Thanks, Nintendo, for helping out with my COBRA payments

One of the bigger successes for Project Arcturus this Christmas was the Nintendo DS, Nintendo's latest handheld gaming device. Yours truly, being the somewhat savvy toy profiteer, knew that there was a high probability of this item being sold out for Christmas. It would appear that product shortages are a key play in Nintendo's general marketing strategies. I guess they love all the press they get from being "the hot toy no one can get" lists for each Christmas. In past years, shortages occurred (and EBay opportunities appeared) with the Nintendo Gamecube and Nintendo Gameboy Advanced SP, so it was my opinion that it wasn’t very risky to do some speculating on the DS. On launch day (Sunday, Nov 21), I woke up early and visited 7 different stores and bought 14 of them, or approximately $2200 worth of them. Had I had the time to work it right, I probably could have picked up another dozen or so but I had to cut my shopping short in order to take my mother to the airport. In most stores, it was sold out by that afternoon (I bought the last ones in three different stores...Most stores only got 20 or less, so they sold out quickly). Needless to say, a product selling out in one day with little chance of restocking during an all important retail period makes the heart of a speculator beat much faster.

One of the interesting dynamics of this is that speculators likely caused some of the shortages. While not entirely scientific measure (which can be influenced by numerous factors such a re-listings of failed auctions, fraud, etc) there were 50,000+ auctions for the Nintendo DS on EBay during the month long period between the launch date and just before Christmas. This would amount to approximately 10% of Nintendo’s US shipments of the DS during this same period.

I won’t bore you with the details of my various auction strategies I used to sell of these items (plus the two additional DSes I managed to obtain during random shopping after the launch date...And you can bet I was kicking myself for not being more aggressive in obtaining inventory on launch day). Some strategies worked better than others but the market can be odd beast. Frequently, bidders would end an auction with a “buy it now” bid $40 higher than it would have taken to win a regular auction ending 2 minutes later (even taking into account things like shipping costs/key words in auction title/feedback levels). However, I will say it is immensely satisfying to net, on average, approximately 75% of my daily take home pay from my previous employer EACH time I sold one of these things (although that could be also be a testament to the low level of pay at my previous employer). Too bad I didn't have 250 of these to sell...I could take off the next 9 months.

So thank you, Nintendo, for creating such a frenzied market that I could earn 6-8 times the profit reselling these items than the original retailer made selling them to me.

Unfortunately, such imbalanced markets rarely last very long and there are usually limits of how much inventory one can get without having some inside source. However, I will certainly be getting up early on the US launch day (still an unspecified date sometime in March) of the Sony PSP. But I am not sure if there will be as many profiteering opportunities with the PSP as there were with the DS. The spending hysteria around Christmas helps a great deal to create these arbitrage opportunities. I find it fascinating that Christmas (and marketing) create people who are quite happy to buy something that is clearly marked up 50-60% from standard retail price from a non standard retailer such as myself. I am always surprised by the number of email I get from buyers saying things like “thanks for making my kid's Christmas” or “I’m so happy to get this”.