Serious help needed regarding retail video game sales.

[Cmosfm]

Yes, now before you go saying I'm just some odd kid wishing he could have a game store...Im 20, and own a jewelry kisok in my local mall thats doing fairly well. Thing is, theres not enough money in it, and im getting tired of it. I'm hoping within 4-5 more years to move up to something bigger and better, yeah, I know that's a long time but I like to plan ahead. :)

Anyways, I want to open a retail game store, new/used/trade/buy and possibly rent sort of like Microplay used to. I'm just trying to figure out is it a profitable buisness to be in. I havent done much research, But from what I hear system sales bring zero profit...all profit comes from software sales and peripheral sales. If that's the case...what's the profit margin on average for software?

Also used games, classic stuff like NES, SNES, etc...Im figuring I can just keep ahold of all the doubles and such I pick up in the wild and store them. Stock being built up while I collect. Either that or if worst comes to worst I have my own personal collection that would be stock enough as it is.

Ok, any info would be very helpful in helping me make this decision. Thanks a lot!

[Ed Oscuro]

Ooh, that's neat. Everybody's going with consoles since PC games don't seem to make any money (you might see about getting some slightly older PC games cheap and see if they sell, no lots though!), and is it possible that you could put a warranty on stuff, like the big stores to (which they make money on)? How about offering the ability to trade in PS2s that need to be sent in for repairs (which you can do for free) and let them take a working one home? Perhaps those aren't the best ideas (or even legal, with the warrany part), but I think those are some angles worth considering.

[Half Japanese]

Hey Cmos, we're in the same area, and if you ever get it going, I'll probably stop by there a couple times a month. I always thought it might be more profitable if you did other things too. The advent of LAN play on consoles has me really interested to see where that could go in a business. For instance: setting up some LAN matches on Xbox (or Gamecube, but to a lesser degree). I know a moderately-advertised Halo tourney would draw quite a crowd. Charge five bucks a head and give out good prizes (that cost less that what you took in), sell some snacks and that's pretty easy green right there. Only potential pitfalls are sore losers and those that might use this "busy time" to try to steal (it happens).

You would probably also want to selectively accept dvds as trade-in. I say selectively because anyone who has worked in a game store can probably tell your crackhead horror stories, where a crackhead brings in massive amounts of stolen stuff or either expects a lot of dough for the $5.50 walmart dvds. I think a club kind of like EB/Gamestop could work well too. Maybe 10% on all used stuff, but maybe have 10% off of everything in the store for cardholders on a day that's been particularly slow (like a Thursday or something). A friend and I kicked around this very same idea, though from a much different approach (more focused on LAN than store). LAN also has the advantage of "sneak peeks" if you get popular enough. I know I did a little bit of research on some LAN places when thinking about possibly opening one of my own one day and I noticed that a place called Lan Lizards (www.lanlizards.com I think) got a few titles from Microsoft to preview and play multiplayer. Pretty cool. Good luck with whatever you decide, and PM me if you want to talk about ideas some more, I'm fairly full of them on a regular basis.

[Nature Boy]

My friends own a hobby shop and carried video games in the Genesis and SNES era. From what I remember their cost from their distributor was usually *more* than what Walmart would sell it for. So you'll never be able to make much money selling software new.

They also rented games and that was a mixed bag. On the one hand you've got to be sure you get the product *back*. And on the other hand you've got to rent it enough times to cover your costs. IMO renting isn't worth it either.

I think that the way to go us used games. You can mark those up 100% say (i.e. pay half of what you sell it for) and if you move enough volume you can make some decent money. IMO Microplay would make more money by decreasing the prices of their stuff and increasing the volume that you sell. Instead of making $15 on a VCS cart, say, make $3 and sell 5 of them in the same span of time. But finding that balance is the tough part.

[maxlords]

There is almost NO profitability in new software of any kind. It's as bad or worse than hardware, and 99% of the time, it's cheaper to buy at Wal-mart than from a distributor. Same goes for rentals....there's money in it but it's SO much hassle that it's not worth it. The only way you'll make good money is on used games, and that's IF you can get enough product into the store, and IF you can manage to find a decent storefront (as malls TYPICALLY don't work for used product).

[Oobgarm]

There is a neat little store in this area that is like a traditional retail store, but they also deal in imports and obscure gaming stuff. They also hold tournaments each week and have a "weekly challenge" with a high score to beat. They also have a big get-together party thing at the store each Friday night.

The only downside is that they're priced a bit steep on domestic stuff, both new and pre-owned. They're a bit out of the way to be honest, they're in between Cincinnati and Dayton, so I can understand things being a bit pricier since they don't have any competition nearby.

