I suppose it’s some combination of election-season jitters, a lackluster Magic release, and normal October retail awfulness, but a bunch of my retailer friends are in distress, and well over a dozen of them have contacted me in the last two weeks about video games. I’ll be giving a presentation in March at the GAMA Trade Show about diversifying your game store into video games, but here’s a FAQ post containing the most common questions that I’m receiving. I’m still happy to answer your questions if this doesn’t cover them, so leave them in the comments.
Where do you get new games?
I don’t. I deal in used games, consoles, and accessories. I buy some new accessories from Hyperkin, who are awesome. New games and consoles are terrible, low-margin, high-risk sellers. A $60 video game typically wholesales for $52-$54, and if it’s a turd the market price can drop to $40 or $20 without warning. You will not be able to negotiate price guarantees or returnability for your independent game store. I have been selling used-only for five years. It’s possible and easy to do.
How much money can video games make me?
I’m more willing to discuss specific numbers privately than I am to post them on Al Gore’s Internet for everyone to see, but suffice to say that I could keep my doors open, pay a couple of part timers, keep the lights on, pay the rent in a very good location, and pay myself a very modest salary. I would not be in just the video game business, but in combination with tabletop games and electronics repair, I make an excellent living and provide for a bunch of people.
How do you price your games? How do you get this stuff into your Point of Sale?
PriceCharting provides an excellent price guide that you can look up game-by-game or download as a big spreadsheet. I have a subscription to the price guide and my point of sale downloads the new prices automagically every night. You may be able to import this price guide directly into your POS system. If you have CrystalCommerce, and your admin panel isn’t currently on fire, they have pricing data and covers and stuff. Nate Peterson’s IMP POS is an upstart alternative that shows potential and also takes care of pricing for you.
How much do you pay for games?
I started off paying 50%, cash or credit, for everything. This grew my inventory quickly but resulted in a lot of low-value junk. What if you gave a quarter for any Magic rare? Yeah, it’s like that. We ended up going with a variable trade value scheme that changes the percentage we pay for a game based on the sell price. This prevents the problem where you have to choose between paying a too-high rate on cheap bulk games and a too-low rate on valuable high-end games. My rates vary between 20% and 80%, but most games are under 50%.
Don’t people try to sell you stolen stuff?
Yes. Take ID and make a record of every trade-in. If your point of sale system doesn’t allow you to attach customers to transactions in order to track them, you’ll want to fix that. Don’t take trades from people who creep you out, and don’t hesitate to call your local constabulary if you feel that something fishy is going on. I deal with this perhaps three or four times a year.
Won’t it change the culture of my game store to have all these video gamers come in?
You are going to get a wider variety of customers than you are used to, but it’s an opportunity, not a liability. I thought you wanted muggles to come in to your store for conversion into meeples? I never thought that store owners would be concerned about lots of new customers, but I have gotten this several times.
For overall civility, I would say that your average video game customer rates with or just a hair below your nicest Magic players, and much higher than your average Yugioh player. (Haters gonna hate.)
How much space do I need? How do I display this stuff?
Figure on devoting 300-600 square feet of shoppable retail space to the category, in addition to two four-foot display counters and maybe a small closet’s worth of extra storage and supplies. More is better, but you don’t need much on the whole. Gridwall or slatwall displays will work. Bookshelves will not work.
How much do I need to invest up front?
Not counting fixtures? Figure on making a $500-$800 Hyperkin order first thing. You’ll also need to spend a couple hundred bucks on some solution for storing CD/DVD media behind the counter. You need a small TV to test systems. You need to be ready to spend several thousand dollars in cash buying games and systems off the street, and you need to spend some money advertising on Facebook that you’re the buyer with CASH IN HAND for their video games. When I open my second store next year I plan to spend five grand over three months getting the word out.
Can I get effective results on a near-zero budget?
No. I can only help you be a professional retailer. I don’t know how to help hobbyists.
How do I get into this category in time to be effective for Christmas?
You don’t. It’s October 27th at the time of this post, and it’s too late to bring in enough inventory from the street to be anything other than pathetic for the holidays. After the holidays is tax refund season, where sales continue to be strong and trade activity scarce. When everyone runs out of tax refund money in April or so, trade-in season starts. That’s when you want to strike.
Of course, it’s possible to either overpay for inventory on eBay or buy out a closing store. If you’re buying out a store, avoid the deal if the store has been running any kind of pre-close clearance sale. You can get started with garbage inventory, but you shouldn’t. You’ll regret it.
I can’t make my November rent payment and I need to make a change in the next six weeks, or else.
I can’t help you if it’s gotten this far. Go to a quiet place tonight after you close tonight, look at your store’s profitability over the last six months, and determine whether you’re collapsing or merely failing. If you don’t have a plan for making expenses other than hoping for a miracle, it’s time to be a grown-up and start moving toward responsible closure.
As a totally heartless aside, I buy out closing stores. Contact me, and maybe I can help you get out without losing your shirt.