Walmart announces plan to buy used games (1 Viewer)

http://www.gamespot.com/articles/gamestop-shares-fall-after-wal-mart-used-game-announcement/1100-6418376/?utm_source=gamefaqs&utm_medium=partner&utm_content=news_module&utm_campaign=hub_platform

GameStop shares fell today more than 5 percent one day after Wal-Mart, the world's largest retailer, announced plans to enter the $2 billion used game market. Currently, GameStop shares are down 4.53 percent to $37.95.

Wal-Mart will begin accepting video game software (not hardware) trade-ins on March 26. The company plans to pay an average of $35 per title, though trade prices will of course vary on a game-by-game basis.

According to Sterne Agee analyst Arvind Bhatia, GameStop investors need not be worried about Wal-Mart's entrance into the market. Bhatia points out that Best Buy, Target, and Amazon have all tried to enter the used game market and none have had much success.

"It makes sense and feels natural that various retailers that offer new video games would try to offer trade-ins as well. However, as many retailers have discovered in the past, buying product from merchants in bulk is quite different than buying 1 disc at a time from customers," Bhatia said.

Click to expand...

Yeah, this has worked out amazingly for Best Buy, right?

Best Buy and Toys R Us put ZERO effort into pricing used titles appropriately. They basically just stick a $15 or $20 or $30 tag on each game and then leave it on the shelf to rot. Some games are cheaper to buy new!

Not that I expect Walmart to be much better, but you never know. . .

Does that mean WalMart will buy my Leisure Suit Larry?

I'm curious why they expect to average $35 buy back? Are they expecting everyone to sell their new games after a week? Standard practice is to buy something used at half or less than you expect to sell it so $20-$25 average seems far more reasonable. Even with only a 50% markup, $35 average is still way too high unless that $35 is only store credit on your next new game.

One of the biggest differences here as some point out is that Walmart is looking at this very differently then Best Buy and even GameStop. They aren't buying the games with cash, they are giving people walmart gift cards. Thta means these people have to turn around and spend the money back at walmart, often on items that walmart makes pretty good margins on.
This makes it easier for Walmart to offer more money then others and still stay profitable with it. More then that, Walmart can also count on some gift card attrition.. people who get a card and don't use all of it.. or even most of it.

Somewhere like Best Buy and even Target struggle with this because while it can work, them offering out instore cards isn't super attractive to all sellers. Meanwhile, Walmart exists in far more marketplaces then either of those - and especially in marketplaces where there are no 'gamestops' or anything like it.

Walmart could offer a high value in say, Nowhere Mississippi and they don't have to compete with many.
It'll be interesting. I'm not saying it'd work, but where Target tried this in a 'test market' and best buy 'test marketted' Walmart is saying that March 26, every single walmart in America will do this. That's also different.

I used to buy used simply to save money on recently released games. Now, I buy 90% of my games when they're under $15, whether new OR used.

This isn't a bad idea for WalMart. At the very least, they're now actively competing with GameStop and Best Buy.