Remember the Christmas debacle that was Tickle me Elmo? Well, it appears Dance Star Mickey is poised to be this years hottest Christmas toy! And of course, I want one, no, need one! I have been looking everywhere for the infernal thing, checking each time I visit any major retailer that would sell such an item. Never was I concerned until last night. I decided to check online, thinking it wouldn't be a problem. Walmart, sold out; Target, sold out; toys r us, sold out; Disney Store, sold out, all with no indication of future availability. I eventually find it on Amazon.com, marked up 50%!!! Seriously!? Then my marketing education kicks in and I realize exactly whats going on.
Once an item is touted as being the next big thing, the hawks swoop in. They quickly buy up all available inventory at it's original MSRP, or even a sale price. Once the general population gets excited about the product and is ready to buy, it's near impossible to find. And queue hawks. All the sudden the product is in ample supply again, but not through the average retailer. Instead, they are being sold through independent retailers you probably have never heard of. And you guessed it, the mark-up begins. In general, mark-up starts at 25%, but as supply stays low and demand increases, mark-up continues. To date, the mark-up is over 50% and estimated to rise. We are talking about a toy that original sales for $59.99, being sold for $96, and on one site, $199.99, crazy!
I have to say this, if Mickey should dance across my path this holiday at it's original price, I will be buying! Not only that, but Mickey will go on e-bay one week prior to Christmas and I am going to try my hand at this game! Then again, I am not very good at taking advantage of people. I will keep you posted. So, final thoughts; Marketing genius, or sticking it to us?
Now lets look at it from the retail side of things. Since I consider myself to be one of the industry leaders in understanding the landed cost and retail price point based on projected turns for any given product sold. This is a subject I am well familiar with. In a nutshell the retailers really sticking to you if you are looking at it from a percentage stand point are the BIG Well known retailers. They purchase in such massive quantities that they are buying product 20% to 30% less then the smaller not so well known retailer. The real villan in this instance is the WalMart and Target. Sure you are buying for less $$ but your also putting more cha ching in their bank account. WalMart bosts 1 Billion dollars per day in sales. That equates to 300 million dollars per day profit before expences. They are still getting the high markup %. Only by reducing their cost of goods.
ReplyDeleteSpoken like a true industry leader ;)
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