The Cult of the Pre-Order – How The Digital World Can Effect & Impact Supply & Demand

Why do we fall prey to marketing tactics every time?

A robot clicking Add to basket
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Paul McNally picks the bones out of last week’s week’s Nvidia 3080 graphics card release and looks for a way that we can stop being eternally disappointed when we miss out on a Day One purchase

There are two kinds of product launches. Those that are successful and those that infuriate the people that matter most – potential customers. Last week Nvidia with the RTX 3080, on a variety of levels, well let’s just say, pretty much became World Heavyweight Champ of the former.

The launch of the hugely anticipated RTX 3080 GPU has been hailed as the future of PC gaming. The product that, once again, ensures that the next generation of consoles – the PlayStation 5 and Xbox Series X, will once again find themselves behind the curve when it comes to cutting edge technology.

Google Trends shows a huge spike in demand for Nvidia’s latest graphics card, RTX 3080. Could trends & search vol have steered manufacturing numbers to a more satisfactory number for consumers – or was that part of the plan?

What Could Possibly Go Wrong?

Barely had the articles started to arrive proclaiming the death of PC gaming as the consoles had finally caught up and surpassed their nerdier, older sibling, than Nvidia held a press conference that basically said, ‘Hold my beer.”

From then on success was guaranteed. Hours were counted down. Just about every prominent PC YouTuber and blogger simultaneously uploaded their unboxing videos as the embargo ticked by. They weren’t allowed to put the card in an actual PC and show it, no, that would be ridiculous to think that would be useful. Nvidia controlled the launch of the most anticipated bit of PC kit in a generation with an iron fist.

Then it went on sale. Sort of. I mean it did. You just couldn’t really buy one. Not without a great deal of luck. It almost seemed like a carbon-copy of those stories you hear in the press when the band of the moment puts a new tour on sale and it sells out within three minutes.

It makes for a great headline but the rather more sinister reality of it is that the automated bots and scalping algorithms snap up the good stuff long before we humans can get to select our seats. Did something similar happen with the RTX 3080? The theory is certainly prevalent on Twitter. Google the card and put the word bot after it and prepare to be greeted by a tirade of abuse towards retailers and Nvidia. Yes, I know you can put anything in the search box on Twitter and be greeted by a tirade of abuse towards someone or something, but maybe here there is a point. And there are a lot of angry people, many of whom list themselves as Nvidia fanboys.

Robots in Disguise

Nvidia, unlike Sony, Oculus and soon to be Microsoft, did not set up pre-orders for the card. Nor did the vast, vast majority of retailers. They knew the stock was going to be low and demand would exceed supply but they still, along with the retailers, doubled down.

Twitter adverts abound from retailers, encouraging buyers to use PayPal Credit to spread the payments for the cards they would likely not receive for weeks, or even months. Who wins there? The retailers get the money from PayPal, Paypal gets their creddity hooks into another poor sap who can’t afford something in the first place. The customer – yeah sorry my friend, OUT OF STOCK, we will let you know when we have a dispatch date..

Many sites, Nvidia included, set up a little box online where you could enter your email address and be notified the moment the cards went on sale. People who measured this on Twitter say the item went from Notify me to Sold Out in under 2 seconds.

Now I have a speedy internet connection but I’m not sure I could get through a check out process that quickly. Certainly not after a beer.

While there may not have been a pre-order active on this occasion the tactics used by the companies were fundamentally the same. Create a larger demand than there is product and hope that people literally punch each other to death to try and get hold of one and watch the cash roll on in.

It’s the online equivalent of that first Black Friday where everybody was fighting to get hold of a cheap TV. Except here the robots watched everybody jumping on each other while they bought up all the stock themselves.

Some online retailers such as NewEgg firmly refuted< the fact that Terminators had bought up all the best bits.

Let’s dissect their tweet:

Those wanting RTX 3080 GPUs, here’s some info:

Yes Please

This morning we experienced more traffic than the morning of Black Friday

Ooh exciting. Told you it was going to be popular. Hope you had enough stock or at least some way to ensure real humans got to buy it.

Limited inventory sold out in 5 mins

Why not say how few you had instead of tweeting incessantly in the run-up? Keep pressing F5 you said?

