N4G Article stirs up some serious VGC hate

[Reasonable]

Fumanchu said:

Reasonable said:

Fumanchu said:

I just don't understand how any of the manufacturer's could possibly get 100% accurate sell-through data to put in a financial report.  Does Sony rig every point of sale register with a trojan that uploads data transactions to a distributed database networked world-wide?? If so, why does NPD exist? If NPD exists for a reason, wouldn't they need a tracking firm in every country they ship to???

They can't and they don't.

Manufacturers get for the most part delayed visibility to sell through via two main avenues:

• buying sales data sold by the retailers to trackers like NPD, Neilsen and the like
• sel through summaries passed back at regular intervals by the retailers

Few retailers pass back immediate sell-through info to their suppliers - i.e. sale by sale - although obviously the flow of orders, etc. allows manufacturers to also estimate sell through rates - i.e. how often does the retailer order and how much and what does this reveal about sell through.

This is normally balanced to updates from the retailer - I've sold 85% of last week's shipment, etc. and data from NPD, etc.

What is often missed is that for the most part, once the goods have been delivered, visibility is within the retailer only, and a time lag is introduced when retailers release summary of performance to trackers, etc.

So, the manufacturer can get a pretty good feel of sell-through, but it is based on periodic snapshots rather than what's happening real time.

I'm not suggesting that they don't have any idea, the regularity of retailer orders and summary reports of the major retailers from trackers should give a fair indication, should they have the resources to compile that data.  The issue is if this number would be accurate enough to put in a quarterly financial report over the more tangible, concrete shipped numbers.  

There's also the question of why shareholders would care about consumer sell-through numbers anyway? Once they've been sold and the company has been paid end of story as far as they're concerned, why even entertain the idea of attempting to track consumer sales at retail and make their numbers look worse?    

Ah.  Got you.  For the manufacturer and shareholders the focus is shipped.  It's accurate and it's directly tied to how the manufacturer makes their money.  Sony and MS know exactly what they've shipped, for what cost price and under what (if any) deal agreements with their retail customers.

Sell through is also important, but not in the way VGChartz is trying to report it for us.  Sell through is simply a periodic confirmation that the goods are popular and selling well.  As you say it is rarely of huge important to the actual manufacturer unless they had cause to feel sell through was worringly low.

However, in the face of good demand and steady orders retail sell-through isn't hugely important vs the order frequency/volume as that drives the manufacturing supply chain.

So, of course Sony and MS want to know that their goods are selling at retail.  But periodic visibility plus orders plus other ways of judging success (PSN subscriptions / Live subscriptions) come into play.

Also, as per your final point, with sell-through being inhernetly ambigous the focus is on shipped, returns, paid invoices, outstanding invoices and deals for the manufacturer.

It's normally the retailer's decision in terms of safety stock, etc. and buffer stock which is where the difference between shipped and sell-through comes from.