Nintendo vs. the Scalpers: For Great Justice!

Nintendo vs. the Scalpers: For Great Justice!

In the video game industry, the scalping of hard to find items is nothing new. Collectors or Limited editions of both hardware and games are put up for pre-order, subsequently grabbed up en masse by third party resellers and quickly dumped onto sites like eBay and Amazon at insane markups. For regular consumers, sourcing these items becomes quite frustrating on a couple fronts: initially in not being able to find products through normal channels and then subsequently having to pay 3 to 4 times more to actually acquire them.

In particular, Nintendo products often represent the scalp du jour for resellers. Though the issue has persisted for quite awhile, last years release of the NES Classic Edition really brought the matter to the forefront. This product had scant pre-order availability in the U.S. and sold out in a matter of minutes. Without any sort of quantity restrictions scalpers were able to deplete pre-order stock incredibly quickly, then immediately turn around and post their ill-gotten gains on reseller sites at sky high profit margins. I never did actually see an NES Classic on store shelves at release or otherwise… plenty of them in stock on eBay and Amazon for triple MSRP though.

With the upcoming SNES Classic Edition, I’ve got to conclude that the situation will remain unchanged. So far, pre-orders are almost non-existent and those that do appear sell out in less than a half hour. Once again, there appears to be no concept of quantity restrictions allowing grey market resellers free reign to pre-purchase large quantities of units with the sole intent of immediately selling them at double and triple the asking price.

One might say that this practice is fair… in fact, it’s capitalism! To be honest, I have no issue with charging a premium (perhaps even an exorbitant one) on a hard to find, possibly out of print item. This is especially true if the item had been specifically branded as limited edition or similar. What I do take issue with is the same practice being permitted on wide-release, pre-order items. Under the current system, the average consumer has effectively zero chance at purchasing these products through normal channels. The concept of supply and demand ultimately dictating price is fine, but when scalpers are effectively controlling (or at the very least, significantly disrupting) the supply side of the equation it’s not a level playing field anymore.

So how do we fix the problem? Well, it starts with Nintendo understanding that consumers ultimately drive sales for their products, not scalpers. Demand for the NES Classic, SNES Classic, and even the Switch is derived from the fan base and other interested parties, not grey market resellers who have zero long-term interest in what they’re selling. While I’m sure Nintendo’s shareholders are enamored that initial quantities of hardware sell out in rapid fashion, much of it is at the expense of real customers looking to source the products for personal enjoyment. The persistence of this behavior should not be looked at in a positive light, let alone being relied upon as an acceptable long-term business strategy.

Once Nintendo gets it, the next step is for them to universally limit pre-order quantities to 1 per person, credit card, and/or shipping address at retail sites. Although this alone will not put an end to scalping, it will handicap the ability to purchase from a single retailer en masse. The strategy is particularly effective if the retailer in question is a popular, national chain that likely receives the bulk of pre-order stock anyway. Units purchased solely for scalping decrease dramatically if only 1 console can be purchased from an online retailer during the pre-order period as opposed to a half dozen or more per transaction.

Another idea speaks more towards Nintendo’s (antiquated?) way of manufacturing and releasing hardware into the marketplace. In short, the company has shown to be very (overly?) cautious regarding how much they make of a product at any given time, particularly during initial release. This line of thinking represented much of the problem with the NES Classic Edition and was instrumental in that systems unavailability through normal channels and exorbitant markups on eBay and Amazon.

In 2017, Nintendo should be progressing towards pre-order availability directly through their website. If timed correctly, this will allow the company to know precisely how many units to manufacture before launch. Pre-order rules for the customer are simple… 1 per customer, credit card, or shipping address, full price must be paid upon order, no refunds. Of course, replacement warranties for defective product would still apply. Folks who truly want the system for personal use, not potential resale value, should be fine with these rules. Once a product is officially released, all of these restrictions can effectively go away.

The point is that scalping of Nintendo products has become increasingly worse over time and it’s up to the company to, at the very least, make efforts to do something about it.  Communicating these efforts to consumers would also go a long way into identifying the problem, if not correcting it.  With each new release the unavailability and subsequent scalping of their hardware is becoming a larger and larger problem. For literally decades, the company has remained unresponsive. At some point potential customers will effectively give up on sourcing their products at launch, tire of paying incredibly high markups to resellers, or refuse to wait half a year or more until stock is (maybe) replenished. Through consistent inaction, Nintendo has allowed scalpers to negatively impact its customer base for far too long now. Perhaps they will become more responsive if/when the fallout from scalpers begins to negatively impact the bottom line. Perhaps by then it’ll be too late.

One thought on “Nintendo vs. the Scalpers: For Great Justice!

  1. I think there are altruistic and not so altruistic motivations to curb scalping. Some music artists are legitimately upset that their fans are being gouged. Others are simply upset that a lot of money is being made off their brand and they’re not seeing any of it. If Nintendo isn’t acting based on one I’m surprised they aren’t acting on the other…

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