Thought this was Interesting

[97thruhiker]

In the holiday shopping spirit I thought this news story was interesting.

http://arstechnica.com/journals/thumbs.ars/2007/12/21/slackers-employees-explain-wii-scalping-business

[ChadTower]

Eh, I just don't see a reason to be outraged.  It's not a vaccine.  It's a consumer electronic.

[97thruhiker]

I didn't say I was outraged, not sure where you got that from.  Thought it was interesting with all the shopping stories you always seem to hear about this time of year.

[tommy]

I'm outraged. Retail stores are not supposed to scalp their stock to the highest bidder.

[SavannahLion]

I'm outraged. Retail stores are not supposed to scalp their stock to the highest bidder.

Then what's markup?

MSRP is just that, a suggested retail from the manufacturer. As far as I know, there is no obligation by anyone to actually sell it at that price.

I don't agree with it, I don't think it's right. But what are you going to do? Go home and cry to Nintendo on the phone?

I was ---smurfing--- pissed when stores were selling then brand new Xboxes and PS3's as bundles at nearly double the MSRP of the standalone with no option to buy just a core unit (despite the fact the consoles sold were core units). It was such a ---smurfing--- rip off that people were buying the bundles and returning the extra crap until the stores caught on. But in the end, what are you going to do? There is nothing anywhere that says this can't be done.

[tommy]

I'm outraged. Retail stores are not supposed to scalp their stock to the highest bidder.

Then what's markup?

Markups are not an auction, It maybe a bit more then the suggested price but I can deal with that. It's also not taken out of the stores where people should be able to buy these things and have no choice but to get ripped off if they really want to buy it.

It's almost like selling water to thirsty people at a high price who really need it. It's not right for a store to do. An independent person can get away with it but not a store, they shouldn't anyway.

[danny_galaga]

I can't believe you have a retail chain called slackers. Do they not work very hard?

[shmokes]

Frankly, I prefer the auctioning to the bundles.  Something about it strikes me as more up front.  I mean, sure, I'd rather pay MSRP.  And, in fact, I'd just go without the item rather than pay extra in an auction.  But bundles irritate me far worse.  The retailer is doing EXACTLY the same thing, but they're also insulting your intelligence by pretending that they're doing something else.  I don't know.  The retailer is well within its rights to engage in either practice, but something about bundling gets under my skin worse than hocking the stuff on eBay.

[bishmasterb]

Wiis are worth more than $250. Would any of us voluntarily sell something we owned for far less than it was worth? Of course not. So we shouldn't be surprised when a retailer does the same thing.

Frankly, I'd have no problem with them simply marking them up inside the store as it would save lots of time for those willing to pay the price from having to track them down on eBay or elsewhere, but I understand their reasons for going the clandestine route.

[ChadTower]

Frankly, I prefer the auctioning to the bundles.  Something about it strikes me as more up front.  I mean, sure, I'd rather pay MSRP.  And, in fact, I'd just go without the item rather than pay extra in an auction.  But bundles irritate me far worse.  The retailer is doing EXACTLY the same thing, but they're also insulting your intelligence by pretending that they're doing something else.  I don't know.  The retailer is well within its rights to engage in either practice, but something about bundling gets under my skin worse than hocking the stuff on eBay.

It took me quite a while to find a bundle that included only things I would have bought separately anyway.  Most of them are 3-4 crappy games I'd never buy.  Finally I found one that was "choose any 3 from this list" and I chose Super Mario Galaxy, Super Paper Mario, and a nunchuk.  I may not have bought those two games immediately but I definitely would have bought them before their prices started dropping.

[SavannahLion]

Markups are not an auction, It maybe a bit more then the suggested price but I can deal with that. It's also not taken out of the stores where people should be able to buy these things and have no choice but to get ripped off if they really want to buy it.

I repeat, stores are under no contractual obligation to sell merchandise at a physical brick & mortar store. Nor are they under any obligation to sell such merchandise at a reasonable price. If the price is pushed up too high, then people simply won't buy, it's that simple.

Do I think it's always the right thing to do? No, I don't. But I'm not going to ---smurfette--- about it because the same mechanism that allows stores like Slackers to rip people off also allows other stores to under sell their competition.

It's almost like selling water to thirsty people at a high price who really need it. It's not right for a store to do. An independent person can get away with it but not a store, they shouldn't anyway.

Again, it's an issue of supply and demand. Have you seen the soda vending machines with thermometers built in? As the temperature rises, the machine will actually bump the price of a soda up to whatever the vendor specifies. One machine I spotted was charging almost $1.50 per can when the weather got too hot. Right now, with the rain and the cold, I believe the same machine charges something like .60 or .65 per can. I remember how pissed I was when I encountered that machine for the first time.

I agree it's not right, but trying to change that kind of mechanism violates the entrepreneurial principle this country depends on.

[ChadTower]

People really need a Wii in the same manner thirsty people need water?  Seriously - it's a game device.  It's not clean water or medication.

[bishmasterb]

IANAL, but I don't think it's legal for manufacturers to set retail prices (price fixing). Even with Saturn dealers, GM could only apply rules that said they had to have a fixed-price (no negotiating), but they couldn't tell the dealers what price they could sell cars for.