I enjoy going there mainly for the imports, but the way everything is set up looks like the people who run the place are genuine gamers who have a passion for the hobby.

Here's a link to some pics of the place, which is actually their entire website. :D

www.game-junkie.com
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Since someone mentioned LANs, we've got a card shop kinda thing nearby that deals in Magic, Mage Knight, YGO, etc. They also have a lot of computers set up there for gaming. There's always someone there on the computers, but I honestly don't see it as being a huge moneymaker, especially considering the costs involved with setting up. Xbox LANs, on the other hand, might just work.

I'd avoid DVDs. I certainly wish Gamestop hadn't started taking them in. Let those other used CD shops take them. It will help keep those aforementioned crackheads and dirt out of your store. The amount you gain on the occasional sale is not worth the hassle of paying for them and letting them sit on the shelf.

[Player-2]

HI! Usually I just browse through this website,but I thought I would log in and offer some help on this topic.My first advice would be: don't try being a clone of another store.The other posts are correct....there is no profit in new releases or consoles if you compete against established companies.Now that the industry has matured,and Walmart etc are all mass sellers of video games.profit margins are very lean.You may find it necessary to carry AAA titles,however,to avoid customers going somewhere else for those "automatic"sales(whether they are profitable or not is inconsequential)Peripherals have a great mark up,but also a high return rate.Most sellers(Walmart etc) can't offer service and knowledge.You can.Don't waste your time and efforts trying to make a profit off the "hardcore gamer....anyone reading this :) .They know too much to be willing to pay for your knowledge.If you have studied your statistics(if you haven't....then don't to gamble a store venture)then you are well aware that gaming is now a mass-market venture(hence Walmart etc).Most gamers don't know;and don't want to know;how all the stuff works.They want stuff at a good price(quality used games)from someone who doesn't talk down to them(or answer with a dumb look and I don't know) and gives them what they need quickly(honest service).These customers now represent over 80% of all gamers.That is the avenue that can offer the most options with the least risk.As for the business end....make sure you understand "cost of goods".You will face audits.Video game stores are targets for many "wanna make headlines" folks at different times of the year.You show me a game store that hasn't faced audits and/or TV interviews,and I'll show someone who needs to advertise and get a little better-known LOL .I've been on the local TV almost every year....and get frequent audits(folks who hate and blame video games can make nasty stuff happen)...Usually following a "catatrophe".My advice comes from ten years in video game retail with eight locations.And,by the way,I have not seen even one successful LAN setup in the last five years.DVD's and CD's are something I have considered,but the knowledge base is so high,I stayed away.From what I understand,You can expect to sell one of five units received unless you really know your titles.(you can only give 20% of sale price to just break even)I hope some of this helps.Take care Doug Player-2 game exchange

[Flack]

My friends own a hobby shop and carried video games in the Genesis and SNES era. From what I remember their cost from their distributor was usually *more* than what Walmart would sell it for. So you'll never be able to make much money selling software new.

Just wanted to second this. My parents owned a little computer store for a while, and I remember my dad's constant complains that Wal-Mart was cheaper than his dealer catalogs. This was back in the mid/late 80's. His suppliers charged him $8 for 10 5 1/4 floppies, which we used to resell for $10. Then Wal-Mart started selling them for $5. New software was even worse. I remember my dad with his head in his hands when Wal-Mart's circular would come out.

[Cmosfm]

Thanks a lot guys...this has really helped. I'm really liking the advice, and knowing that theres not much profit in new games gives me a lot to think about.

I want to own a game store...badly...but I refuse to start up a profitless buisness. I think I'd have to work mainly on used games. But I've got some more ideas - multistore, sorta games and something else profitable. Ive got a long time before I really jump into anything cause Im still working my way out of debt. Long hard process...but once Im out of debt Ill start saving everything from my store...then work toward something new. I eventually have to get out of this mall.

[dave2236]

player 2 summed up mostly what I was going to say

another thing is that 95 % of your customers are not collectors. Do not aim your business towards collectors, you deal with regular people who would rather buy 10 crappy $3 games than one really good $20


You make money on

DVD's
used PS2 and GC
used gameboy
SNES, NES, PS1
N64

Low profit on

Genesis
X-Box
Game gear
intellevision
VHS

[NintendoMan]

I think it would be really neat though if someone put together a store with mostly classic stuff though. It would be harder to find stuff to make money off of, but as someone else said about dealing with regular customers, I do agree.
I don't know how much money there would be in a classic shop though, I have never been in a "TRUELY" classic video game store. Good luck with whatever you do!

