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GameStop Corp. Message Board

  • danielwilkins21 danielwilkins21 Mar 5, 2009 10:58 AM Flag

    GME vs AMZN

    This is yet another buying opportunity for GME investors.

    1) The so-called 'news' from AMZN is not really anything new. AMZN has been selling used games for years and so there is no reason why this will eat into GME's market share anymore than it already has--which is rather minimal.

    2) GME thrives on offering instant gratification for gamers. This happens on both the buy and the sell--gamers instantly get money/credit for games they sell to GME and instantly get the game they want after the trade-in. Nobody wants to wait around several days for credit or a game. Smart, patient gamers would simply sell on Ebay anyway. That's old news.

    3) GME is located where teenagers and college kids hang out. GME thrives on foot traffic, the fun of hanging around other gamers, the community element. You don't get that from your postman.

    4) GME has a knowledgable staff...very important for the gift-givers who want to ask staff what to get for their loved ones. You don't get that at AMZN.

    5) Every other major retailer who has tried to enter the used game market has not so much as made a dent into GME. No signs why this will be any different.

    6) In a few weeks GME will announce what we know to be stellar earnings, the forecast will include the much larger installed base of the consoles, the impeding PS3 price cut, the great new games coming out, etc. Wall Street can only ignore actual performance for so long, eventually, it rewards it.

    7) GME trading at the low-end of its trading range. This low-end has seen strong support over the past few months. if GME breaks through, and goes under 23, that would be a serious back-up-the-truck opportunity.

    8) This drop reminds me of the news that GTA IV would be delayed...GME took a big drop. I bought aggressively, b/c I realized wall street can't really be stupid enough to think that GME will lose money by a blockbuster hit being delayed a few months--since they'd still make the money, but just make it a few months later. Wall Street will soon realize its overreacting, that there's nothing 'new' in AMZN selling used games, and that this will have no incremental impact on GME. The same people who didn't buy or sell used on AMZN (or ebay) will continue to not buy or sell used on AMZN (or ebay).

    if you found this informative, please rate with stars. let's drown out the doom-and-gloom nonsense that infects these boards.

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    • Video game trading and buying used games is for trailer trash and slum welfare kids. I would never allow my son to stoop to this level. Cheap bastards! But it new!

    • The key pieces that everyone is missing is that very few people are going to go get a box - pack up their vid games - go to the post office and mail. No kid is going to do that. And very few adults would do that. Why would anyone go through all that effort when thye can just go to the local GME ?? As otheres have said, TRU is the only real competition. But we all know how TRU as a total store is doing - 1 foot in the grave. If they split off into just vid games then it may be different.

      • 1 Reply to dtrosen3
      • I can't really see it working on a significant enough scale to affect GME on any meaningful level.

        They are offering a couple of dollars above GME tradein values and for that you're expected to package it up, print off labels and wait several days for a response? Doesn't seem like a worthwhile value proposition to me.

        As others have said what they are asking people to do is only really a step below the process of selling the games on eBay, which financially is a far better alternative.

    • Tons of excitement on bargain hunter forums about trading their games into Amazon...people love Amazon credit.

    • I think there are a few misunderstandings.

      1. Amazon is offering a totally new service - it buys your used game at a price which is significantly better than what GME is offering - and resells them at prices which are considerably below those of GameStop. It did not do so before - yes, you could sell your used game on Amazon if you had a buyer but only then. Now you just go into their website, ascertain that your game is on the list, download the address label, drop the box into the post, and a week or so later you get either of two things: either a Amazon gift card or the game back. The latter happens if either of two things occur - your game is not salable as is [no origninal box, for instance] or it is not playable because it is damaged. Gamestop will buy your used game if you do not have the box but will take off about 25% of the normal used game price because the game needs "refurbishing". I spoke to a friend of mine at Amazon yesterday and he said that the reception of this new service had been "fantastic".

      2. ToysRUs is very much more of a threat than Best Buy or Circuit City or Blockbuster ever were, all retailers that tried to venture into used games and failed. TRU has a dedicated video game space fully staffed with dedicated shop floor assistants - which the other retailers did not have. Their video game assistants are not quite as savvy as those at GME but they are getting close - all the other retailers did not have a clue. TRU is the third-largest video game retailer after GME and WMT and they are unlikely to make the same mistakes the other wanna-be's made. I phoned the people at the Nanuet store and also talked to a TRU national video game buyer whom I know. Both told me that the traffic in the video game area in the Nanuet store and the other four trial stores had doubled since the announcement.

      3. It is obviously too early to make hard and fast predictions but I do know that the brass at Gamestop is very worried and is following the situation very closely. For instance, they dispatched people to the TRU stores trialing the used games and they had their people sell their used games at Amazon.

