Used Games: An inside look from a retailer’s perspective

 

Used Games: An inside look from a retailer’s perspective

 

By Ryan Sherer

 

The used game industry has been around for some time now, dating back to the early days of gaming. You might say that Gamestop pioneered the used game market but if you are under that belief you are wrong! The used game market started with what we dub as the mom and pop stores. I am not sure of where it all started, if I did research I could definitely tell you where and who came up with it. Ultimately they get recognition for the market and as the industry leader in the market I guess they can have the right to claim it. The corporation that we all do know made it by buying out the competition or the mom and pop stores but many still exist! Let’s fast forward to 2012 and get some inside looks on how they have impacted the industry, what mom and pop shops do to survive, what all the fuss is over developers and used games and lastly trade in prices and how that part works for the retailer.

 

Gamestop has definitely shaped the way video game retailers do business but they have done this at a cost, the cost I will address later. The company had gone mainstream years ago and is at the forefront of the industry, they have drove the used game market for the past decade and before. Used game sales have dramatically increased over those years, enough that bigger businesses like Best Buy and Walmart have started accepting used games. It’s more acceptable now to play games and even more so to trade those old games in to get the newest and best there is than any other time in gaming history.

 

Now let’s look on a smaller scale at the mom and pop shop side. I know from being a retailer I kinda take offense to that name or being put in that category, my company is as good, if not better than that big box store. Anyway, most small retailers move into cities with no big box presence and they are fine to survive and some do really well at it. Small areas that have no big box presence is getting harder and harder to find but there are some retailers that will go forward and do battle with the big box. My store, GAMER VGA in Findlay Ohio is one, opening in a town with three Gamestops, two Walmarts, Best Buy, Meijer and Sears! So this brings us to the question ‘What do small retailers do to survive?” I wish I could give you a simple answer but it’s not so simple, it takes a lot and even when you think you might have it, you don’t! Retailers that are new or owners that think they know will try to compete, undercutting prices and giving way too much for trades. I can recall my first business lesson ever, never undercut your competition and offer more; those are some words to live by when you run a business! I can recall right after opening my store there was a gentleman that came to town after me, he even ask for my help with distribution, I’m not going to undercut but I’m not going to help anyone get started in the same town, so I declined. Yes, this man got mad at me and threatened that I would be the first to fail in my town, he on the other hand undercut and gave too much trade; he is no longer in business sadly. So what is it that sets smaller retailers apart? It’s the way things are run! If you go to a smaller retailer your more likely to get better customer service, the guy behind the counter probably knows his games and such, you’re going to feel more personal and more than likely if you have a problem you can speak with an owner, not a manager. Small retailers try customer cards; discounts and some will even break street date on a new game. The small retailers that I know and friends with owners and I all deal in retro games also, retro is usually what drives a small retailer, very rare that a smaller retailer can function on just newer items. Retailers will generally find other niche products to make money inside their store like system repair, collector cards like Magic the Gathering, one retailer I know sells skateboards and accessories and I run arcades inside mine. We all have our little niche when it comes to those things but it’s generally what the owner is knowledgeable in or someone they know and trusts knowledge. So in closing this part I would just like to point out that the smaller retailers have the knowledge behind the counter and can make a personable experience, something the big box will never have.

 

Now let’s talk development, why are developers so mad that used games are a market, why now when it’s been going on for so long? I cannot fully answer the question but I know the developer doesn’t make any money off that newer game you just bought used for five dollars less. I can understand and see where they can get angry because they aren’t making the money off of that copy but on the backside they already did. I will agree if used game stores did not exist and there was no internet way to buy used then yes, we would all have to buy new and they would make the money. We live in a society today that does have the power of the Internet and we do have access to used game retailers, so what are they really going to do? The developer or publishers have already started doing, almost every new game you buy has a voucher for something you get only if you buy new! I know in some instances the voucher code being used essentially makes the game worthless beyond single player. So you buy a used game now and then you have to buy a voucher just to play online, so that used price you got really wasn’t that good of a deal! I believe this could have been avoided altogether with the big box coming up with some kind of kickback to developers whenever their game sold off the shelf, greed is the ultimate ending and where digital distribution will take over, not now but it’s coming!

 

Now to the trade in part, the part of the article that may blow you away! It’s no surprise that the used video game industry is fueled by you the consumer. The things that consumers don’t see are the things behind the scenes, how much profit and loss, where the trades go, what is done with defective trades and where do the trades come from. Profit and loss on used games can vary but the trade in amount is so low that stores have a lot of room to work with this part. In general and from personal experience the only games to worry about taking a loss on are sports games. Sports games are an every year updated experience and so the year before the current usually doesn’t retain much value, well unless your Tiger Woods or Fifa. In the general scope of all used trades it’s very rare to take a loss. The next thing is, where do the trades go? Trades are generally kept in the store they are traded in at and smaller stores like mine they remain there no matter how old they get. The big box stores will only let a product that doesn’t sell only sit in one location for very long before they transfer it to a different store they think it will sell at. Defective trade in product, what happens to it? The defective trade is also a creature of it’s own, again with smaller stores retaining them or not trading them in at all and big box stores sending them to their centers to get repaired and resold to the consumer as refurbished products. Smaller stores will retain the defective trades if they take them and then find someone to repair or do the repairs in house. Companies do lose some from defective trades in some instants but profit from others. The last topic to cover is, Where do trades come from? In a nutshell they come from the consumer trading in to get the next best thing, but is this always the case? The answer to that question is NO! Big box stores buy small retailers out to eliminate their competition in those territories as well as boost their stock of games. The other option some retailers have is to drop ship the stock to different territories so those places have the stock they need. In a smaller town with local video game stores the owners generally have city pride and the trade in stock they get comes from the town their in and they generally don’t order or bid online to pull new stock into the store. Generally if the retailer can get a good flow going then trades will just flow fluently without interruption. I know first hand when that flow doesn’t happen right, you get customers that complain that one section lacks games!

 

It is hard to gain ground in an industry that has outgrown itself, growing in other directions and already has it’s main contributor. The smaller video game stores will always take more pride in what they sell and have a vaster knowledge of the product they sell! In the end, if you have a small video game store in your town and it’s game sections are smaller, support them before the bigger corporation and those sections might just grow!