[kevincure]

Good luck if you go through with the idea. Here's some advice that I picked up from a successful game store where my friend worked. My old town of 140,000 had a Gamestop, EB, Game Crazy and 4 independent game/used game stores when these guys opened their store, yet they were able to succeed even in such a saturated environment. Within six months of opening, no joke, they were in the black and had started opening a second store a few towns up the highway. The owners were more or less straight out of college, as well. Here's how they did it:

1) Stay out of the mall. You don't want to open at 10, because no one shops for videogames then. You don't want to close at 8 or 9, because you'll lose the Halo Tournament-style business. You don't want that expensive of a lease, and you don't want to have to compete against the EB or even the Target at your mall.

2) Used games make more money, but know what stuff it worth. Don't buy games, especially CDs, in bad condition - those are for the pawn shops and you don't want the hassle and cost of returns.

3) Rentals can make money. The store in my old town rented for a buck a day: You paid the balance on return of the game, and of course needed a credit card to open an account. They had very few theft problems, and filled a niche on price that Blockbuster and the like weren't filling. The better idea? All games were rent only for the first month, after that they were for sale at 40 bucks (although you could still rent them until they were sold). If you decided to buy the game after the one month period, you wouldn't have to pay for the rental. They moved inventory quickly this way, and ended up pulling profits on what were basically the "no-profit" new games.

4) 4 $2000 Widescreen HDTVs, all linked up to Live and PS2 Network, with nice leather couches. You know that shitty vgame store that has "stay and play" on their 25" RCA? What's the point? Stay and Play or Halo Tournaments or SOCOM, etc., were all better when the stuff there was much nicer than what you had at home. They charged something like $8/hr to play there, and you could use any game in the store, of course. Their Halo League drew dozens of teams, paying like 20 bucks a player with nice payouts to the winners.

5) Keep the store clean. What's with game stores and not knowing how a vacuum works?

6) Hire friendly people.

7) Locate near a college. Buy cool stuff for you store like PacMan machines or old videogame posters. Have things like a NeoGeo that you people can pay to play on in the store. That's the kind of advantage you have that WalMart doesn't.

It's definitely possible to make bills in videogames. Here's the last and best tip: Come to Boston and bring your store. I'm not joking when I say this city of 600,000 or so with 200,000 college students in the area has only 4 videogame stores, and all of them are EB or Gamestop. There aren't even any good used CD/game places. Huge untapped market, I promise.

[Cmosfm]

kevincure...wow, you just seriously inspired me. Those ideas are excellent, I like them, it really sounds like this may work. I guess I'm going to have to work hard at my jewelry store for a while...but after the debt goes away, I believe this just may work.

Thanks for inspiring me, and everyone else. The ideas are excellent...keep them coming. One day I WILL get out of this crummy mall and into my own store. I love it, thanks guys!

[Masco73]

If I may ask, what do you pay a month for your kiosk?? I always wondered how the people at those kiosks made any money. Most of the time I would see the person sitting there with a bored look on thier face.

I once consider doing much of what you are looking into. I was going to sell used games from all systems and small collectibles. When I asked about one of thier smallest kiosks it was $800 on regular months and between $2000-$5000 during the holidays depending on location in the mall. This pretty much blew me away. Why would I pay all that rent when I could basically do the same thing on ebay without any overhead!

[Masco73]

If I may ask, what do you pay a month for your kiosk?? I always wondered how the people at those kiosks made any money. Most of the time I would see the person sitting there with a bored look on thier face.

I once consider doing much of what you are looking into. I was going to sell used games from all systems and small collectibles. When I asked about one of thier smallest kiosks it was $800 on regular months and between $2000-$5000 during the holidays depending on location in the mall. This pretty much blew me away. Why would I pay all that rent when I could basically do the same thing on ebay without any overhead!

Good Luck!!

[Cmosfm]

If I may ask, what do you pay a month for your kiosk?? I always wondered how the people at those kiosks made any money. Most of the time I would see the person sitting there with a bored look on thier face.

I once consider doing much of what you are looking into. I was going to sell used games from all systems and small collectibles. When I asked about one of thier smallest kiosks it was $800 on regular months and between $2000-$5000 during the holidays depending on location in the mall. This pretty much blew me away. Why would I pay all that rent when I could basically do the same thing on ebay without any overhead!

Good Luck!!

Actually, its damn hard to make profit here. Rent is 1000.00 a month and 3000.00 in Nov. & Dec.

If I did't live at home with my mom and have few other bills I wouldnt make it. The sales are pretty slow up until Christmas. The only bills I have currently are the monthly rent here, 500.00 a month toward my debt (only 10,000.00 left!!!!!), and about 400.00 a month for other assorted bills. I average about 100.00 a day here right now. Pretty pitiful actually, but Im making ends meet, and I feel things will get better.