This seems like an interesting plan: Wal-Mart is now going to accept video game trade-ins in 3,100 or so of their 4,835 U.S. stores. It’s interesting because normally when you trade-in a video game — say, at GameStop — you use the money to probably buy another video game. But at Wal-Mart, you could trade in a bunch of video games and use it to buy, well, actual food for your family. That’s the first part that’s interesting. The second part is that Wal-Mart actually tried this idea before, back in 2009, but it didn’t work. 17 hours ago, though, the corporate YouTube had a flashy new video about how to trade in games this time:
The partnership in 2009 was with e-Play; this partnership is with CExchange, profiled in the top video above. They bill themselves as “the experts in electronics buyback,” and their tag line is “Get new value out of your old technology.” They’ve worked with Wal-Mart before on SmartPhone trade-in programs and even have a landing page on Wal-Mart’s site. CExchange is actually the key player in this whole idea; you can make an argument that the video game trade-in industry is about $2 billion in the United States, and GameStop tends to dominate there.
So, what of GameStop? They have 6,000 locations — which is about twice the number of Wal-Mart stores that will have this option — but when Wal-Mart announced their plans, GameStop’s stock dropped seven percent. The one good thing they may have going in their upcoming competition with Wal-Mart is that most research and anecdotal evidence around gamers shows that they like to trade in games to generate money towards new games. If they don’t want bacon or camping equipment or a DVD (options at Wal-Mart) and instead just want games, then GameStop could come out of this unscathed. But going toe-to-toe with Wal-Mart in the U.S. is usually pretty hard, unless you’re Amazon.
In an Operations class I took last year, one of the teams did a business presentation on GameStop. They’re actually pretty cool — they have good tailored marketing plans based on loyalty club memberships and a record of what people buy, etc. They also have decently cool commercials.
They’re generally trailing the market this year — although Wal-Mart is also down 5.4% overall — so hopefully this Wal-Mart plan isn’t a death knell for them. I suppose it could be, but there’s a lot of context unknown here about how gamers will react to the idea of trading in at Wal-Mart — and CExchange will have to be better at managing the program than e-Play was back in 2009 (albeit those contexts were also a bit different).
