We all have fond memories of shopping in GameStop. Heck, the store supplies us with video games, which, as we all know, are the ultimate sources of human happiness. But despite all that, we sometimes find ourselves wondering, "Is GameStop a rip-off?"
Ask any random gamer about the store, and the responses will vary widely from highly positive to violently negative. In fact, GameStop employees even have conflicting thoughts about the brand. So, the question remains; is GameStop really all about giving power to the players or is the shop more focused on stealing money from children?
Sometimes the company really isn't at fault (like that credit card security breach), so it's necessary to dig around and see if GameStop is intentionally shady. Maybe it's all just a misunderstanding. You'll be surprised to learn the truth.
GameStop's entire business model is based on the buying and selling of used games. Whether you think the amount you're paid for older games is fair, it's an undeniable fact that loads of gamers prefer to trade games at GameStop instead of dealing with potential scammers on Craigslist.
But the thing is, most of GameStop's money comes from selling those games, and the company prefers if you buy something used instead of something new. Management cares so much, they've implemented a "Circle of Life" quota system, to ensure employees push used games more than new games, even to a customer's detriment.
Kotaku interviewed several GameStop employees who admitted that they frequently lied to customers, claiming that new game systems weren't available when they were. Customers had to purchase used items. Employees sometimes screwed over customers so as not to miss corporate-mandated quotas.
You may wonder why GameStop employees feel compelled to lie about new games. Missing a quota is bad, but surely GameStop would prefer employees to actually help customers rather than fulfill an arbitrary sales number? And certainly the company would value employees that put the customer first in all things?
Unfortunately, though, there are many, many stories about GameStop employees fearing demotion or dismissal. After all, GameStop has an endless pool of eager, new candidates to choose from whenever a job opens up. The establishment doesn't need anybody.
That dreaded "Circle of Life" policy turns regular staff into used car salesmen. One employee mentioned:
"When we’re faced with either losing our jobs or selling a product that the guest doesn't want, nine times out of 10, we’ll sell something other than what the guests want... I worked two jobs myself until I hit [Assistant Store Leader] just because I didn't get paid enough to support my family. And then shortly after I received my promotion and quit my other job, they roll out [Circle of Life]."
Many employees have to match sales quotas, regardless of their own morals.
Even when employees aren't outright lying about how many copies of a new game they have, you better believe they do just about anything to get you to buy used. This is because the profit margins on used games versus new games are insane.
In the third quarter of 2016, GameStop made over $30 million more from used products than new ones. Unlike retail chains such as Best Buy or Walmart, GameStop doesn't have very many avenues to make money outside of used game sales. New games are only supposed to get people in the door.
While new games only net GameStop 21 cents per dollar, used games can earn 34 cents per dollar. That 15% has a huge impact.
People often complain about how little GameStop pays for trade-ins. After all, you could make a lot more money selling somewhere else, right? People still do those trades for convenience, though, and GameStop makes bank.
For example, trading in a used Xbox One X nets you $300 in store-credit or just $240 in cash. And employees won't even let you use that vaunted PowerUp Rewards card that's hyped so much. The rates are mostly nonnegotiable, no matter your membership.
So what does GameStop charge for a used One X? It retails for $480! That's $180 to $240 in profit. And if you bought the system new from them for $500 in the first place, you essentially handed them a free $200. That's what you lose between the purchase and the resale.