Why are Nintendo Wii's so hard to find?

By glblguy

Needle in a Haystack?
Photo by Curugon

Have you been searching in vain for a Wii? We have, and every store we visit is out of stock. Finding one is like finding a needle in haystack. We get one of two responses 1) “We receive our shipments on Sunday mornings, so come early” or 2) “They are drop shipped to us and we have no idea when we will get them. Just keep checking with us“.

The following weekend we headed over to Best Buy an hour before they opened to try and get a Nintendo Wii. We spoke with a Best Buy sales person who said they had already given out all of the tickets more than an hour before. I headed next door to Target to see if they had any and was given answer #2. She did tell me that she came to work at 5:00am that morning, and there was already a line of people around the side of the building at Best Buy. I decided at that point a Wii just wasn’t worth it and needless to say, I was frustrated.

The Nintendo Wii was introduced well before Christmas last year. Given the high demand, I expected them to be in short supply last year; however, not a full 1 year later. The unavailability of a product both baffled and frustrated me. I decided that Nintendo must have extremely incompetent management and are complete idiots when it comes to managing their product and inventory. Seems I was wrong, they are in fact quite smart.

I decided to do a little research into why Wii’s are in such short supply 1 1/2 years after they were announced. Turns out the answer is found by looking at the history of Nintendo and the conservative way they manage their cash flow. A s many of you may recall, during the 1980’s, Nintendo was extremely successful and saw it’s fortunes rise as a result. Then, during the 1990’s the exact opposite occurred as it lost significant market share to Sony and Microsoft Corporation.

As a result, Nintendo now maintains an intense focus on cash flow and thus makes every effort to keep inventory of it’s products, including the Wii as low as possible. The result of course is consumers, like us, speculating that Nintendo is deliberately keeping the product in short supply to create more market hype and to keep the product in high-demand. Reggie Fils-Aime, president of Nintendo’s U.S. division says this isn’t the case and that Nintendo simply didn’t anticipate the current level of demand for the Wii. He also says that Nintendo is working hard with retailers and is making best efforts to ramp up manufacturing.

Providing a different perspective, supply chain management experts and consultants say that missed sales opportunities is still better than having excess inventory, which has bitten Nintendo in the past. Excess inventory causes the exact opposite effect of a shortage, as it gives the impression that consumers don’t want the product. As a result, companies automatically tend to err on the side of shortage rather than excess. Additionally, excess supply also angers retailers who have to work harder to sell the product and as a result frequently have to lower prices. Manufacturers also suffer in they often also have to lower prices and even buy back excess inventory.

Unfortunately for us the consumer, it’s far better for the manufacturer and retailers to have a shortage. Having us begging for the product is a far better position for both of them to be in.

Let’s return to the Best Buy on Sunday morning. It turns out that Best Buy gives out tickets based on the number of Wii’s they have. The tickets are handed out well before they open and one ticket is available to each person. After a little digging, I’ve found out that what people are doing is bringing their whole family, friends, etc. and getting multiple tickets and thus multiple Wii’s. They are then listing these on eBay for a significant profit. Retail list price for a Wii is $249. They are selling like hot cakes on eBay for $500.00+ right now. I would suspect as we get closer to Christmas that will only increase.

Did you get a Wii for Christmas? If so, let’s hear your story. Did you pay list price? What are your thoughts on Nintendo’s inventory practice?

Source: Wall Street Journal

28 Responses (including trackbacks) to “Why are Nintendo Wii's so hard to find?”

  1. chris Says:

    I got one at Target – just like you said (early Sunday morning, but BEFORE the holiday rush). I was tempted to get two and sell one on ebay, but alas, I didn’t and now I regret it. I think the company is smart and that the consumers should take after them. Watch your cash flow, don’t overspend when the future is unstable, go for the sure thing…..

