Why retailers are slashing Wii U prices

#1Nice_Kirbyfan9Posted 3/16/2013 3:06:43 PM
http://wiiudaily.com/2013/03/why-retailers-are-slashing-wii-u-prices/

Over the past weeks, retailers in the US and in Europe have been slashing Wii U prices due to extremely low sales. Weíve hard time and again that Wii U sales arenít up to expectations, and this hurts retailers more than anyone. They usually buy consoles from manufacturers like Nintendo and sell them on to the customers for a profit.

Last month retailers in Europe started slashing Wii U prices by an average of 50 Euros, and this week the price cuts were found across many retailers, effectively creating an unofficial Wii U price drop in Europe.

If there is low demand for a console, the retailer is stuck with huge stockpiles of inventory they canít move. The only way to clear the inventory is to sell the console for less and less, and they ultimately end up losing money on the transaction. In the US, Coscto recently started selling their Wii U consoles at $50+ off the MSRP, and theyíre no doubt losing money on the deal.

Nintendo loses money on each Wii U made, and many retailers are now losing money on each console sold. Thatís extremely bad business and canít go on forever.

There are two reasons the Wii U isnít selling. One is obviously that some consumers are finding it to be too expensive. Another is that most consumers arenít even aware that that Wii U exists. Nintendo is in a position to fix this, either by cutting the price or making more attractive game bundles, and by ramping up Wii U advertising to the casual gamer and average consumer.

Wii U is now selling way below the sales of the Xbox 360 and PlayStation 3, and it wonít get any easier later this year when the Xbox 720 and the PlayStation 4 launch. The console sold just 66,000 units last month, way below anyoneís expectations.

Even publishers have called for Nintendo to cut the Wii U price and move more units. Ubisoft said earlier this month that they were optimistic about the Wii U, but that Nintendo needs the ďWii U to be at a lower priceď. Realizing that their upcoming Wii U exclusive Rayman Legends simply wouldnít sell enough copies to earn back the investment, Ubisoft made it into a multiplatform title.

And if you purchased a Wii U, the selection of games isnít that great at the moment. Besides a few great first party titles from Nintendo and some decent third party launch titles, we donít have much else.

To make matters worse, Nintendo isnít talking about future titles on the Wii U. Besides Pikmin 3 and Zelda Wind Waker HD, thereís isnít much to look forward to. If there were cool games on the horizon, more people would be buying consoles. Retailers know that demand is extremely low, and if Nintendo isnít doing anything to boost sales, retailers can only do one thing: cut the price and sell it at a loss.

If youíre optimistic about the Wii U, youíll buy the console at cheap now and wait for the great games later this year. If youíre pessimistic, you hold on to your money until Nintendo actually reveals some great games.

The retailers are clearly pessimistic about the situation and are therefore dumping their inventory, even if it means losing money.

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#2chuchumyrocketPosted 3/16/2013 3:07:22 PM
Nice_Kirbyfan topic.
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#3Nice_Kirbyfan9(Topic Creator)Posted 3/16/2013 3:08:24 PM
From: chuchumyrocket | #002
Nice_Kirbyfan topic.

Stick around. I may need you to keep bumping my topic.
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#4Baha05Posted 3/16/2013 3:08:37 PM
Surprised no snarky comment though this makes me wonder why they never did this with the Vita that had far worse sales figures.
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"I think there will be a price drop at the latest by E3. I'd even bet my account on it." Icecreamdunwich on the Wii U
#5Beatperson14Posted 3/16/2013 3:09:26 PM
Official price drop in place

Called it
#6chuchumyrocketPosted 3/16/2013 3:10:47 PM
Nice_Kirbyfan9 posted...
From: chuchumyrocket | #002
Nice_Kirbyfan topic.

Stick around. I may need you to keep bumping my topic.


Yessir!
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#7Baha05Posted 3/16/2013 3:11:00 PM
Beatperson14 posted...
Official price drop in place

Called it


Not official until Nintendo states it.
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"I think there will be a price drop at the latest by E3. I'd even bet my account on it." Icecreamdunwich on the Wii U
#8squatch22Posted 3/16/2013 3:11:30 PM
Beatperson14 posted...
Official price drop in place

Called it


Wrong again
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#9PendragoonPosted 3/16/2013 3:12:47 PM
Retailers aren't losing money on these price reductions... Nintendo gives retailers massive margins and many European retailers set the prices themselves with no input from Nintendo, so the artificially high prices are finally coming down in those cases.
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#10KolanifvPosted 3/16/2013 3:57:18 PM
PENDRAG0ON posted...
Retailers aren't losing money on these price reductions... Nintendo gives retailers massive margins and many European retailers set the prices themselves with no input from Nintendo, so the artificially high prices are finally coming down in those cases.


Buyer for a major US retailer here. We pay $1116.80 for a case of 4 Wii U 32gb directly from Nintendo. If we were to drop the 32gb sku by $50, that's drops it from the budgeted 20% to a 7% profit margin, and that's would indicate that we were planning on pulling the product off the shelves very soon unless we got a cost break from the manufacturer. I won't say which company I work for, but I guarantee you that Costco isn't getting a lower cost from Nintendo than we are.

I will say that we're not happy with holiday 2012 sales on the U, and were a little taken aback at the continued strength of the basic Wii bundle (which, I might add, we're making bank on, something along the line of 38%).