Sunday, December 23, 2007

Slackers Stores Not Slacking on Wii Profit Margins [UPDATED] [Retail Greed]

wiimoney%20GI.jpgThe chaps at Ars Technica are reporting that Slackers stores, of Illinois and Missouri, are retailing their entire Wii stock on eBay, making a tidy $150 profit over the MSRP. According to an unnamed employee at Slackers, the stores are receiving a regular shipment of Wii consoles. Unfortunately, none of those are making it to the shop floor. Instead, to increase their profit margins, they are selling their entire stock via eBay, with a "Buy it Now" price of $399.99. The price was lowered from a previous $499.99, as the products were not exactly flying off the cyber shelves. Ars Technica tried contacting the management, but failed to receive a response.

Considering people are falling over one another to get their hands on a Wii console for their kids, friends and lovers, it's distasteful practice by the boys at Slackers. Not only is it outright greed, but they are also violating Nintendo's terms of retail sale. We think Mario should jump on Slackers until they are a completely squashed retailer, which will hopefully make them realize the errors of their cash grabbing ways. [Ars Technica]

UPDATE: Slackers have issued a statement strongly denying the accusations; the full statement can be read below:

Dec. 21 - Official Statement

An Open Letter to Slackers Customers and the Game Buying Community

December 21, 2007

In a December 20, 2007 article posted on the on-line site Ars Technica, author Ben Kuchera wrote a sensationalist article about Slackers, in which he makes a number of sweeping and factually incorrect statements about Slackers' practice of selling Nintendo Wii Game systems on eBay. In his article, Mr. Kuchera claims that Slackers "stockpiles" its entire allotment of Wii systems from Nintendo and sells them exclusively on eBay at substantial mark-up. This article is factually inaccurate, and unfortunately, other sites are picking up this story and spreading the misleading piece. In his article, Mr. Kuchera claims that he attempted to contact me, Slackers' owner, multiple times to comment on his article. That is simply not true. Had Mr. Kuchera contacted me, I would have told him exactly what I am telling you in this letter.

Slackers is a small, 11 store chain in Missouri and Illinois selling music, movies and games. Slackers prides itself on its commitment to its customers, and offers great products with great service at a fair price. We are not big box, and our customers like that. They like that they get friendly, knowledgeable service when they come into our stores.

However, being small has its disadvantages. Unlike the big box retailers, we do not get an "allotment" from Nintendo. Rather, like all small independent retailers, we must buy our product from distributors. Since November of this year, the total number of Wii systems Slackers has been able to acquire from distributors this holiday season is 44 units - that's it. With respect to nearly all of these systems, the units are held for a specific individual, e.g. loyal customers, family members, business associates, employees and friends - 35 of the 44 units Slackers was able to acquire this holiday season went to such individuals at the suggested price of $249.99 (our cost). If one of these customers paid for the system with a credit card, Slackers actually lost money on the system as the credit card company takes up to 3% of the sale.

What about the other systems? One was donated to a silent auction with the proceeds ($450) going to St. Louis Children's Hospital. Slackers will be giving away another Wii system on the radio tonight on the Hipp Nights show on the Big 550 AM, KTRS (please tune in)!

Does Slackers' sell Wii systems on eBay? Yes. This holiday season, Slackers has sold a total of 5 Wii systems on eBay at a price of $399.99, while a couple units remain in stock. Why do we sell the Wii systems on eBay? Like all small retailers we are trying to improve our profile on the web. We have a website and an eBay store site. By offering even a small quantity of a hot system like the Wii on-line drives many hits to our sites. As for the price, Mr. Kuchera claims we are "scalping." At the price Slackers offers on-line, when you factor our cost for the unit and shipping, and after eBay and PayPal take their cut, Slackers makes less than $75 per unit we sell on-line. For this holiday season, we made a whopping $375 from the eBay sales - that's it. We gave away 2 systems at a cost of $500, and on every other system, we either broke even or lost money. Slackers does not make money on the sale of Wii systems.

Because of Mr. Kuchera's article, others on the web are using words like "gouging" and "repugnant" when referring to Slackers. I cannot begin to tell you how much this hurts. In this year alone, Slackers gave away more than $7,000 in product, gift certificates and donations to schools and churches in our community. Slackers is a good business citizen in its communities.

Had Mr. Kuchera taken the time to fully research his article, he would have a much different picture about Slackers' practices and what we are all about.

To our loyal customers, thank you for your continued patronage.

Happy holidays!

Kurt Jellinek

President, Slackers CDs and Games



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