4 ms·
Have several years experience dealing with supply chain from the retailer side in the past, and your comment is spot on. Anything that is: expected to be in de
by mfrommil 4y ago
Have several years experience dealing with supply chain from the retailer side in the past, and your comment is spot on.
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.