Brigands-R-Us

  By Shamus   Nov 28, 2006   16 comments

Via Haibane.info I find this article, which simply belabors the fact that the Wii is a great idea, albeit with a dumb name. I’ve already done my own cheerleading for the thing, so I’m not going to get into that now.

What I find interesting here is what Toys-R-Us did:

In my opinion, Toys R Us is using underhanded sales tactics to push their extended warranty. I did not preorder, and I did not wait in line. My local Toys R Us claimed that they had units in stock when I called. I drove the seven miles and got in line, which was short – only two people in front of me, and neither of them were buying a Wii. Lucky me.

When I asked for a unit, I was told by the “R Zone” clerk that they were out of individual Wii units. They were now only stocking “bundles”. This “bundle” is not officially-sanctioned. It does not come in a bigger box with factory-packed extras. No, the Toys R Us “bundle” consists of simply a standard off-the-shelf Wii, upon which you are forced to add a game, two accessories (which don’t even have to be official Nintendo accessories), and the extended protection plan from Toys R Us.

You can read all the gory details for yourself. He’s certainly a lot more forgiving than I am. Those people would never have gotten my money. They may have squeezed this guy for an extra $100, but they will never, ever see a penny from me. I’m not talking about this Christmas season. I’m talking about from now on. This sort of thing is disgusting, and I would never reward this sort of behavior by shopping there and taking part in it.

People look down on those Grinch-like “scalpers” who buy units and then turn around and put them on EBay for a $50 markup. I draw no distinction between those scalpers and Toy-R-Us, except that TRU has an even higher markup and are doing it on a much bigger scale.

A compliment is more easily forgotten than a slap in the face. I’m going to remember this for a long time.

1624 comments. (That's 10 in Hexadecimal.)


  1. bkw says:

    The markup on ebay is more along the lines of 100% — PS3s are going for $1,200, Wiis are going for $400 (ref).

    Personally I don’t see the big deal with people who eBay consoles right after they launch — I see it as pretty much raw capitalism in action.

    Do I want a Wii? Sure, eventually. I’m not willing to pay the premium in either time and effort (waiting in lines, pre-ordering, etc) nor money (100% mark up on eBay), so I’m just going to have to do without for now. When I can either pick it off the store shelves or (more likely) order it online and have it delivered to my doorstep (hurray laziness!) — then I’ll get it. Next month or three months from now. Not a big deal.

    For some folks it is worth the cost to have it RIGHT THIS VERY MINUTE. More power to them.

    On the other hand, I do have problems with Toys-R-Us forcing bundling with useless pure-profit “extended protection plans” on consumers. I wonder if it violates some kind of terms or agreement with Nintendo?

    I certainly hope this doesn’t set a precedent. It’ll be interesting to see how a manufacturer’s desire to sell units clashes with the clout of a major retailer. Like if WalMart were to start telling companies, “We will be bundling our Customer Protection Plans (it’s to protect the customers, you see) with every item of yours we sell. Those are our terms. If you (the manufacturer) don’t agree, we will not stock your product.”

    Interesting.

  2. Shamus says:

    I certainly hope this doesn’t set a precedent.

    That is my big concern, and the reason I get all exercized about this. The last thing I want to see is Wal-Mart and TRU in some sort of war to see who can construct the most devious and confusing markup.

    And yeah – I’m wondering how Nintendo feels about this deal as well. They went to a lot of trouble to undercut the XBox and PS3, and are probably none too happy about a retailer packaging their unit with a bunch of overpriced junk. From their perpective, this is a lose-lose deal. Their unit costs more, they don’t make more, and their customers get a lot of junk that could, by association, mar the Nintendo brand and generate a bunch of erroneous support calls.

  3. John Horst says:

    I can’t particularly fault them for wanting to make more profit from a popular toy (they could as easily just jack up the price, assuming that was allowed). However, the market will ultimately decide the wisdom of such a move. I think we would all hope they just DIAF.

  4. bkw says:

    Given how strict the agreements are between retailers and manufacturers, I think either this is a local store doing something completely unsanctioned by TRU (that can (and should) land whomever responsible in a lot of hot water), or a massive oversight. I’ve not heard any other stories like this — although there were a few stories a couple weeks ago about how some fairly high-profile webretailers were being criticized for selling “Console Packages”, and not the individual consoles themselves.

