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Looking for a video game dropshipper who sells new releases?

Discussion in 'Dropshipping' started by JustCraig, Mar 11, 2011.

  1. JustCraig

    JustCraig

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    I have just posted this article on one of my other sites, but I thought the content may be of use to some new sellers on here;

    Choosing the right supplier is a vital part of any retail business but it’s often one of the most frustrating aspects of starting a new retail business but equally as important is finding the right outlet to sell your goods.

    Finding suppliers, in principle at least, is not quite as difficult as you may think, there are simple, tried and tested strategies that veteran traders use to help them source stock, what is difficult however is finding one that suits your needs.

    It still amazes me just how many novice traders spend hours, days, weeks and even months trying to find suppliers of all the latest PS3 and Xbox games to sell on eBay and what amazes me even more is how many of these novice traders actually want the suppliers to drop ship the titles for them.

    The bottom line is if you want to sell new releases, then don't sell on eBay and if you want to sell on eBay then don't bother trying to find new releases and more to the point, a seller who drop ships them.

    Sure buying new releases has its place, as does using a video games dropshipper (even if prices aren’t "competitive" enough to re-sell on eBay) but if your primary outlet is going to be eBay there is little point in even contemplating selling the latest video game titles.

    Why? Well here are just a few reasons;

    Margins - New releases may sell for up to £40 a pop, but average trade price (when buying through the official distribution channels) is around £32 plus VAT, giving retailers an average mark up of just £1.59 on a new release when sold in a retail store at £39.99, a margin of just 4%. I know of some retailers who make as little as 35p profit per sale.

    Factor in selling fees, PayPal fees and postage fees and you are simply fighting a losing battle.

    RRP of new releases - The RRP is between £49.99 and £54.99 for a vast majority of new releases (hence the high trade price) however you rarely see them being sold for more than £39.99 (in most cases it is even less) and would be forgiven for thinking that they carry a sub £40 price tag.

    Competition - Major on-line retailers and supermarkets extremely aggressive when selling new releases making it almost impossible to compete on price (unless of course you want to sell at a loss) many of these retailers (Zavvi, The Hut, ShopTo etc.) now also sell on eBay.

    Combine this with the hundreds of other sellers who are selling unwanted birthday presents, grey imports, and stock "off the back of a lorry", it's easy to see why the market quickly becomes floored

    Grey Imports - The market is flooded with grey imports, which means if you are buying from official distribution channels you will simply not be able to compete.

    If you do find a drop shipper who sells imported video games then because of the weak pound, margins are almost as bad.

    Depreciation - Another important point to remember is that the shelf life of a new title has now shortened down to two weeks before the price drops and as the pre-owned market booms, this drops the retail value even more. To illustrate just how much things have changed, just two years ago the shelf life of a new release was expected to be six to eight weeks. Suppliers need to shift this stock quickly otherwise it will end up being sold at a loss.

    So why do video games dropshipppers exist if they can't offer competitive pricing?

    People often view dropshippers as an easy option, they mistake the risk free aspect of the dropshipping model with making money with little effort. This is simply not the case. If anything it is actually harder because of the saturation which is caused by dozens of sellers selling the same products from the same supplier, all fighting for the same buyers.

    That’s not to say you cannot make a profit selling drop shipped goods on eBay, Amazon or Play, but dropshippers (Video Games Dropshippers in particular) are better utilised as a quick and easy way to boost your inventory with no financial risk. Making additional sales via third party marketplaces should been seen as a bonus and not what your whole business plan should be built around.
    Cody, chankin87, powellyla and 3 others like this.
  2. UKbuyer1

    UKbuyer1

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    This is an absolutely fantastic post Craig, and I agree fully with all of the content.

    The amount of threads created looking for this service by newer members astounds me. In fact, the amount of people looking for dropshippers of all types of products, like laptops, plasma TVs and the like, continues to amuse me - these services simply do not exist, and if they do it will be a scam or there will be absolutely no money in it.

    Great post that should become a sticky.
    Cody likes this.
  3. Dave

    Dave

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    The bit about Margins - that is scarey , so would the likes of Game be making as small amount as you mentioned ?

    You know I haven`t a clue about this market but how does anyone make any money?

    Is it the development studio who makes all the money?
  4. Saajan

    Saajan

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    The developers and the publishers.
  5. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    GAME are the market leaders so will get special treatment from the distributors, also the trade price mentioned is only for low volumes.

    Pre-owned is the back-bone of the video games industry. That is where the margins are. 30-70% depending on title. The trade in model also adds value to stock levels too.

