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Forums - Sony - Sony channel stuffing PS3's to retailers (w/ pics).. AGGRIVATING.

Spankey on 06 December 2010
whatever said:

Well, I guess we wait to see if any retailers decide to slash prices in January (outside of an official Sony pricecut), that would be an indication of over shipping.

I'm guessing Sony is just waiting to get through the holiday period and we'll see a pricecut in Feb.-Mar. timeframe.  If production is really getting much higher, then the cost per unit will go down enough to justify a pricecut.


but wouldn't that indicate more of a case of over-stocking by retailers instead of over shipping by Sony?



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M.U.G.E.N on 06 December 2010
ils411 said:
Darth Tigris said:
ils411 said:

yes, it does make sense to return products to suppliers if they are too slow moving or sells too few units over a period of time. This is usually a decision that is made after reviewing sales vs payment terms. For example, lets say sony delivered 50 units of PS3s to a retail outlet and the store can only sell 5 PS3s per month. THis means that they can sell through the initial delivery after 10 months. THis is all well and fine but if payment terms is 30 days, this means that after the first month afer delivery, the retail outlet already has to pay Sony for the 50 PS3s even if there are still 45 units sitting in their stores. This is very undesirable as the retailer's money is sitting on stocks and will only be liquidated after 9 more months. If this is the case, they can opt to return a portion of that inventory to Sony to free up space in store and to free up money that can be invested else where.

On consignment basis/ consensionair basis, Sony can ship as much shit as their heart's please. Though I'm not sure if Sony does consignment terms. My only experience on electronics and stuff like that is on some basic hardware items such as some hand tools, light bulbs and the likes. I had an agreement with the supplier to have terms on a consignment basis. So I just tell the stores to provide this supplier with space and the supplier will in turn fill that space with as much shit as they want. This is all ok since we dont have to pay them for their entire shipment. Only for the items actually sold. If items are not selling, the supplier will initiate pull out of none selling items and replace them with other items in the hopes that those new items will sell. We get our sales, only pay for actuall sold and the supplier getrs to deliver as much shit as they want. This way, everyone is happy...well, at least the purchasing team and the supplier is happy, the store managers are usually in the losing end as they go "where the fuck are we suppose to find space for this supplier? we're already stuffed with other items you asshole!" and i go "just to do your job and find space deepshit!" hahahahha!!! yeah, those were the days...

Hmmm.  Interesting.

If retailers CAN return console stock to the manufacturer, doesn't that throw off ALL shipping figures???

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


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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Cross-X on 06 December 2010

So maybe tomorrow I should make a thread about how my local EB Games shop here in Australia has heaps of PS3s, X360s and Move and Kinect units just stacked on top of each other whilst the Wii just flies off the shelves.

 

Shit that must surely mean that Sony and MS are overshipping and just keeps on sending them because they have nothing better to do...

 



greenmedic88 on 06 December 2010

I'd like to see some hard reports of retail outlets returning inventory back to SCE warehouses.

If they don't exist, there is no "channel stuffing."

You either have inventory that should be redirected to other retail outlets within the same chain due to mismanagement within the distribution system, or maintained until the holiday season has concluded.

If a glut exists at this point, then consumers will benefit from inventory clearing sales, followed by reduced orders from retail and production from the factory.

Doesn't happen? No channel stuffing indicated.



Jlmadyson on 06 December 2010
Blood_Tears said:
Jlmadyson said:

This doesn't surprise me one bit at this point. Sony shipment's have pretty much been whack since mid year compared to MS versus real sales. So I wouldn't be surprised by huge stockpiles throughout the US and this being of the weakest Decemeber's yet for the PS3 come NPD time. There will be a massive gap between the 360 and PS3 in the US this holiday and likely 10 million or more by year end ltd.



wow, where did you get a working flux capacitor???

No need at this point. Writing is clearly on the wall. It may not dip under the 08 level, but I'll say it right now it isn't going to do much better than that and I'll easily say a million plus difference between the 360 and PS3 for December NPD. Will check back in a little over a month.



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The Anarchyz on 06 December 2010
M.U.G.E.N said:
ils411 said:
Darth Tigris said:
ils411 said:

yes, it does make sense to return products to suppliers if they are too slow moving or sells too few units over a period of time. This is usually a decision that is made after reviewing sales vs payment terms. For example, lets say sony delivered 50 units of PS3s to a retail outlet and the store can only sell 5 PS3s per month. THis means that they can sell through the initial delivery after 10 months. THis is all well and fine but if payment terms is 30 days, this means that after the first month afer delivery, the retail outlet already has to pay Sony for the 50 PS3s even if there are still 45 units sitting in their stores. This is very undesirable as the retailer's money is sitting on stocks and will only be liquidated after 9 more months. If this is the case, they can opt to return a portion of that inventory to Sony to free up space in store and to free up money that can be invested else where.

On consignment basis/ consensionair basis, Sony can ship as much shit as their heart's please. Though I'm not sure if Sony does consignment terms. My only experience on electronics and stuff like that is on some basic hardware items such as some hand tools, light bulbs and the likes. I had an agreement with the supplier to have terms on a consignment basis. So I just tell the stores to provide this supplier with space and the supplier will in turn fill that space with as much shit as they want. This is all ok since we dont have to pay them for their entire shipment. Only for the items actually sold. If items are not selling, the supplier will initiate pull out of none selling items and replace them with other items in the hopes that those new items will sell. We get our sales, only pay for actuall sold and the supplier getrs to deliver as much shit as they want. This way, everyone is happy...well, at least the purchasing team and the supplier is happy, the store managers are usually in the losing end as they go "where the fuck are we suppose to find space for this supplier? we're already stuffed with other items you asshole!" and i go "just to do your job and find space deepshit!" hahahahha!!! yeah, those were the days...

Hmmm.  Interesting.

If retailers CAN return console stock to the manufacturer, doesn't that throw off ALL shipping figures???

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


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.


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...



ils411 on 06 December 2010
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


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.


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...

@ 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.



arcane_chaos on 06 December 2010

since when does one store=the world?



whatever on 06 December 2010
Spankey said:
whatever said:

Well, I guess we wait to see if any retailers decide to slash prices in January (outside of an official Sony pricecut), that would be an indication of over shipping.

I'm guessing Sony is just waiting to get through the holiday period and we'll see a pricecut in Feb.-Mar. timeframe.  If production is really getting much higher, then the cost per unit will go down enough to justify a pricecut.


but wouldn't that indicate more of a case of over-stocking by retailers instead of over shipping by Sony?

Either way, the outcome will likely be the same. 



evolution_1ne on 06 December 2010

@ this thread