What do companies (specifically Nintendo) gain from limited stock?

Avallon

Avallon

Member
BOTW figure-locked dlc has made finding certain amiibo impossible. As a result, reseller prices are shooting through the roof. $50+ for a Smash Link amiibo is insane.

A similar thing is happening with the Switch itself. The console is marked up and selling quite successfully on eBay.

What benefit does Nintendo get from this? Sure, the products are in-demand, but without enough supply to meet said demand, the only ones profiting are the scalpers.

Many have claimed artificial scarcity, especially when it comes to amiibo/NES Classic/Etc. Am I missing something here, or is it just a case of actually not being able to keep up with demand?
 
Free cash flow. It's expensive to tie up resources in inventory. Also limiting initial production runs potentially allows for minor changes in subsequent batches to fix issues (like scratching for instance).
 
I missed out on getting an amiibo for under 40$. Now I feel the need to get all of them cause I don't know what I'll want later. That's why.
 
I didn't get a Switch launch day because I had to work.
Went out the next day to Target right when they opened for normal grocery shopping and saw they had them, so I jumped on it, not knowing if I'd be able to find one later. I personally feel lucky. Probably a bad example of patience. :)
 
Artifical scarcity is a myth.

Nintendo doesn't "gain" anything they just want as little excess as possible to minimise storage costs.
Also after the WiiU failure retailers probably ordered less Switches.

BronsonLee said:
Also yup
Click to expand...

Very questionable. If I'm torn between buying a Switch and not buying a Switch and the things are hard to get it's much more likely that I just wait. The longer a customer waits, the higher the risk that he changes his mind.
 
iMax said:
Customers are generally more likely to make impulse purchases when stock is limited.
Click to expand...

This. Hype train.

Also surges stock prices. Stock buyers who have don't have a finger on the pulse of the industry have no idea how many unit sales make up a successful launch, but if they hear that the demand is so powerful that production can't keep up they see it as attractive buy.
 
They probably don't produce at 100% output 100% of the time because they don't want to make products that sit on shelves. Stores also probably don't order amiibo based on what it does but are skittish after Animal Crossing failed to sell and had to be deeply discounted.

Smash amiibo were also inefficiently produced and some required hand-painting.
 
In the case of amiibo, everyone is having Zelda fever right now. The 30th anniversary amiibo launched back in December and for about ten weeks they sat on shelves waiting to be purchased. It's only because Zelda is in the front of everyone's minds right now that they're hard to find.

It's the Villager and Wii Fit Trainer amiibo all over again...they were everywhere until someone said "Oh hey these might be discontinued" and then suddenly they're the hot thing to find.

Avallon said:
Don't overpay for that one. They're everywhere.
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$6 on a Wal-Mart clearance table last night. (Also found a Boo amiibo for the same price.)
 
Smash Link amiibo were on clearance like a month ago. Why would they keeping the factories pumping them out if there's no longer any demand?

Should they have predicted demand better with BotW coming out? Probably. Would have been a lot smarter to have the shelves full of Links and Zeldas for launch.

amiibo stock has been feast or famine since the outset. Scalpers go hog wild half the time and, they clog shelves the other half. Nintendo just doesn't know what they're doing there.
 
Omg. They have nothing to gain. They lose sales and create frustration and bad will.

Nintendo is super conservative with production and supply. Why production? Expanding capacity is risky and expensive. You dont want to do it for temporary spikes (launch). Instead you try to build up a surplus before launch... but then you have less time to modify final design. It's a tradeoff.

Now. Nintendo is also fairly conservative with supply? Why? They don't want to overship and devalue their brands if their products are discounted at retail.

Nintendo has issues when it comes to understanding demand for their products. They made the Wiiu after all. This meme that somehow scarcity generates demand needs to die. If it were true, every company would do this for every product. They all want to make as much Money as possible

Want to improve the situation? Preorder and or dont buy from scalpers.

The problem seems particularly bad for Nintendo because they SUCK at communication. They don't clarify if something is a single batch or more is on the way. This leads to people freaking out. That's what happened with NES mini and amiibos. More amiibos generally came (see splatoon).
 
Animal Crossing amiibos will be the hottest item when items x NES/snes/n64 games are locked behind animal crossing amiibos

They have sat on shelves since their release too
😈
 
boiled goose said:
Omg. They have nothing to gain. They lose sales and create frustration and bad will.
Click to expand...

Yep
Also they make money on Software but only if people own the hardware. It is in Nintendo's best interest to meet demand as much as possible. I went to a general store today and they had like 20 Switches. It's pretty normal to be sold out on the first couple of days, that has nothing to do with "artificial scarcity".
 
Avallon said:
Right, but how does that help the company. It seems like that would just benefit scalpers.
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Making a limited amount for a guaranteed profit is better than making a shitload of product that might not sell out and lose money in the long run. See also: Animal Crossing amiibos. Nintendo isn't your best bud, it's a corporation that has to turn a profit.

