Natural disasters are also one of the dangers of overstocking inventory as any sort of natural disaster may damage either software or hardware permanently. The decrease in prices due to regulations, consumer demands or competition may also impact retailers adversely who hold large inventories of the software. The launch of other video games by competitors significantly affects the demand of previous video games and the demand suddenly drops. All these dangers may cause huge losses if there is a very high level of specific inventory in retail stores (Bozarth, 2006).
The retailers would benefit quite significantly from direct shipments such as those provided by Nintendo as these retailers would not have to worry about very low or very high levels of inventory and can focus on other areas of business. The consumer demand in the holiday season and in the off season could be met quite effectively and retailers would not have to worry about selling items at low costs just to free up inventory space. The retailers would be relieved of the overall dangers associated with overstocking and under stocking of inventory. Although retailers have decreased their inventory carrying costs their transportation costs have increased due to direct shipments by manufacturers and manufacturers want to share the increased transportation charges with their retailers. The retailers are not simply trading inventory costs for transportation costs they are also minimizing the risks of overstocking and under stocking of inventory (Bozarth, 2006).
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