Snap's Spectacles: $40 million of hype, 220,000 pairs sold

Spectacles were Snap's first real hardware: sunglasses with a built-in camera that shot 10-second circular iPhone-only videos, unveiled in September 2016 and released in November 2016 at $130. To create buzz, Snap launched them through 'Snapbot' vending machines that appeared in unexpected places — a pop-up bus in Venice Beach, a vending machine in New York — and for a moment the scarcity worked: people queued for hours and resold pairs for hundreds of dollars.

The scarcity was inventory that never came. Snap bet the launch narrative on being hard to find, then pulled the product everywhere without checking whether the crowds would still be there. By late 2017 the drop-offs caught up: Snap recorded a nearly $40 million charge for excess Spectacles inventory and wrote down a purchase commitment, and the company admitted it had sold just over 150,000 pairs in the previous quarter. As of May 2018 the total was about 220,000 pairs — 'less than expected' — against the hundreds of thousands Snap had ordered.

The gap between the queue and the cash register is the whole case. Snap manufactured a year's worth of demand stories and only a fraction of demand. The product line did not die — Spectacles 2, 3 and 4 followed — but the lesson of the first run was printed in the third-quarter 2017 accounts: hype is a marketing function, not an inventory plan.