including the Ferengi). Though (some) retailers do this kind of shit whenever they think they can get away with it. The information is out there? Yes, I'm sure that the Ebay posting for these Wiis mention how these are supposed to be retail units and that the seller is buying them at wholesale. It does imply lack of choice because now there are people getting priced out of the market. Your "choice" is overpriced on Ebay or nothing (provided that they are sold out at honest merchants in your area, which many people are experiencing).

 

[SatansBestBuddy]

This is Yankee capitalism at it's worst (not including the Ferengi). Though (some) retailers do this kind of shit whenever they think they can get away with it. The information is out there? Yes, I'm sure that the Ebay posting for these Wiis mention how these are supposed to be retail units and that the seller is buying them at wholesale. It does imply lack of choice because now there are people getting priced out of the market. Your "choice" is overpriced on Ebay or nothing (provided that they are sold out at honest merchants in your area, which many people are experiencing).

That's the key thing right there: wholesale.

These people are buying their Wii's at a much lower price than consumers have avalible to them. It's not like, say, the PS3 launch where guys waited in line for 3 PS3's and then sold 2 of them online for hundreds more than they got them for. That was dirty, but they still had to buy the things at the same retail price everybody else was given, and usually had to wait overnight to do so, too.

But imagine if the launch had companies that tried to sell all their stock on Ebay and not even provide any for the line outside?

You wouldn't be sitting there saying, "It's just business" if that happened, would you?

 

[Arbre]

Huh, a retailer decides to sell product X at an increased price for a short period, because there's a huge demand (and it does sell even at that price), instead of putting them on the store front at normal price (stupid in this case), and people act surprised and complain?
Again: business. Demand is the exact same reason which enabled Nintendo maintaining the same price for a whole year.

Apply that to gas, because hay guyz you can always walk, and people burn down gas stations in more consumer-friendly countries. Price fixing's price fixing, dude.

I didn't know Wiis were essential to the economics of a country.
For the record, my car runs on fuel, not wii.

But imagine if the launch had companies that tried to sell all their stock on Ebay and not even provide any for the line outside?

You wouldn't be sitting there saying, "It's just business" if that happened, would you?

Yes, I'd do, because I know that under saner conditions (like no shortages for example), little would be the number of people ready to buy a console bundles at such a high price.
And if several retailers started to use that system, out of of period of great demands, they'd be shooting their own foot, while as typical sharks, other retailers would sell the console bundles at the normal price, and... well, sell, contrary to their hungry competitors.

 

[rawlight]

Where did you get a Wii for $150? That's way below cost.

I just heard that retailers actually make almost no money from the Wii, they only make a few dollars off of the MSRP. So I can understand why this guy is doing this. In fact, there is the reply to all this from Slacker's right here:

http://slackers.com/

I'm feeling more sympathy for the guy now, but not a whole lot more.

 

[Sethala]

Think of it like a comic book, take a Mint Spider Man #1. They're rare, at this point, Wii's are rare. Comic book store ups price, what's stoping Slackers from upping their price. It's a long running business practice that has proven lucritive...
It's shady and greasy alright, but there's not much you can really do about it. It was my understanding that after a company bought a product, they could then sell it at whatever price they wanted.
Although in this case they're just going overboard.
It it a shame, yeah... Is it going to stop people from buying them, oh hells no. It's called greed people, it happens.
Raise your hand if you actually paid less than $150 for a new Wii.
(Raises hand)

The problem with that analogy, however, is that your comic book store is very likely -not- buying a mint Spider Man #1 directly from Marvel. Instead they're buying it from another consumer and then re-selling it, either immediately or at a later date. This is called the "secondary market". The problem in this case isn't that the Wii is rare, it's that they are buying it driectly from the supplier - something the average consumer is not able to do. While it is by no means illegal, that doesn't mean it's ethical, and while it may make more money immediately, it's very likely going to hurt the business's reputation in the long run. That is why it's a bad idea for them.

 

[Kronopticon]

shouldnt there be/isnt there, some kind of clause preventing companies selling things on ebay. as i believe that should be the case, with exceptions for small companies run by 2-3 people.

either way, they are going to suffer, as they have promptly shot themselves in the foot.

 

[Andy Chalk]

Independent companies like Slackers are free to do what they want with their product. They could mark the consoles up to $399 for in-store sales if they wanted. Their reasons not to include bad publicity like this and a high risk of backlash among customers who dropped $400 bucks on a Wii and then, in the clarity that comes with the holiday let-down, realize the seller was taking advantage of the situation to rip them off.

Because that's really what it comes down to. Mr. Jellinek's statement extolling his company's virtues as a good corporate citizen is really just a thin excuse for the bottom-line fact: He wants more money. Let's be clear: Giving away a Wii over the radio is publicity, nothing more. There is no difference between doing that and spending the cost of the Wii (and probably quite a bit more) to purchase an ad spot on the same station. The implication that these acts are somehow altruistic is laughable.

As someone with significant retail experience, let me offer an insight: Nobody makes money on consoles. Retailers eat the cost of the console because it gets people in the store and will (hopefully) bring them back for future purposes. You either accept that bare-bones consoles are loss leaders, or you don't stock them and deal with the reduced traffic and reputation that results. It's the nature of the business, always has been.

I'm not suggesting that Slackers should somehow be prevented from selling their stuff on eBay for any price they want, or that they're breaking any laws or Retailers' Secret Code of Conduct and Honourable Behaviour by doing so. But there's no doubt in my mind it's a greasy practice, and I honestly don't see how a few extra bucks per console justifies the negative publicity and potential bad feelings that could result.