The Wii Holiday Grey Market 3: When Supply Meets Demand

The Wii Holiday Grey Market 3: When Supply Meets Demand
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Nintendo’s apparent ability to meet demand this holiday season seems to have flattened the turbulent Wii grey market, with eBay sales of the console going for far less than in previous years, according to eBay sales data analysed by Kotaku.

Wii Fit resales, a popular add-on for the console, also seemed relatively flat, according to the data.

Nintendo and eBay have had an interesting relationship during the holidays over the past three years, so this year we once again revisit the Wii Grey Market to see if supply has finally met demand.

During the Wii’s first holiday season, prices were a bit out of control, with consoles easily going for many times the suggested retail price of US$250. Then in 2007, prices looked to be rising to record levels, until a last-minute infusion of systems from Nintendo successfully doused the fuse on what could have been an eBay explosion.

This year? Looks like Nintendo finally managed to catch up to consumer desire – or consumers finally got wise and didn’t wait until the last minute. Let’s look at the numbers for both the Wii itself, and its hottest holiday peripheral, the Wii Fit.

A Mild Holiday Season

As you can see from the chart above, things were relatively calm this year on the normally stormy Nintendo Wii eBay sea. Fluctuations in the market were far less drastic, with a difference of only US$32 between the lowest average price per console – US$284 – and the highest price, US$318 on the last day of the year. Numbers did see an interesting rise directly following Christmas on December 25th, perhaps indicating that a number of people waited until after the holiday rush to try and purchase a console online.

What’s more interesting than the numbers themselves this year, are the possibly reasons behind such an even line.

Nintendo Meets Demand: Simply put, there were plenty of consoles to go around, and no one felt the need to panic and pay exorbitant prices for a console that would be back in stock within days of disappearing. Many of the local stores in my areas were getting shipments as late as December 24th, and the local Fries outlet had stacks of their overpriced bundles available both before and after the holiday.

Consumers Get Wise: Instead of waiting until the last minute as they did the previous two years, consumers may have finally learned their lesson, picking up the console as a Christmas present before they were forced to spend hours driving from store to store in order to hunt for one.

The Economy: The downward spiral the economy is currently in could have very well been a contributing factor in the steady eBay Wii grey market. Prices on the consoles rarely spiked, and when they did, they were generally accompanied by a distinct drop in the percentage of successful auctions. Sellers tried to increase prices, but the buyers just didn’t have the cash to go crazy just to purchase a Instead of being gouged, consumers simply waited – which also could account for the post-Christmas spike.

So all in all, various factors could very well have contributed to the mild eBay Wii holiday season. Now let’s take a look at how the console’s hottest peripheral fared, with a look at the Wii Fit grey market.

It’s important to note that for this particular chart, the numbers have been gathered using a very general search for “Wii Fit”. This is due to the large number of bundles found on eBay throughout the holiday season, as well as the fact that people weren’t sure whether to categorize the item as an accessory or as a game. While the average prices seen above are indeed indicative of what the standalone product was selling for, the data does include bundles with the Wii console. Think of it as more as an indicator of pricing trends than a definitive look at Wii Fit pricing.

Once again, despite the rampant popularity and relative scarcity of the peripheral, the Wii Fit also enjoyed a relatively mild holiday season on eBay.

Supply was certainly low, so we can’t attribute this particular price trend to Nintendo, who earlier in the season predicted the Wii Fit would be hard to come by. Having eliminated that reasoning, we’re left with the remaining two factors that I speculated on in the console section of the article – savvy consumers and the floundering economy.

To see how closely the two pricing trends were related, I went ahead and combined the Wii prices and Wii Fit prices into one chart, which revealed a strong correlation between the two.
As you can see, the two products followed basically the same sort of trends, only with the Wii Fit perhaps a day or so behind the console itself. Looking at it from a consumer point of view, you could almost imagine someone purchasing the Wii, and then realizing they needed the add-on for it the next day.

The trends only really differ wildly towards the end of the season, with a huge spike in Wii Fit sales hitting first on Christmas Day, and then on New Year’s Eve, which could indicate that people who received the console as a gift immediately hopped online in order to score themselves a balance board.

The Conclusion

While it wasn’t exactly the most dynamic and exciting year for the Wii grey market, taken along with the two previous years the numbers paint a picture. They show that Nintendo is slowly but surely beginning to meet consumer demand, something they’d struggled with for a good two years. They show that while consumers are embracing video games more and more, the economy is keeping them patient, making them wait for an opportunity rather than succumb to the pressure to acquire something as soon as possible.

Of course this is all just analysis, which is basically studying trends in order to form an opinion, but after three years of pouring over these numbers I feel I’m beginning to get a pretty good idea of the underlying meaning behind those spiky coloured lines.

How I collected the graph data:
To track eBay sales for the Wii I once again used a website called Terapeak, which is one of the most trusted eBay market research tools available. I looked at data for the US eBay site each day utilizing the keyword “Nintendo Wii” in the Video Games/Systems category, while excluding certain terms in order to weed out bundled consoles (bundle, fit, extra, games, wiifit, and extras). 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.

For the Wii Fit data, I simply checked the video game category for the terms “Wii Fit”. Too many Wii Fits were included in bundles, scattered between different categories, and otherwise involved in bulk transactions to accurately gauge the item’s numbers without broadly generalising. The Wii Fit prices were gather more to determine price spikes than to deliver an accurate representation of going prices.

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