Why Does (GameStore) Offer You $2 in Trade for a $10 Game?

We’ll pick a hypothetical example that is somewhat extreme. Say there’s a game… uh, Halo 6. It’s been a couple of years since release, it came bundled in a Christmas packaging of the Xbox 1440, and the multiplayer scene has been eclipsed by that of Halo 7, so there’s lots of copies out there.

2014-06-16 13.47.25Say I’m Big Boss at GameStore Big Data HQ. I look at how many of these fracking games we have on the shelf, and realize that on average, each of my stores has 40 copies. Criminy. I figure out that the number of copies that are traded in sample stores is close to the same whether I give $4 in store credit or $8 in store credit. In fact, the number of copies traded in doesn’t start to go down until I get down to the $3 range.

I do further research and realize that Halo 6 isn’t selling much better at $7 than it is at $15. Once I increase it above $15, sales numbers start to trend downward. It turns out that when someone walks into one of my stores looking for Halo 6, they’re willing to pay $15. They may even know that it’s selling on half.com for $8, but they want to play it this weekend, so they pay their $15.

Clearly, the better trade-in value is $4, and the better sale price is $15. Even this is really too simplistic, since it ignores the fact that I want to keep the smallest possible amount of inventory that will give me the greatest number of sales. Maybe I’m willing to give $2 instead of $4 at the cost of some lost trades because I can’t actually sell at any price all the copies that will come in if I’m giving $4. I’m sure there’s other factors, all weighted differently.

If you think that GameStop doesn’t have analysts with specialized software that tracks data this way, well, I guess you should hate GameStop on a forum for a while today. My estimate is that my business is at least 25% fueled by such hatred*.

As always, we must remember that customer satisfaction, while usually playing a very important role, is not the goal. As a small business owner, I have the luxury of caring about how my customers perceive me, but even that has limits.  Corporations have a responsibility to maximize shareholder value. I have the same responsibility, but my quality of life as the operator of the business factors in, too, so I’m probably more sensitive to my customers than the big guys. I’d rather be both profitable and beloved, but sometimes you have to decide which one you’ll favor over the other.

(* – When you think about it, this competition-fueling hatred is probably another one of those factors. I wonder if the field in the database is called something like PROJECTED_BUTTHURT_LEVEL. They obviously have found what is, to them, an acceptable level.)