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https://www.wsj.com/articles/ninten...-plane-to-quickly-meet-high-demand-1493619178

TOKYO— Nintendo Co. NTDOY 5.62% said it used aircraft to ship its new Switch videogame machine in its first month on the market, an unusual and costly logistics measure responding to unexpectedly high demand.

Earlier, Nintendo said it shipped 2.74 million units of the Switch in the month after it went on sale March 3, up from an initial plan of two million.

”We carried some of the Switches by plane in March to serve our customers more promptly," a company spokesman said. He said Nintendo switched back in April to less-expensive sea freight to replenish store shelves.

Nintendo didn't say where the planes were used, but analysts and others briefed on the logistics said the flights took Switch machines to the U.S. and Europe from factories in China.

Ace Research Institute analyst Hideki Yasuda said further use of air freight was possible because the item remains hard to find at retailers globally. ”Air is a big profit-squeezer because it could cost additional ¥5,000 per unit," or about $45, he said.

Waseda Business School professor Atsushi Osanai said it was worth the price to get the product off to a good start.

”It is important that companies sell as many units as possible, as quickly as possible, while customer interest is high," he said. The initial months are critical for a game machine, because strong hardware sales drive interest from software creators, and a wealth of software titles in turn generates interest in the hardware.

 

[RadioJoNES64]

Do you think Reggie flew one?

 

[terencecah]

link this topic anytime someone mentions "artificial scarcity"

 

[liquidtmd]

Nice, last time Nintendo had an in-demand product they discontinued it.

 

[shotgunbob04]

Reggie calling in the air drop

 

[Mory Dunz]

link this topic anytime someone mentions "artificial scarcity"

but they used really really slow planes

 

[Kenzodielocke]

Didn't notice any new stocks, must be working nice.

 

[DecoReturns]

That dropping the bomb gif just got a little bit funnier

 

[DR2K]

Not even Nintendo expected this system to take off.

 

[jett]

”Air is a big profit-squeezer because it could cost additional ¥5,000 per unit," or about $45, he said.

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

edit: I actually had entirely forgotten the Wii U was sold at a loss. Either way, if they are able to take a momentary $45 hit, they must be making a tidy profit out of this one-time air freight.

 

[AniHawk]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

they sold the wii u at a loss. if the thing is unexpectedly popular, then give people more. unlike the ps4 or xb1, you're more likely to buy accessories for switch in addition to games.

 

[Skyzard]

That's nice that they did that but it gives me the impression that they aren't super confident.

I don't blame them after WiiU.

Hopefully it all goes better than expected for Nintendo.

 

[Hcoregamer00]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

Did it occur to you they might take a short one time shipping loss to keep their fans happy since the cost of Zelda and accessories pretty much pays for it, and most early adopters will buy way more than just one game?

 

[Resistance100]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

They probably took a hit on some. Would have been worth it to beat forecasts ahead of end of FY plus would have made the money back on Zelda/accessories alone.

 

[LambdaTeos]

Not even Nintendo expected this system to take off.

They may have expected it, however, it's impossible for a company to be 100% sure about it, every product is a risk
Glad it is paying off

 

[Hattori]

This can't be right. They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

maybe they have a separate budget for shrink/loss that enables them to temporarily take a hit on profit to satisfy consumer demand. they can recoup/balance that loss through software and accessories.

 

[VariantX]

they sold the wii u at a loss. if the thing is unexpectedly popular, then give people more. unlike the ps4 or xb1, you're more likely to buy accessories for switch in addition to games.

Yeah, it's not like they won't get it back over time through 1st and 3rd party software sold and increasing the potential # of users to sign up for their subscription service this fall.

 

[Alchemy]

Thats smart, they need to ride the early hype as much as possible to inflate their user base early and attract developers so theres long term support for the system. Sounds like Nintendo is all in and making sure the Switch is available which is great.

 

[random25]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

It probably covered only a portion of units for sure to take losses.

 

[Hcoregamer00]

Thats smart, they need to ride the early hype as much as possible to inflate their user base early and attract developers so theres long term support for the system. Sounds like Nintendo is all in and making sure the Switch is available which is great.

I agree, going this extra step shows that Nintendo really wants the system to succeed.

 

[Nanashrew]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

Likely a single trip because of how costly shipping by air can be. That way it's just a minor loss and nothing too significant.

 

[Interficium]

Wow. Highly unusual move for consumer electronics at this scale. Probably the right play even if it's a margin-killer in the short term.

 

[Gamer @ Heart]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

What?! Do you know how this industry works? Consoles arent smartphones with $300+ profit margins

Good lord, the switch isn't some tiger electronic tablet being sold at 299. Considering they sold the Wii U at a loss, I don't know why you would think that.

Also, air freight is insane. They must have deemed avoiding the absolute shit port customs slowdown as being worth the cost at least for launch because there is no way they do this again.

 

[Team Filler]

Smarter to take the short term hit and get as many units into people's hands early on while momentum is still so strong.

