It's no secret that video game retailer GameStop's bread and butter is the used games market. In fact, in the company's last quarter, GameStop's used games business comprised more than 45% of its gross profit for the period. Other big retailers have tried starting up used game sales of their own, including Wal-Mart, Best Buy, and Toys 'R' Us, but GameStop isn't concerned one bit.
“We don't talk about our competition,” Tony Bartel, Executive VP of Merchandising and Marketing for GameStop, told us recently when we asked about companies like Wal-Mart encroaching on GameStop's used games biz. “What we like to talk about is what we do really well. Here's the facts that I can tell you. What's really important from our perspective is that we are giving the person who loves to play games just a little bit more, and part of that is offering them an alternative form of currency, that they can bring in the games they no longer play and trade them in for video games. If you look at the difference between us and the competition, we are the only people that actually take their unwanted games and turn them into new video games. As a result, over 20% of the value of the new games we sell are funded by these trade credits.”
Bartel continued, positioning his company as an “enabler” for the average game buying consumer: “If you stop and think about the role GameStop plays in the industry, we literally enable gamers to come in and sell their unwanted games and buy the new games. That's an important distinction – we are totally focused on helping gamers afford the games that they want to play. So for instance, in the case of Modern Warfare 2, over 20% of the purchase price that people paid for it across the world is being paid for at GameStop by credits that they get from trading in games. And that number has increased this year; it's higher than it's ever been. So that indicates that our model is working extremely well in allowing more people in this difficult economy to afford the games they want to play.”
2 Comments
3 months ago
After reading this, I just had to submit a response.
Gamestop has every right to NOT be be concerned with Best Buy, Wal-Mart, etc. because no one is going to beat Gamestop at the "buy low - sell high" racket they have perfected over the years. Those companies will get some of the market based on convenience if a Best Buy is closer than GameStop but the truth of the matter is GameStop caters specifically to gamers and they have built a lot of customer loyalty with getting the trade-in shuffle down to a science over the years. Furthermore, younger gamers are typically using their parents money and don't understand or have the motivation to switch horses. Older gamers tend to notice the unfair trade-in practice in general and don't care if it's GameStop or Toy R Us offering bad deals. Older gamers simply stockpile their games rather than dealing with time consuming options like selling them on eBay. GameStop has been instrumental in cultivating the perception that your games aren't worth anything when you're done with them.
Not having to worry about all the brick and mortar competition is where I stop agreeing with Mr. Bartel. If gamers are willing to get shafted over and over, you can't blame GameStop 100% for exploiting them. However, the idea that GameStop is doing good for anyone but their shareholders and highly paid executives is a farce. GameStop's retail practices not only take money away from developers and publishers, they have made billions of dollars from unfair trade-in values. If I buy a used new release at GameStop for $55, finish it in two weeks, and bring it back for a trade-in, they'll give me about $17 (store credit). They will take that game I just traded in and put it back on the shelf for $55. I them put my $17 credit towards another used game that costs $55. Rinse and repeat.
What does GameStop need to worry about? They need to be worried about a company that can destroy their monopoly with something totally new and better that people love. Remember, NetFlix came out of nowhere to slay Blockbuster.
So, what's out there? Reluctantly, I have to admit I've spent way too much time trying to find a GameStop alternative. I've tried to use eBay to sell my used games but with all the listing fees, expirations, and 9,000 other people selling the same games for $1 less than me, it's really more hassle than it's worth. I've tried Gamefly but the waiting cue for the games I want is dreadfully long and whenever they have sent me a game I want, I've only received about 60% of them because my games were stolen in the mail! I've tried using Goozex, which is a trade-in site that uses a confusing point system instead of store credit.... let's just say I refer to that site as Gooz-sux these days. The only site I have used so far that really works for me is SwitchGames.com. The big difference with SwitchGames is that it's a peer to peer trading system. There are no trade-ins, subscriptions, or points, I trade directly with other people I trust. I've been using SwitchGames for about three months now and I must say that I'm impressed.
I'm not sure it will be Amazon.com or SwitchGames.com that becomes a thorn in GameStop's side but there will be a company to do it. The market is way too big for one company to hold a monopoly and it's going to take new thinking to take a bite out of GameStop's pie. No one is going to beat them at their own game (don't pardon the pun).
3 months ago
Some good points lbale20. I've heard some good things about Dawdle.com too. I've not used it or SwitchGames so I can't speak from personal experience.
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