    There is a good margin on most accessories too.

    Having said that the traditional video games retail model is dying out in favour of a more generic pre-owned entertainment specialists (CeX is a perfect example)
  6. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Also Just to add to my original post;

    Allocation - Major distributors will always look after the major players (the big spenders) before they look after the smaller re-seller. Allocations of Triple A titles to small retailers (and I imagine the same applies with small wholesalers) is notoriously appalling.
  7. UKbuyer1

    UKbuyer1

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Yes. But have a proper look at your local GAME. I would say 75% of floor space is devoted to used games. They don't want you to buy new, or if they do, they don't want your cash, they want your old games and cash.

    I worked at an indie 2001-2004 the owner always pushed us to direct people to used games, via a simple equation: if they are buying new and trading games in, that's fine. If they are buying new, and paying cash, see if we have a used copy, and direct them to that. It cost the customer less, there was less money in the till, BUT it was more profit.

    The games retail industry is crazy, no wonder they are so keen for used games sales not to be outlawed.
    Cody likes this.
  8. Dave

    Dave

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Hi Rick,
    Why will used games sales be outlawed?

    I know the price they buy the used games for and then sell it at are miles apart, I wish when I sold my used games I got their top price for them.:)

    Dave.
  9. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Publishers hate pre-owned because they don't benefit from it. i.e. they sell a game once and its gone.

    Once it's in the marketplace it can be re-sold dozens of times in its lifetime yet the actual publishers don't get anything out of it.

    Things are changing a little bit now, EA pioneered DLC (downloadable content) in an attempt to claw some money back.

    Basically DLC is an on-line pass which is sold with the game which the user needs to go unlock content (obviously in an effort to tackle the "pre-owned problem") - if the game is sold second hand the buyer will need to re-buy the DLC code from EA - but obviously this has a massive effect on the used price.
  10. Dave

    Dave

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    I read something about this, I have pre-ordered Homefront and there was someting on their site about this, if you resell it, the next user will have to pay a fee to play online.
  11. Hugo

    Hugo

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    Wow great article Craig. I often find if I can pre-order a tittle for £30 really early before release I often do because that's about as good as it get for new games. Some distributors do have okay prices like Keynes but add vat and eBay + paypal + postage and you have made a loss!!

    I often find special copy of video games (these are normally limited quantities) sell quite well! Also
    Box sets are good!

    Also buying smart - used titles often you can get some great deals from your friends!! Yes I said it! Some of my friends have games they dont touch any more! Example gears of war 2! Buy that of a friend bundle with with gears of war 3 when it's released and you got yourself a good method! Bundling well is crucial!!

    Also certain offers for example on my site when someone buys an xbox game and choses the gift wrap option (£1.20) on a game I include a 'free' 48 hour xbox code so they are really only paying 40p for the wrapping service!

    Point is you need new games to attract new customers and then pre- owned for profit!!
  12. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Some fantastic points. New sellers should take note.

    Keynes are a little cheaper because they sell grey goods.
  13. Hugo

    Hugo

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Thanks Craig,

    Might need to start writing a few articles myself lol
  14. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    If you feel you have something that will be of use to others then why not :)
  15. eAuction

    eAuction

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Most developers don't make much money - all the power and money is with the publisher.
  16. Beauty Wonderland

    Beauty Wonderland

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    True, I know one of the guys who was one of the main developers for the last Grand Theft Auto game. He makes good money but not that great. He's left the company now as the working conditions were not good, brought a few others with him and they're now setting up their own company.
    Jamal Angelos likes this.
  17. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    But if you look at it from the publisher’s point of view, they need to make a reasonable profit from the original sale to make it worthwhile.

    Once a video game is on the open market it will be sold and re-sold dozens of times in it’s lifetime and the publishers won’t see a penny of it.
  18. Brettguise

    Brettguise

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Brilliant post mate I learnt a fair bit from this. Wasn't thinking about selling games but the cogs started working for the used games industry.
  19. Hugo

    Hugo

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    Now EA and THQ have an online code so if you but that game second hand you will still need to buy a code of the publisher to play online. Not good since I already have to pay for xbox live.
  20. JustCraig

    JustCraig

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    Re: Looking For Video Game Drop shipper Who Sells New Releases?

    Not good at all from a retainers point of view or even a consumers point of view but from the publishers point of view it makes perfect sense.

    That said 90% of new releases that are sold are not really sold at a profit to the retailer. Swings and roundabouts.

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