    I’m not intimately familiar with the details of retailing, but I know in supermarkets companies are *very* sensitive about shelf placement of product — how many rows their stuff gets, and the exact placement on the shelves and end cap visibility and what not.

    Think I saw a documentary on FoodTV, or somesuch. I imagine it’s more of the same with other retail goods.

    If it’s not … that’s an entire service industry just waiting to be born!

  5. Shamus says:

    John Horst: Interesting point. Now that I think about it, if they just jacked the price up $75 it wouldn’t really bother as much. But instead they insist on selling $100 of stuff I don’t want or need so they can clear that extra $75.

    The mandatory add-ons is slimy and underhanded because they can still pretend they are selling a Gamecube for $250. Its not the same as bait-and-switch, but it has the same goal: Lure them in with what seems like a good price. Once there you try to screw them, hoping to confuse them with your rules about mandatory purchases and protection plans.

    If I saw an ad for a $350 Wii I wouldn’t be interested. If I saw an ad for $250 Wii and got the deal outlined above, I’d be angry that they lured me into the store and wasted my time.

    And maybe this is in response to Nintendo’s rules: Maybe they are not allowed to charge more, but they can see that customers are willing to PAY more, and that this is their way of trying to get that additional money.

    Interesting.

  6. Mark says:

    The thing that’s really bad about the TRU experience was that someone called them and asked if they had any, then made the trek down to the store, waited in line, and only then did they find out that it was a bundle. If the phone rep just told him up front, it wouldn’t be as big of an issue.

    I work for an online retailer, and we have a limited electronics business. We got a few hundred units of the PS3 when it launched, but we only sold them in bundles (with an extra controller and games – no useless service plans). We have to do this with a lot of the electronics we sell because of the margins. I’m not a merchandiser, but my understanding is that we don’t make much money on this kind of stuff. So it’s either sell it with a bundle, or don’t sell it at all. This is probably why we have such a limited electronics business, but at least on the web, you can see what you’re getting and aren’t inconvenienced that much. Also, this isn’t new. We’ve been doing this since the PS2 (maybe even earlier than that). Then again, we’re somewhat unconventional and we’re not a big electronics retailer…

  7. Deoxy says:

    “I’m not intimately familiar with the details of retailing, but I know in supermarkets companies are *very* sensitive about shelf placement of product — how many rows their stuff gets, and the exact placement on the shelves and end cap visibility and what not.”

    Actually, I have a friend who works for Coke; he goes around to all the supermarkets in the area and stocks their shelves FOR them (for Coke prroducts) – not EVERY time, of course (they replenish betwen visits), but regularly (once a week, I think) – he is the one who sets up the displays, etc.

    Yeah, I’d say they’re pretty sensitive about it.

  8. Ubu Roi says:

    Check their website out. They don’t even sell the console alone there.

    I used to work at one 20 years ago. I do not have fond memories of the place. I still wonder how much of my experience was typical of such establishments; from what I hear from a friend of mine in the Geek Squad, apparently quite a lot.

  9. Batmanintraining says:

    Well if people are dumb enough to pay for the unofficial bundles then why should companies stop doing it? Not that I’m defending them, or saying what they are doing is right, but if they can still get the sales, why would they stop?

    Until then, though,your best bet is to open your own store called, New Release Games, or some other crappy name, and offer newly released consoles without official bundles, until the next gen is released, and only offer new games for 3 months after date of release. That way customers would know a place to go to only buy new games and consoles.

  10. Shamus says:

    why would they stop?

    One can only hope: Because people like me refuse to do business with them when they employ cheap tricks like this. Insisting that a customer buy overpriced low-quality crap is sleazy.

    Note that I am in no way suggesting that they should not be *allowed* to charge whatever they like. Lots of you are acting like I’m advocating price controls or something. I’m not. If they can get someone to pay, as you said, then they are free to do so. I just don’t care to give them my money, even after they end this “special offer”.

    What I’m saying is that some people (like me) take a dim view of this sort of shenanigans, and when I go to buy some stuff I’m going to avoid TRU. Three months from now there will be plenty of Wii’s to go around, the shortage will be over, and these deals will disappear. I’ll march out to buy my Wii at a post-Christmas discount, and when I do I won’t go anywhere near TRU. I’ll remember them as the guys with the $30 plastic “controller covers” and the snake-oil protection plan, and I’ll go to another store.

