Nintendo Torpedoes The Wii Grey Market

wiigreymarket.jpgTwas the month before Christmas and all through the land,
Not a single retailer had one Wii on hand...

More like the year before Christmas, actually. An entire year where not a day went by that hundreds of electronic and gaming retail employees didn't have to negatively answer the same nagging question. "Do you have any Wiis in stock?" Even though the console sold relatively briskly in the year following its launch, getting your hands on one meant you either won a contest, knew someone who worked for a retailer, shadowed UPS trucks or were just plain lucky.

As the holidays season started heating up, things looked bleak for parents and gamers looking to get their hands on Nintendo's tiny, motion-controlled console. Rumors of chip shortages ran rampant, and I personally was certain that the eBay grey market price for the hot gift item would far meet if not surpass the highest numbers seen during the initial late 2006 release window.

Miraculously that never happened. At the very last moment, in a series of moves that gained them criticism from fans, Nintendo managed to pull together enough supply to curb the often ridiculously inflated eBay demand before it was too late.

Rising...Slowly

As you can see from the chart, back in early November the Wii was selling for a relatively modest price on the world's largest online auction house. While $US 350 is still $US 100 than the retail price of the system, the markup isn't quite as painful as it could be. Then the Christmas panic sets in.

By November 21st the price has spiked to $US 459...nearly double the retail cost of the system, and with a few fluctuations the price stays solidly about the $US 400 mark. Perhaps consumers hoping to avoid the Black Friday rush 2 days later were trying to get a leg up on things, causing the price to reach this high of a point. Either way, things were looking pretty grim for parents and fans hoping to get their hands on a Wii without getting fleeced by eBay resellers - until one day.

Reggie Spreads The Word.

On December 14th, Nintendo President Reggie Fils-Aime held a conference call to address the growing problem of Wii shortages, detailing the companies plans to get customers matched up with systems by any means necessary. First came the raincheck system, which allowed customers a chance to pre-purchase the machine at GameStop stores across the country, with the understanding that they would be guaranteed a system by the end of January.

Then he announced that seven retail outlets - Best Buy, Target, Wal-Mart, Sears, Kmart, Toys R Us and Circuit City - would have the coveted consoles in stock that weekend, revealing that stores had been stockpiling the systems for a massive, last-minute flood.

While the rainchecks met with varying success due to limited ability, the flood of systems that weekend had a huge effect on the eBay market.
wiissold.jpg
Bursting The Bubble

On December 17th, according to my data seen on the chart above, 11,016 Nintendo Wii consoles were sold on eBay, for an average price of $US 368 - the first time the price had dropped below $US 400 in a month. As Crecente noted in a previous post, eBay was positively slammed with Wiis, bringing the average price down and significantly lowering the normally high auction success rates on the console. Folks looking for a huge payoff still made a little dough of course, but nothing like the windfall they were expecting when they rushed out over the weekend to snag the systems for profiteering purposes. By the time Christmas Eve hits, the consoles are dollars away from the lowest price since November started.

Conclusion

As of this writing I cannot say if this was a calculated move by Nintendo to thwart the profit-hungry eBay grey market or simply a happy side-effect of a last-ditch effort to save face in the eyes of consumers worrying about where the product they wanted to purchase was, but Reggie's press conference and the subsequent console flood neatly nipped in the bud what could have been a terribly expensive Christmas for families looking for a little motion-controlled joy. Whatever the case may be, the end result is a small victory for the hardworking folks out there more worried about the smiles on their children's face than the thickness of their wallet.

Nicely done Nintendo.

While Nintendo declined to comment for this story, back during Fils-Aime's December press call he did address the issue of Wii gouging.

"We are always very disappointed if we see retailers that are pricing the Wii or any of our products above the MSRP price."

How I collected the graph data:
To track eBay sales for the Wii I once again used a website called Terapeak, which is of of the most trusted eBay market research tools available. I looked at data for the US eBay site each day utilising the keyword "Nintendo Wii" in the Video Games/Systems category. I set the price range for $US 200 through $US 10,000 to weed out any artificially inflated auctions as well as any fake buying guide auctions. Keep in mind that the results are still in part tainted by systems including games and extra controllers, but I believe the method I used obtained the most accurate results, all things considered.

As for the numbers sold chart, I used the same data, taking note of the "Items Sold" statistic for each day in the period.


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