Are GameStop employees really your friends? Well, not exactly. Behind that friendly smile and helpful demeanor lies a carefully constructed system designed to push used games and maximize profits. GameStop’s main goal is to make money, and they’ll do whatever it takes to sell more pre-owned games than new ones. But why? Let’s delve into the intriguing world of GameStop’s employee incentives and explore the reasons behind their unique business model.
The Circle of Life
In recent years, GameStop has implemented a program called the “Circle of Life.” Under this system, each store is given specific sales targets for pre-orders, reward card subscriptions, used game sales, and game trade-ins. These targets are based on the store’s total transactions. For instance, if a store’s quota for used game sales is 30%, and they make $1,000 in sales, GameStop expects at least $300 worth of merchandise to be pre-owned. This stringent quota system has left employees fearing for their jobs, as their performance is closely monitored and assessed.
It’s All About Incentives
As someone who once worked for Electronics Boutique (which was later acquired by GameStop), I can attest to the pressure employees face to prioritize higher-margin items over new games. The pre-order system plays a crucial role here, as GameStop wants to avoid being stuck with unsold copies of new games. A sealed game sitting in the back room is a liability. GameStop’s real concern is not that a game will sell out; they can always buy more copies. The company’s main focus is on minimizing purchases from distributors and maximizing trade-ins and accessory sales.
In fact, GameStop is heavily invested in the used game business. Their profit margins from used games far surpass those from new games. Just take a look at the numbers: in the third quarter of 2016, GameStop made a staggering $218 million in gross profit from used and “value” video game products, with a profit margin of 46.4%. Meanwhile, they made $187.3 million from new games and hardware, with profit margins of 24.3% and 13.1%, respectively. These figures speak for themselves.
The Long-Standing Game
This situation is not new; Gamasutra reported on the high profit margins of used games as early as 2009. GameStop thrives on pushing used games and systems because they generate substantial revenue. While we may not know the exact price GameStop pays for each PlayStation 4 Pro, it is common knowledge that systems usually have low or even negative margins for the companies involved.
GameStop’s website further emphasizes their focus on used products. When you search for consoles, you’ll find yourself confronted with multiple options, including used and refurbished systems, before finally stumbling upon the new systems. The same pattern holds for other popular consoles. The message is clear: GameStop wants to maximize their profits by selling you used or refurbished systems, even if you initially set out to purchase a new one.
A Business Perspective
Let’s be fair here: GameStop is not an evil corporation. It’s simply a business with easily replaceable staff, largely consisting of young and enthusiastic clerks. Their primary objective is to generate revenue, and used games and hardware are where the money lies. It comes as no surprise that employees are encouraged to prioritize these items. GameStop’s website employs various strategies to lure customers into buying used products, but there is a certain transparency to their approach. The trade-in values and used game prices are readily available online for customers to evaluate.
Moreover, purchasing used games offers significant cost savings, a fact not to be overlooked. While the ethical debate around supporting game creators is complex, there is undeniable value in buying lower-priced used games. GameStop is not alone in this business model; other retailers, including Amazon, have also delved into the world of used games and trade-ins.
The Bottom Line
So, when you walk into a GameStop store, keep in mind that the clerks are not there to sell you what you truly want. GameStop’s ideal scenario is for you to trade in your old games and buy from their selection of used games, where they can maximize their profits and avoid sharing revenue with game developers. However, it’s important to remember that GameStop does provide a valuable service. They transform your old games into new ones, and many successful game sales are fueled by customers using trade-in credits. GameStop’s approach may not be hidden, but their success suggests that their service holds value for many gamers.
If you find yourself facing resistance from GameStop employees when you’re looking for a new game, remember that there are other options. You have the power to walk out and explore alternative stores that will offer you a straightforward response. So, the next time you embark on a gaming quest, armed with your $60, consider all your options and make an informed choice.
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