We’ll release more as we get more

Obvs

Bot protection was in place, orders were human

Every card you had was complete and checked out inside five minutes by real humans? It takes me five minutes to find my credit card at 6am.

Turn on Auto Notify & check back

I think I’ll leave it until everybody stops being stupid thanks.

 

Nvidia, having realized they were now taking flack for failings on the behalf of all retailers as well as their own online store, mustered a statement.

“To stop bots and scalpers on the NVIDIA store, we’re doing everything humanly possible, including manually reviewing orders, to get these cards in the hands of legitimate customers.”

This came hot on the hooves of the horse that had definitely just bolted.

While somebody was constructing that defense the scalpers had bought all the stock and were busy reselling it on eBay for thousands of dollars… remember that concert ticket analogy?

When will we learn?

From PR messes like this to pre-orders selling out leaving customers frustrated (PlayStation 5 being last week’s example with Xbox to come soon) when will we as consumers and, maybe, more importantly, the manufacturers learn that this is all total nonsense?

Apple was perhaps the first true exponents of creating bigger demand than they were able to supply. They managed to get people camping out on high streets across the globe every time they released a new iPhone but it seemed to garner friendly competition. People joined queues to get themselves on the news and there was always the, relatively amusing story, of the poor kid who missed out by one person.

More recently the tactic seems to be used more aggressively, in some cases garnering support for pre-orders where there will be plenty of stock available. Pre-orders play on the Fear of Missing Out or FOMO as the cool kids call it but it’s all smoke and mirrors.

FOMO however is a real thing. Verywellmind.com tells us: “FOMO is not just the sense that there might be better things that you could be doing at this moment, but it is the feeling that you are missing out on something fundamentally important that others are experiencing right now.

A study in Psychiatry Research found the fear of missing out was linked to a greater smartphone and social media usage and that this link was not associated with age or gender.

Nowhere is FOMO more apparent, and bizarre, than the pre-ordering of digital versions of video games. Items that do not physically exist to be able to sell out in the first place.

I had a ‘discussion’ with my 10-year-old last week because he wanted me to pre-order him FIFA 21 some four weeks before release. His reasoning – you get it as soon as it comes out if you pre-order.

My counter was that the $70 is better in my pocket than Electronic Arts’ for the next four weeks as he can get it as soon as it comes out even if I don’t pre-order. He’s barely spoken to me since.

Why do people pre-order things? It makes no sense. If there is such a limited run I get it from a customer’s “I have to have that” point of view, but then it is down to the companies to protect them, I believe, from unscrupulous internet charlatans intent on making a fast buck at the expense of the loyal consumer base.

In reality, they seem not to care. As long as they can say it’s sold out in 1.2 nanoseconds it is a win for the marketing department, real folk be damned, and that’s not right. At all.

The concert ticket industry has come under scrutiny in recent years for dubious practices, and businesses closer to our sphere of interest better get ready for the same thing happening if this nonsense continues.

Maybe Apple was so successful at pulling off the magic trick and not annoying customers that missed out because, as the major distributor of its products, it could keep control and tweak expectations where needed.

When Good PR Turns Bad

What Nvidia found out last week was that retailers also saw it as an opportunity to screw customers, by jacking prices up way above the MRP and basically holding up a middle finger to people while taking their money. Nvidia suffered not only for lack of stock but from bad PR from the actions of sellers they had zero control over.

Apple would have never dealt with them again. Is Nvidia tough enough to investigate and chastise those whose actions were plain wrong? Or are they happy for their marketing department to back-slap, go out for after-work drinks and look forward to a repetition this week when the RTX 3090 launches, and next month when the RTX 3070 follows?

One thing is for sure, three poor launches and tens of thousands of annoyed customers is not good a few weeks before AMD launches their competitor card.

This will continue to happen while we continue to want everything the instant it is available. Prices will continue to be artificially inflated, bots, and scalpers will take everything away from us and move to big houses in the Cayman Islands, and, well it kind of serves us right.

My message to you, in order to save the human race…. Stop trying to buy things on Day One you are costing us a fortune! Until then, I’ll see you in a queue for the Xbox Series X