      • 2 Replies to toymarketintel
      • AMZN's prices will not be significantly lower than GME's...if they are, they won't be profitable. In any case, you have to consider all the advantages and discounts that go into using the EDGE card. the more obvious point is that GME offers instant gratification for gamers who already know what they want. Gamers don't just trade in old games willy nilly, they trade in old games when they want a new game, and they want that new game ASAP. Gamers who want the very best price for their old games would just sell on Ebay. which begs the question, who will actually bother using AMZN's new service? the instant gratification crowd will still go to GME and the price-sensitive crowd will still go to Ebay.

        AMZN's new service is just lipstick on a pig. online trade-ins is old news.

        Toys R Us has a small footprint, does not appeal to hardcore gamers, is not located in areas where hardcore gamers shop (near high schools, colleges, strip malls and shopping centers). and you don't just start a used game business overnight--you need careful inventory management which GME has developed with several years of experience.

        if anything, the fact that AMZN and Toys R Us are so eager to get into the used game market shows how profitable it is and how it's future should be strong. whatever happened to the DLC debate, and how GME will be the next blockbuster? obviously, used games is a thriving business and will continue to be. GME will be continue to be the leader with its loyal customer base, wide footprint, successful inventory management, and trained staff.

      • Even though I am currently "stuck" long in the stock, I agree with you. People are confusing what Amazon is actually doing here... They will dig into GME margins without a doubt. I am less concerned about TRU...

    • I agree, just 14 days ago Market-Watch issued this article regarding strong earnings performance from GME. Has 14 days changed the outlook for GME's earnings? I don't think so..

      • 1 Reply to bull_no_bear
      • From the article it does read like a new service from Amazon:

        " Inc will allow shoppers to trade in used video games for store credit, a move that may challenge a core driver of profitability for No. 1 U.S. game retailer GameStop Corp. GameStop shares fell 13 percent on Thursday, after Amazon set the trial launch of "Amazon Video Games Trade-In." Users can mail in used games and get varying amounts of credit, including a 10 percent bonus toward items in Amazon's online video games store.
        Amazon's move, which includes free shipping, comes on the heels of reports that big-box retailers Best Buy Inc (BBY) and Toys-R-Us are testing the trading of used games.
        Credit Suisse analyst Gary Balter called the Amazon development "disconcerting," suggesting that it chips into a kind of monopoly that GameStop has on used games, albeit one too small for game trade-in competition from Amazon to have much impact on the specialty retailer's profits.
        GameStop profit margins have benefited from an active trade-in system in which shoppers return used games for a fraction of the purchase price or store credit. The returned games are sold at a higher profit margin than new games.
        "That (Toys R Us testing) in many ways is less of a threat, as GameStop's advantage of 10 times as many locations and selection seem to make them less vulnerable," he said. "Best Buy and others have tested it for some time but have not been as successful."

        But I look at this as a buying opportunity before they blow away earnings on the 17th! ToysRUs is a joke. They are trying to stay in business. They are a big box store. No kid can walk to a big box store and no teenager or older kid is going to be go there because they would not be caught dead in a kids store. The Amazon site is marginally a threat but there is nothing there but an impersonal mega company. If you were trading in your games you would want to deal with a game company.

    • I read that it is a new on-line service from Amazon as reported by Silicon Alley Insider. I have a spread but I do not think we should panic. The next few days will tell whether this is a serious threat to the business model - the Street always gives us the verdict. Once we have the confirmation, we can reset our trades to take advantage of the gap moves. Is Toys R Us doing the same thing?

    • if markets didn't make mistakes, there'd never be buying opportunities. go back and see what happened to gme when gta iv delay was announced. computers are driving this thing down now that stop-losses are kicking in.

    • Daniel,

      Do you know this for a fact that Amazon has been buying used games in the past?

      Is there anything 'new' about the way they will be purchasing/exchanging these used games?


      • 1 Reply to rbutler96
      • When I say buy and sell 'on' AMZN, I'm writing from the customer perspective. Customers can buy and sell used games on AMZN and have been doing so for a long time. Whether the customer sells the used game to AMZN itself or to another customer is irrelevant for GME, since all that matters is that it's yet another channel (like ebay) for the buying and selling of used games. AMZN might buy games for a higher price, but if they want to keep margins worthwhile, they'd have to sell at a higher price as well. And then the more savvy sellers would be better off selling on ebay. it just doesn't matter where used games are bought and sold online--it's the same old competition GME has had for years. if tomorrow Toys R Us or Best Buy announce they'll buy and sell used games online it won't make any dent in GME either. let's not GME's core customer or competitive advantage.

    • Amazon has NEVER bought used games with the indent to sell them... They let people sell used games on their site though. THis is the big difference which you seem to be missing. Amazon is buying the used games and then reselling them at a profit (just like GME)

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