Nintendo Using Expensive Air Freight Shipping To Meet Higher Than Expected Nintendo Switch Demand
The Switch’s success took even Nintendo by surprise.
There may have been some who expected the Nintendo Switch to be a success – I remember I thought it would be a hit once people actually got their hands on it – but no one, not even Nintendo themselves, saw the extent to which the system is a hit coming.
Nintendo had projected that 2 million units of the system would be shipped worldwide in March. Astute analysts who observed that there was a lot of demand for the system said that the final shipment would be 2.3-2.4 million units. Nintendo ended up shipping 2.74 million units of the system worldwide, almost 35% more than they had originally intended.
How did they manage to do that? Well, it turns out, to meet the higher than expected demand, Nintendo decided to take a bit of a hit on these extra consoles, and ship them using air freight shipping, which is extremely expensive, and therefore something that not many companies ever use.
Speaking to The Wall Street Journal, a Nintendo spokesman said, “We carried some of the Switches by plane in March to serve our customers more promptly.” After the demand was met, he did note that Nintendo switched (heh) back to using standard ship freight.
Ace Research Institute analyst Hideki Yasuda noted that the use of air freight cost Nintendo ¥5000 per system in margins, or $45; Waseda Business School professor Atsushi Osanai, however, noted that the hit to short term profits was worth it in the long run.
“It is important that companies sell as many units as possible, as quickly as possible, while customer interest is high,” he said. This is hard to disagree with- if it sells well now, it has momentum on its side driving more sales in the future, and leading to more software support.
In the end, the Switch has ended up selling 2.74 million units worldwide in less than a month- and given the frenzy around the just released Mario Kart 8 Deluxe on the system, it seems unlikely for that to change any time soon. It shall be interesting to see how Nintendo can continue to meet the demand and stabilize the supply.