  2. Patrick Says:

    Excess inventory can be a HUGE problem in tying up cash flow – especially for high dollar, slow -moving items. As far as the Wii goes, I’m sure this is a calculated move on Nintendo’s part. Shortage of suply keeps demand high and ensures they sell out, which is much better than the perception that no one wants the Wii and they don’t sell at all. I do think Nintendo erred a little bit by creating such a huge secondary market for them.

    Now, if you want to pay for all your Christmas gifts, you know what to do – load up your family and buy about 5 of them for resale!

  3. Erin Says:

    We got a Wii for my boys for their birthdays this summer (their birthday are days apart so it was a combined gift).
    I just happened to be in Target fairly early (maybe 10 am or so) one morning and they had them- about 12 of them. I bought one. My husband and I came back later that day for something else and they were out already. And that was in July; on a Friday I think. I paid regular price.

    It really stinks that people have to go through so much to get them.

    But they are a lot of fun! Maybe you can put a picture of a WII in a box? I KNOW, it’s not the same thing…

    I hope you can find one before Christmas.

    Can you try getting to a store early on a weekday?

  4. Justin Says:

    It’s funny how time feels longer than it is, the Wii was released late November of last year, the 19th.

    As for scarcity, I can’t blame Nintendo at all, before launch it was poo pooed as the specs are nothing to write home about, especially when compared to the PS3 and Xbox 360.

  5. glblguy Says:

    Chris, very true. it’s always interesting how basic finance principles apply.

  6. glblguy Says:

    Patrick, trust me we had thought of that. Be my luck though I would end up with an excess of Wii inventory which would effect my cash flow :-O

  7. glblguy Says:

    Erin, the Wii was going to be a joint gift for my wife and I. Our kids all asked for an XBox 360. Good deal for us really as it is a shared gift across 4 of our 6 children.

  8. glblguy Says:

    Justin, good catch…but note I said announced not released :-) I don’t blame them either, now that I understand the underlying reason. Makes good business sense for them. Once bitten, twice shy.

  9. Laura Says:

    We got a Wii last November. A friend of ours was waiting in line for the PS3 and we gave him the money to buy a Wii. My mom got hers about 6 months ago. She has a friend who works in Wal-Mart. My mom literally had a 10min. notice ot get to the store. She made it the 2nd time and got a Wii.

  10. glblguy Says:

    Laura, it’s amazing. We missed being able to get one about 2 months ago by like 10 minutes. Oh well, eventually I guess.

  11. debtdieter Says:

    I’m amazed to see these posts about the Wii’s being such an in demand item popping up. I’m wondering if it’s a US-centric thing or if it’s the same here in Australia. I think I’ll have to find out!

  12. glblguy Says:

    debtdieter – Let us know what you find out!

  13. boomeyers Says:

    Costco, baby, Costco! I caught on last year after driving in vain from store to store for the Nintendo DS Lite. In frustration I rolled in to Costco to give it a look. They had plenty in every color!! I got the Wii there for my daughters and there were plenty. Last year I also got that crazy Elmo doll that everyone was selling on ebay. Try the club stores!!

  14. glblguy Says:

    Thanks boomeyers, I’ve called Costco and checked at Sam’s every weekend, no luck. Thanks for the suggestion. Resigned at this point to just get one after Christmas.

  15. Jayman Says:

    We got ours the day after Thanksgiving. For about two weeks we called every gamestop and ebgames and Target in our area everyday when their shipments were supposed to be in…no luck. Finally, we just bit the bullet, got up really early on Black Friday, and we got the very first voucher. I have heard the tip about Target especially. Same goes for Meijer, but Meijer is a regional store. But Target and Toys’R’us has them almost every Sunday, if you get there early enough you should be able to pick one up.

  16. glblguy Says:

    Hi Jayman, welcome to Gather Little by Little. Wow, you got one on black friday, you should be proud! Thanks, maybe we’ll make the rounds before Church this Sunday and see what we can find.

