We’ve had a Wii at Red Renee World Headquarters for quite some time. We’ve recently been enlisted to help a friend acquire a Wii for his family. If you’re also looking for a Wii right now, you know that this can be a frustrating experience. We frequently check Costco, Sam’s, Wal-Mart, Target, Best Buy, Circuit City, even K-Mart, and yet as soon as any of the retailers get Wii’s, they’re gone.
Of course, the shipment of Wii’s” usually translates to only 10 or 15 units, which most employees that I’ve talked to say sells out in thirty minutes or less. The shipments come in on Friday or Saturday and go on sale Sunday morning. That Sunday morning, usually hours before the store opens, folks start lining up waiting for the morning manager to show up and throw open the doors for business. If the story were to end there, I’d be fine, but it doesn’t.
Most of those patient folks waiting in line (the Wii pimps) aren’t buying the Wii’s for themselves or their family, they’re buying the consoles to dump directly onto ebay. Again, ordinarily, I’m fine with this- I’ve stated frequently that I’m a strong supporter of capitalism and supply and demand. What doesn’t make any sense here is the inefficiency of what’s going on.
The console retails in stores for $249. According to one internet site, the consoles cost Nintendo about $156 to make and wholesale for $195.99- that’s a profit of roughly $40 per console for Nintendo. The consoles are selling for around $350 on ebay (thousands listed on ebay right now- go check). So ebay is making a killing on the listing fees and Wii pimps are making about $100 a pop every time they sell a unit.
What I can’t figure out is why Nintendo just doesn’t sell directly through e-bay. They’re obviously controlling the supply portion of the equation to keep demand high, but why would they cut themselves out of the $100 the Wii pimps are getting? It’s just plain inefficient. Nintendo could solely market through ebay and hold supply in check so that the price always hovered near $350 making them not only the additional $100 they’re losing from the pimps, but they’d also be recovering the $63 they’re losing to the retailers. Then they’d only have to cover the ebay costs which they could strongly leverage down through a sole distributor agreement.
I also don’t think the retailers are getting anything out of it- I doubt any of the people buying the Wii’s are buying anything else in the store.
Nintendo is losing, except for the $100 the Wii pimps are making is probably being spent directly on video games (and acne cream), retailers are probably only slightly covering their nut, and John Q. Public is definitely losing.
I say to Nintendo- skip the middle man and go straight to ebay. Let the free market decide there and quit forcing hard working folks to look for a product that doesn’t exist.
You’re welcome.
