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mfrommil | 3 years ago
Anything that is: expected to be in demand during Q4/Xmas season, manufactured in Asia, electronics, etc., demand planning and orders are in minimum 3-6 months in advance.
Even if a retailer wants more supply, many manufacturers are extremely hesitant to overproduce.
Here's some rough napkin math to help illustrate the cost of being overstock (caveat: I have no idea actual costs of video games, using best guess), applies to both retailers and manufacturers:
$60 MSRP Switch game, cost to retailer: $48 ($12 profit/unit)
Let's say a retailer orders 100k units of a game in Q2 for the upcoming holiday season, but sells only 70k units during Q4. 70k * $12 = $840k profit. Meanwhile, 30k * $48 = $1.4M of inventory is sitting there, that cash is tied up so the company can't buy inventory of new games releasing in the future, and there's some non-trivial cost for each subsequent month that merchandise sits unsold in the warehouse. That's for under-selling forecast by 30%... now imagine if you're off by 50% or more an any individual game.
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