  17. FinanceAndFat Says:

    The Wii stats are incredible. They make up to 1.8 million per month and can’t keep up with demand. I really think they legitimately underestimated demand. I had no interest at all int he Wii when it first came out, but after I played it I had to have one. I think the Wii has ‘gone viral’ unlike any other game console in the past.

    I’ve heard production should catch up by April. I hope you can find one before then!

    I’ve actually been tempted to sell my Wii now and buy an Xbox 360, then get another Wii when they are easy to find again. I’m still debating that one…

  18. glblguy Says:

    FinanceAndFat – I agree on your “gone viral” comment. We talked a little tonight, we’ll just play the XBox 360 we got our kids until the Wii’s are available :-) It will be tough, but I’ll survive!

  19. Jennifer Says:

    Nintendo is not the only manufacturer doing this-it seems everyone is lately. It’s rare to be able to buy a couch and not have to wait for it to be shipped in to the furniture store-they don’t floor them because they have to pay a flooring company. Instead they order them from brand company, who orders it from the warehouse. Often the warehouse is out though (backordered) and you then wait for the next batch to be built before you get it. The couch I wanted was on the sales floor at 4 different stores within 30 miles of my house, but no one could get one into my house faster than 4-5 weeks.

    We waited for our couch on backorder for an extra month. Our new blinds were supposed to be in in 2 weeks. We ordered them well in advance of Christmas, but we won’t see them for another month now at least, because the backorder has been back ordered. Companies aren’t willing to take risks or pay overhead.

    My big frustration with this is that orders are being shipped on convenience priority for the companies, not on a first-come first-served basis for the customers. If 5 people in 5 different states order Ashley couches, and there are 5 couches in the warehouse, they will be earmarked for those 5 customers–unless one store/region orders 3 of them. The company will ship to the bigger order in one place, and only send the remaining 2 to the other customers who have been waiting. 3 people will have to have their order back ordered even though they ordered first, and the computer was showing it as “in stock and ready to ship” when they placed the order.

    Both my couch & my blinds were in stock in the warehouse when I ordered them. Unfortunately in both instances one location placed a larger order elsewhere, and their order was shipped, and mine was placed to the backorder list. This happens more than you think and the retailers have little control over it. Many like Home Depot have been changing to a drop ship method on orders so they don’t have to deal with the irate customers and can refer their complaints directly to the warehouse.

    The large retailers are turning into a face-to-face version of a catalog/mail order store for any large or expensive items. They stock a floor model and place your order for you with the company. They take a cut, but they don’t take the risk an item won’t sale. The company doesn’t want the risk either so they don’t manufacture enough items to meet demand-in case demand changes.

  20. glblguy Says:

    Jennifer, great comments and thought provoking. I guess this is all due to companies having to run leaner and meaner to stay competitive and keep their earnings up. This is particular true of brick and mortar stores that have to compete with online vendors.

    It is very frustrating, but I can see why they do it this. Once bitten twice shy I guess.

  21. Jeff Says:

    Our family ended up with a Wii before Christmas as a gift to the whole family. It was inspired by my oldest (8 yrs old) daughter asking for one for Christmas.

    My wife went to a local GameStop who had just got a shipment in that morning but was selling pre-ordered units. The pre-order even came in a little box for under the tree, however the next day we got a call that our wii was in and were able to have it wrap for the kids.

    I have to say that while I’m not a huge gamer, the wii is an amazing gamin machine. We got the bundle package that came with wii sports and I was amazed at how sore our bodies were from playing the previous day. (Boxing is a great workout.)

  22. glblguy Says:

    Hi Jeff, thanks for the comment. We decided to wait until after the holidays to get one. We’re hoping they will be a little easier to find here soon.

    You’re right, boxing is a great workout! After all I ate during the holidays, I need a workout! Told my wife the other night I need to start another blog called “Gaining Weight Little by Little” :-) Hope you had a wonderful holiday!