Internal metrics for the Switch must be incredibly pleasing to go for this sort of expense.

 

[Skiesofwonder]

Not even Nintendo expected this system to take off.

Nintendo originally planned to ship 2 million Switches worldwide by March 31st, which 2 million sold in March would have still been considered a success. I imagine these air freight were the extra 740,000 units sold past projection.

I always felt like Nintendo was overly optimistic about selling 2 million units in the first month, and the vast majority of GAF thought the Switch was DOA. So I don't think really anyone expected demand to be this high out the gate.

 

[robotrock]

Wow. This company is amazing. I love this brand for selling me this new product

 

[cw_sasuke]

They're making a killing on these things if accurate, since there's no way Nintendo would sell the Switch at a loss.

This is a short term crisis solution to not possibly of customers... Not something the can afford forever and for all Switches. Some were shipped this way... Not all.

 

[oti]

link this topic anytime someone mentions "artificial scarcity"

Let's see how long that will ta-

Nice, last time Nintendo had an in-demand product they discontinued it.

Eh, good enough I'd say. I guess this is the new joke after even the last person hopefully understands now what an utterly idiotic concept planned artificial scarcity is. For a company like Nintendo no less.

Didn't notice any new stocks, must be working nice.

I'm sure you're the only person in the world looking for a Switch. Maybe Nintendo is just lying. #followthemoney

 

[VariantX]

link this topic anytime someone mentions "artificial scarcity"

we should just start calling it what it is, fucking salt.

 

[Smiles and Cries]

taking a $45 per unit hit is pretty high

 

[DecoReturns]

Not even Nintendo expected this system to take off.

The Zelda unexpected Universal acclaim probably helped a lot. And of course the hybrid nature being another factor

I doubt many expected it to hold a 98 for so long (think it dropped to 97 weeks later).

I admit, I'm surprise too and I thought the Switch would succeed, just not this fast

taking a $45 per unit hit is pretty high

Using that Fire Emblem heroes money/s
well actually, maybe

 

[Robiin]

Switch seems to be flying off the shelves. Glad to see the system take off like this.

 

[titiklabingapat]

Crossposting from the other thread:

There were major restocks into the days leading to and the day of Mario Kart launch. There were also constant restocks throughout April. Won't be surprised if they sell close to 900k in the USA again for April.

 

[BouncyFrag]

I was hoping they would have used a catapult.

 

[Hcoregamer00]

Crossposting from the other thread:

There were major restocks into the days leading to and the day of Mario Kart launch. Won't be surprised if they sell close to 900k in the USA again for April.

Now the system is hard to find again.

Thanks Mario Kart 8.

 

[Skux]

They could just make more of them instead of it costing more to ship fewer out faster.

 

[SolicitorPirate]

In Sydney, I've been seeing stores with huge signs advertising whenever they got Switches back in stock.

And forget the fucking accessories. Those things have been out of stock ever since the Switch came out to market

 

[Kenzodielocke]

I'm sure you're the only person in the world looking for a Switch. Maybe Nintendo is just lying. #followthemoney

Have you been following it as closely as I have in our city? If not, this post just comes around as useless snark tbh.

 

[Amalthea]

 

[oti]

In Sydney, I've been seeing stores with huge signs advertising whenever they got Switches back in stock.

And forget the fucking accessories. Those things have been out of stock ever since the Switch came out to market

Joy-Con are completely sold out on Amazon Germany thanks to Mario Kart. I bought a pair of neon ones for 75€ a few weeks ago, now they are 90€ from third-party sellers.

Have you been following it as closely as I have in our city? If not, this post just comes around as useless snark tbh.

You're implying Nintendo's flexible and costly re-stocking measures aren't working, because you can't find a Switch. That would be true, if you were the only person looking for a Switch. You're not. Others got a Switch because of this air delivery method. Sucks that you weren't one of those, of course.

 

[WhiteRabbitEXE]

And yet people will still buy into that completely idiotic artificial scarcity conspiracy theory.

 

[_Clash_]

Classic thread incoming

 

[And_Gignac]

What an incredibly poorly managed company.

 

[Grim Patron]

Thanks so much for letting people give you money to buy your game console. really generous.

 

[CosmicQueso]

They could just make more of them instead of it costing more to ship fewer out faster.

Can't believe Nintendo hasn't hired you yet. You sound like a master of logistics.

 

[_Clash_]

But seriously please make comedy gifs of air supply drops

 

[Hcoregamer00]

And yet people will still buy into that completely idiotic artificial scarcity conspiracy theory.

I am hoping that people who are typing it now are either completely naive with no knowledge of business or they are trolling for kicks by being ironic, like a bunch of posts in here.

 

[Interficium]

Thanks so much for letting people give you money to buy your game console. really generous.

This exact joke was already made. On the same page.

Spoiler

It was lousy the first time, too.

 

[sirap]

That explains the markup and bullshit forced bundles for SEA buyers.

 

[Mariolee]

What an incredibly poorly managed company.

What part of this specific story indicates ths company is incredibly poorly managed?