Every year, there are a few hot tech products that grab attention during the holiday season. Every year, consumer demand leads to a few high-profile incidents of product scarcity during the high-volume sales period. 2016 was no exception, with supply chain giants such as Nintendo, Apple, and Amazon plagued by stock shortages of premier products at the retail level. These names generate significant consumer buzz in response to most of their product launches, and the introductions of the NES Classic, AirPods and Echo, respectively, were no different. In all three cases, though, the demand generation strategies appear to have been slightly too successful, leading to outages at the point of sale. Here, I’ll outline what happened with each launch, and make some suggestions as to what could be done differently to keep products on the shelves and sales going strong.
Nintendo NES Classic
Nintendo’s supply shortages are the easiest to reconcile. The company is famous for purposely under-forecasting product production as a means to generate artificial scarcity that can further drive demand. While it’s a strategy that dates back to the days when the NES was brand new and not a nostalgic throwback, this tactic was most notable during the launch of the Wii game console when the lack of product extended the launch window of the device many months past what would otherwise be expected.
If Nintendo is to continue its planned scarcity approach while still satisfying its loyal customer base, they will need to ensure that a closely monitored and flexible supply chain is in place. If the company doesn’t, retailers will be the ones feeling the burden of customer demand and will need to scramble to ensure equitable stock levels across accounts – or alternatively, funnel larger volumes to “preferred” locations. Neither solution is likely to do anything but reinforce Nintendo’s reputation for having challenging relationships with its retailers.
When Apple launched the iPhone 7 in September, the headlines weren’t focused on a new feature or capability, but rather the removal of a longstanding component: the standard headset jack. Apple’s AirPods, shown off at the launch event, are Cupertino’s answer to this removal. However, the wireless earbuds started off behind the 8-ball, with their launch being pushed well into Q4, significantly after the launch of the iPhone 7.
In situations like these where a popular product launch is delayed, companies have two options:
- Wait for manufacturing to totally catch up with demand
- Launch as early as production will allow in order to get some product into the hands of customers, and then let manufacturing play catch-up
Neither option is perfect. The first option gives companies the luxury of taking care of all customers while also ensuring that full channel fill is possible. The downside is that production takes time, which reduces momentum from the announcement and affords competitors time to capture customers while they wait on your product. The second option is a quicker path to market, but requires a buttoned-up supply chain to ensure that the company delivers the right product at the time originally promised.