The reason I assume you don't see very much price differentiation BELOW the MSRP is because the margins are tight. And I assume the reason you don't see very much price differentiation ABOVE the MSRP is because the MSRP is so well advertised and consumers are typically very aware of it, and charging a premium would cause anger among consumers (see this thread!).

[slycrel]

For me, I really don't give a rip if they're selling wii's higher than MSRP.  I do care that they are lying to people that they don't have them in stock and are instead selling them on ebay.

Yeah, thjey can do whatever they want in that regard.  I am just surprised they feel the need to lie about it.  That implies that what they are doing is wrong or in some way, shape or form needs covered up.  And if that's the case...  is the potential loss of reputation worth a few hundred bucks?

[Spaz Monkey]

Remember, it's the mfg's SUGGESTED retail price.

[SNAAKE]

wii is still hard to find ? I saw like 30 of em at best buy last week 

[SavannahLion]

wii is still hard to find ? I saw like 30 of em at best buy last week 

It's probably regional distribution issues. In my city, every store I've checked out don't have enough and half of them have purchasing restrictions. ie, one wii per person per day.

[SavannahLion]

IANAL, but I don't think it's legal for manufacturers to set retail prices (price fixing). Even with Saturn dealers, GM could only apply rules that said they had to have a fixed-price (no negotiating), but they couldn't tell the dealers what price they could sell cars for.

The reason I assume you don't see very much price differentiation BELOW the MSRP is because the margins are tight. And I assume the reason you don't see very much price differentiation ABOVE the MSRP is because the MSRP is so well advertised and consumers are typically very aware of it, and charging a premium would cause anger among consumers (see this thread!).

No, I think this is incorrect re video games.  Also look at magazines and newspapers... I think the situation is the same.  Retailer doesn't really own the goods, they just facilitate the sale and take a margin off the top, and then the distributor takes back unsold product and does something else with it.  I'm sure once a game gets old, the situation changes.

I'm not talking about premiums, I'm talking about this is the reason Wal-Mart doesn't clear out dud games at $30 when they're two weeks old.

Err.... No. AFAIK, that business model for video games hasn't been around since the NES days. Retailers buy their stock prior to sale. Manufacturers can buy back their stock if they so choose, but they're generally under no obligation to do so. And sorry, Wal*Mart does clear out their games from time to time. In fact, Wal*Mart has a clearance bin filled with nothing but poor selling games at $5 to $15 a pop.

Most stores do employ a similar model to what you're describing. However the store does own the goods once it is in their posession. There is a business model (I can't recall what it's called right now) where they either get credit for damaged merchandise (common) or the manufacturer buys back the merchandise (rare). From most manufacturers, there is usually a monthly limit to this quantity based on the merchandise purchased. This prevents a retailer from returning their entire stock if it doesn't sell (though this isn't unheard of either but it is not nearly as common as what Nintendo did during the NES cycle).

This is why sales numbers from companies like Sony and Microsoft tend to be heavily skewed. They're not counting actual consoles sold at the retailers, they're counting consoles sold to retailers.

The difference is minor on paper, but it makes a world of difference in terms of who gets what in profits and where stock goes.

[ChadTower]

In fact, Wal*Mart has a clearance bin filled with nothing but poor selling games at $5 to $15 a pop.

When they're two weeks old?  Show me where.

[SavannahLion]

In fact, Wal*Mart has a clearance bin filled with nothing but poor selling games at $5 to $15 a pop.

When they're two weeks old?  Show me where.

That's out of context.

And sorry, Wal*Mart does clear out their games from time to time. In fact, Wal*Mart has a clearance bin filled with nothing but poor selling games at $5 to $15 a pop.

Wal*Mart does eventually mark down titles. Come to think of it, a two week markdown on titles is a bit of a exaggeration. Stores sit on some ridiculously crappy titles priced out at MSRP for months before marking them down. There's a shop downtown that sits on titles so long, they're covered in thick dust before the owner marks them down. Picked up a MIB B&W Gameboy title for $5 that had been sitting there for God knows how long.

Edit: fixed spelling.

[Green Giant]

wii is still hard to find ? I saw like 30 of em at best buy last week 

If I saw 30 of them I would probably buy 20 of them and turn around and sale them on ebay.

Just did a quick check and the lowest price I saw them going for is $300 for the stock system not including shipping.  If you had all 30 of them thats a cool $1500 minimum profit, probably closer to $2000.

[ChadTower]

Yeah, if he had up 7.5-8 grand available to do it (depending on sales tax).

[SNAAKE]

wii is still hard to find ? I saw like 30 of em at best buy last week 

If I saw 30 of them I would probably buy 20 of them and turn around and sale them on ebay.

Just did a quick check and the lowest price I saw them going for is $300 for the stock system not including shipping.  If you had all 30 of them thats a cool $1500 minimum profit, probably closer to $2000.

hmm...I didnt realize wii was still hard to find. that and I wouldnt take a chance with 20 wiis. I will probably get 4-5 next time I am at bestbuy though..they always have them on sunday and monday.