The Anarchyz said:
M.U.G.E.N said:
ils411 said:
not really, returned stocks would just be re-channeled to different outlets that needs the stocks. hence, the shipment figures would remain the same. Unless of course if the returns were massive as hell. But i doubt that as Sony, even though they have sales targetrs, would not overship PS3s to the extent that they would incur massive returns.
Also, it should be noted that returns are usually done as a last ditch effort. I dunno about how other retailers handle overstocks, but when I used to work in retail, we usually transfer stocks from one store that is overstocked to another store that needs the stocks. Returns are a pain in the ass to process for both parties hence its a last resort.
Plus, in my experience, I sometimes view overstocks as an oportunity to get the supplier to support us. For example, lets say i had 500 of item x and could only sell 100 units of this item this christmas. Instead of returning the item, i request for bundling promotions or discounting promotions from the supplier. Bundling promotions and price offs are a better solution for suppliers as they wouldn't have to take back the stocks. In the end, I would have an exclusive bundling promotion or price off only available in our stores which we will intrun advertise with the aid of the suppliers to get more customers to go into our stores instead of our competitors.l
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correct me if I'm wrong here
1. Sony can't ship 'as much as they want' if its a consignment, there are specific conditions for such deals and must align with company policies as in can't be out of the norm of how they do things
2. consignment will be still marked as inventory not sales. It will be marked as inventory on consignment with finished goods being credited in the books. Sales will not be recorded unless a 'sale' has taken place between the consignee and a customer at which point they can mark it as a sale.
Not sure how sony indicate their shipping numbers in their financials as I haven't really bothered to read through their 10k but they should at least mention such dealings in footnote according to GAAP, not sure about IFRS standards but I'm sure they have something along the same lines as well
so what I'm trying to say here is that, chances are these are not consignment, at least not to the point of having a significant impact on the financials, I would have imagined we would have heard of it if it was the case.
Again this is not channel stuffing, it's about either GS HQ ordering too much, logistic team effing up the ditribution, some stores used as strategic warehouses or Sony shipping with a buy back agreement with GS....or GS thinks they they might need the excess stock to avoid shortages like last year. All in all we knows nothing since we have no idea how the inner financials are for GS.
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We also have some providers with consignment, but we rarely use the return option because they're usually products with high inventory rotation, and yes, in this model (or at least in this company) the providers only count units sold to customers as sales, for that we have to deliver a sales report to them (another wonder of automatization)...
In gaming case, i think that the last hardware manufacturer that told the retailers that if the console didn't sale they could return it was Nintendo in the 80s, and that was because the retail companies didn't want anything to do with consoles (because of the crash), once the Nintendomination started, they changed the rules...
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@ MUGEN
1. yes, that is true, at least for the company i used to work for. We had to kinds of consginemnt, one was the standard consignment, and the other we called consesionairs. They're basically the same as we only pay them for actuall units sold. the difference is that for consignment, inventory is recorded into the system and is tracked for payment. For consignment suppliers, POs are issued and we dictate volume of deliverys.Cconsesionaires on the other hand do not have thier inventory recorded into the system and are on open PO basis. This means that they can deliver s much as they want as long as it fits into their allocated display area. Since we dont pay consesionaires for stocks on hand but for units sold, we dont really give a shit if they overstock their items. As long as we get our cut from their items sold.
2. yes, items on consignment are recorded as inventory. It is only recorded as a sale when a unit is sold. The good thing about consignment is that we get to have stocks of whatever item the supplier is selling but do not have to spend money in advance.
As for Sony, I have no idea if they allow consignment or not. I'm just speculating possible reasons or scenarios as to how they can stuff the channel with PS3s if what the OP is saying is true. I dont think Sony needs to specify if they are in consignment basis or on what kind of payment terms they are on in their financials. These information are somewhat confidential between different retailers and Sony. I'm sure that Walmart wouldn't want their competitors to know what sort of agreement they have with suppliers regarding payment terms. There are times when one retail outlet has a better payment scheme than others.
But IMO, it is probably more an error within their company itself and not Sony's fault.
@Anarchyz
Same with the suppliers we had. They only counted units sold as sales. I also rarely return inventlry to suppliers and usually give them a chance to try and sell their products through promotions and price offs as I understand that they are also people trying to make a living and returning produts would be a large negative in the sales reps upraisal. My colleagues on the otherhand are a bunch of jackasses and are "inventory return" happy. which is one of the reasons why i left the company i used to work for. too many assholes in the work area.