I mean really, it's a pretty basic concept.
 
Nothing. Nintendo is simply very worried about overstocking, which often leads to demand being higher than supply.

There is no evil masterplan.
 
DeathoftheEndless said:
Its better to underestimate production than overestimate.
Click to expand...

See: Disney Infinity

Avallon said:
Right, but how does that help the company. It seems like that would just benefit scalpers.
Click to expand...

With regards to the Smash Link Amiibo, it doesn't really help Nintendo unless the new demand causes them to do a reprint of it. However, for Amiibo overall, it does seem like good business strategy for Nintendo to encourage the purchase of them for potential benefits in the future. I'm not a Smash player, but bought the Smash Link Amiibo a year ago pre-owned at Gamestop during a sale for $5 or $6, just because I love the Zelda franchise. It's really nice for that purchase to pay off in a relatively big way with its integration into BOTW.
 
I don't think the Switch is limited stock... When a new product launches and there is high demand you cannot always fill it. A lot of the older amiibos were not in demand last month, so why would you increase production? I'm glad most gafers don't run a business because you'd guys go bankrupt in a hurry.
 
It can work and it may have worked with the classic to switch (as they seemed to have planned)

and no matter what (with the sales they got) rather they fail or not from here

Nintendo will keep doing it cause they believed it worked anyways.
 
Amiibo's are definitely artificially constrained, the Switch is not.

No tech company would purposely constrain the product that gets people onto their platform. It's not feasible to manufacture 20 million units for launch and pray that they sell. That's how bankruptcy happens. If Nintendo thought for 1 second the demand would have been this high they would have had more units on the shelves.
 
You would think that the run on NES Classics, and the buzz created by no one being able to see them in a store regularly at all, would have a big effect on a person who was on the fence about a Switch purchase. They may have waited or held off otherwise, but the frenzy plants a seed a seed in their head that makes them think "better get one now while I can..."
 
liquidfox00 said:
Amiibo's are definitely artificially constrained, the Switch is not.

No tech company would purposely constrain the product that gets people onto their platform. It's not feasible to manufacture 20 million units for launch and pray that they sell. That's how bankruptcy happens. If Nintendo thought for 1 second the demand would have been this high they would have had more units on the shelves.
Click to expand...

I don't think anyone is saying the switches are as of launch (if they are well how to do that) but for them to be or at least try to do it is likely for Nintendo.
 
mattiewheels said:
You would think that the run on NES Classics, and the buzz created by no one being able to see them in a store regularly at all, would have a big effect on a person who was on the fence about a Switch purchase. They may have waited or held off otherwise, but the frenzy plants a seed a seed in their head that makes them think "better get one now while I can..."
Click to expand...

Citation needed.
 
It's the funniest thing, because these amiibos were literally sitting there in mass quantities for weeks/months/years, individually or in packs, for like $10. They were the farthest thing from scarce or artificially limited. The Link Smash amiibo was probably the easiest one to get...didn't they even re-release it because of some issue with the original version's stand or something like that?

A little hype gets behind them, resellers get to buying them up, and then people are complaining about amiibo scarcity now.

I'm sure it'll be back in stock eventually, or re-released like Nintendo's products tend to be.
 
gauge demand
save money on storage and shipping and toher transactional things
less upfront investment to get a thing launched

having worked for a company that increased shipments of a much cheaper thing, i know it can be a huge, huge logistical nightmare to double or triple shipments and sometimes the cost per shipment of item can more than double or even triple once broken down. I can't even imagine assembly and component manufacturing. It must be a nightmare.
 
Supply Chain and cost estimation vs demand. You don't want to over produce and have shit sit in a warehouse where storing your product you already manufactured is costing you more than actually dumping it. Control your output, control you cost and revenue then adjust if the market demand requires it.

Artificial demand is a thing but it's not this wide spread tactic people think it is. Especially in the fucking toys market where hits are not long burners generally.

I wonder of some people who think its artifical have ever worked in a factory where your product literally is sitting on the shelf. Its fucking stressful. And depending on the industry you dont want to build excessively ahead of schedule. You get problems with mass manufacturing before hand.
 
Demand exceeding supply is better than supply exceeding demand, from the seller's point of view. You can always make more if the demand is there, but unsold stock that nobody is buying is wasted money.
 
ShockingAlberto said:
They probably don't produce at 100% output 100% of the time because they don't want to make products that sit on shelves. Stores also probably don't order amiibo based on what it does but are skittish after Animal Crossing failed to sell and had to be deeply discounted.

Smash amiibo were also inefficiently produced and some required hand-painting.
Click to expand...

This is pretty much it. Nintendo had a problem with overproducing too many Wii Us and having those sitting on store shelves for years. Whenever I went to my local Best Buy the same three Mario Kart Wii U bundles were just always there.
 
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