  11. Shamus says:

    LATER:

    Geeze. I just re-read my comment above. Wotta grouch. I didn’t mean for this to sound so testy. The thing with TRU really got under my skin, but above it looks like I’m getting irritated with Batmanintraining.

    I apologize for the cranky tone on that and the other comments.

  12. Parable says:

    Its one thing to offer a bundle were you get a discount off when you buy them together… its a completely different and very evil thing to say No you must buy these together or i won’t sell it to you at all. Just give me the damn Wii and keep your other garbage unless you’re willing to chop cash off my total.

    Looks like my little cousins are getting their chrsitmas presents from KB Toys from now on.

  13. Wonderduck says:

    “I’m not a merchandiser, but my understanding is that we don’t make much money on this kind of stuff.”

    In my 15 years of retail, I’ve learned a ton about margins and what is (and isn’t) profitable. My year at CowPuters (before they shut their brick’n’mortar stores) taught me a lot about where the money is made in consumer electronics/computers.

    Short version: Game consoles and computers have tiny, tiny margins: 5% if you’re LUCKY, usually closer to 2% (for those who don’t sell things for a living, that’s making $2.00 for every $100 of ticket price… BEFORE such things as payroll, utilities, etc are paid for). The real money is made on the accessories, sometimes as much as 50% margin. Digital cameras, printers, memory cards, game controllers, software: those are the moneymakers.

    But the BIGGEST moneymaker of all is the Extended Warranty. An EW is nothing BUT profit unless something breaks, and even then the retailer can often weasel out of it (EWs don’t cover “user damage,” for example, which can be anything from a peanut-butter samitch in the DVD drive to fried processors caused by a dusty room). And what do you get for the $100 EW? A piece of paper with the terms of the warranty on it, and sometimes not even that.

    Which is not to say that EWs are worthless. For something like a plasma TV that costs $1500, or a computer system for $1000, I’d not be opposed to having an EW (please note that Chiyo-chan, my new computer, does NOT have an EW, because I fully intended to do surgery on her, such as a new PSU and graphics card, both of which would have violated the terms of the usual EW). Considering that it usually costs $100 just for a tech to diagnose your problem, it’s not a bad value at all if you’re not tech-savvy (MomDuck has an EW on her new computer).

    But, boy, do they make money for the company. I’m not surprised at all that TRU is trying to force them down customer’s throats… though I AM surprised by that autobundle. Reminds me quite a bit of the College Textbook business, actually… don’t get me started.

  14. Batmanintraining says:

    No offense taken whatsoever. I also should have noted in mine, that I do agree that this pricing scheme is BS and when I do buy my Wii(what a terrible name they should have kept it the Revolution) it will not be from TRU or Best Buy.

    I would also commend you on advocating market forces to correct the problem and NOT suggest pricing controls.

    But not to worry about getting worked up, besides this was in Rants, it’s supposed to get you fired up. I get all fired up when I go to a mall and I see they have valet parking. Man that really gets me mad.

  15. […] Ars Technica has an extensive review of the Nintendo Wii. According to Wiiseeker, various Wal-Mart and Target stores get a new shipment on Sunday (I am sure Toys R Us is getting shipments too, but buyer beware). […]

  16. Steve C says:

    Shamus said, “Its not the same as bait-and-switch, but it has the same goal”
    Very true. If that Toys-R-Us was in Canada, what it did was illegal and would be fined $100,000, and $200,000 for each offense after the 1st. Likely it’s illegal wherever that guy had his experience. All the G8 countries have relatively similar consumer laws. But Shamus is correct, it’s not bait-and-switch. However bait-and-switch is just a small subset of “Deceptive Marketing Practices.” Bait-and-switch is just the part that’s easy to remember.

    I printed out a copy of section 74.01 of the Competition Act and keep it in the glove compartment of my car. Unhelpful clerks tend to backpedal hard and fast when I feel I have to get it and then read choice quotes to them.

One Trackback

  1. By Wii indeed at Haibane.info on December 1, 2006 at 9:25 am

    […] Ars Technica has an extensive review of the Nintendo Wii. According to Wiiseeker, various Wal-Mart and Target stores get a new shipment on Sunday (I am sure Toys R Us is getting shipments too, but buyer beware). […]

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