GameStop’s Pre-Order Madness

Last December, one of my kids (yes, I have kids, scary but true) decided to spend his Christmas money by preordering a Pokemon game at GameStop. He wanted to do this so he wouldn’t spend the money before the game’s release date. He paid the $35 and got a receipt so that he could pick the game up when it came out in March. Yesterday the game was released. My wife went in to pick up the game for him and they asked for another $5.48. It turns out that since December, the price of the game had gone up by five bucks and despite the fact that my kid paid his money and got a piece of paper saying he bought the game and only had to wait until it was released to get it, they would not give her the game until she paid the additional money.

When I’m not writing about my car or books about how to do the wrong things the right way, I work at a company in Kent dealing with inventory and purchasing. In one way or another I’ve been dealing with inventory work for the last five years. So I know a little about it. I understand vendor relations, pricing, iventory management and everything related to those processes. And regardless of what you’re selling, these processes are very similar.

While a case could be made that the retailer is being charged more for the game and thus must pass that cost on to the customer, let’s talk a little about pre-orders. The only real advantage to a customer for pre-ordering something is that they are guaranteed to get it even in the event of a sellout. However, from a retailer’s standpoint, a pre-order has all sorts of advantages. As a retailer, a pre-order means you have a guaranteed sale. This item isn’t going to use up valuable shelf space. It also means getting the money before the item is sold which can often make or break a small business. It’s a lot easier to buy inventory if you already have the customer’s money. So if you’ve already paid for an item months before you actually get the item, you’re doing the company a big favor. They don’t have to stock the item in hopes that it will sell. They don’t have to put a price tag on it. They don’t have to spend time putting it out on the shelf. They don’t even have to pay for it with their own money. They have yours.

Now, given all of that, let’s take another look at this situation. A 15-year-old kid takes thirty-five dollars cash and gives it to GameStop in December. Sometime between December and March GameStop buys a the game from the software developer. It’s more than they expected to pay for it, but odds are it’s still under the thrity-five dollars they pocketed back in December. I know this because you can buy the same game from Amazon.com for $32.54. So GameStop’s increase in purchase cost did not exceed the purchase price. It only cut into their profits. And yes, those profits are needed both for business and for overhead, but as I mentioned before with a pre-oder there’s almost no overhead. The employee simply needs to open the box they came in, pull out a game, and hand it to the customer. Still, instead of just eating the five dollar profit loss, GameStop’s current policy is to stick the additional cost to the customer, even when that customer is a fifteen-year-old-boy. They do say that whenever this occurs, an automated service calls all the pre-order customers to notifty them of the price change, but my kid never received such a call.

This is a short sighted way of dealing with customers. Yes, it avoids a small profit loss on a new and popular game, but what GameStop isn’t paying attention to is the one thing that is most important in business: Customer Relations. Someone who pre-orders a game isn’t likely to be just a casual video game player. The sort of customer that pre-orders is an avid gamer and the sort who probably spends more money than average on games and gaming devices. A customer like this is likely to spend more than five dollars every time they walk in the door. Not to mention the fact that a customer like that probably uses the Internet more than average and is likely to tell others about their experience. When you look at it like that, maybe taking that five dollar hit wouldn’t be such a bad idea. Instead what has happened is that GameStop has five more dollars than they would have and has lost the business of my family. In the twenty-four hours since then, my wife has told everyone in her family, on her Facebook page and on her Twitter. And now I’ve posted this.

-Jack

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5 responses to “GameStop’s Pre-Order Madness

  1. I won’t lie, I’ve never cared for Gamestop’s business practices. It’s never been about servicing the customer. It’s about bottom line for them. I won’t even get into my preorder woes from them.

    Anyway isn’t there a preorder low price guarantee that they have? like if you preorder, you will get the lowest price even if the price increases between then and release date? Perhaps I’m wrong. I dunno. I would have said, “well just gimme back my $35. I’ll just order it from Amazon for the $32 listed and it’s no tax and free shipping”. Granted it would be a hassle but at that point it’s it’s a matter of principle.
    Well I hope your lil man got what he wanted at least. $35 is a lot when yer so young. I remember saving up for a Sega Genesis with my paper route money. Took me over 5 months to save $200 and I also learned about taxes in that transaction. 6% tax on $199.99 = roughly $12. $203 wasn’t gonna cut it. Luckily my brother bailed me out 😀

  2. GameStop’s ‘low price guarantee’ reads: “Pre-order any product and if the price drops before the release date, you will be charged the lower price.” In other words they won’t charge you their inflated price if their cost goes down. It says nothing about if their cost goes up. I would have cancelled the order with them, but he wanted the game yesterday so I just figure it’s our last order with them.

  3. Ahhh I see. What a crock. Well I wish you and your son better luck in the future. Hope he thoroughly enjoys the game 🙂

  4. Another point to be made is that, if your son has ever bought used games there, those are pure profit for GS, as none of that money goes back to the developer. Typical Gamestop customer service.

  5. Sounds illegal to me… he purchased a product in advance. Their website (http://www.gamestop.com/gs/help/Pre-orders.aspx) states that they will lower the price if it drops… nothing about raising it. If I order a product at a price from a mail order catalog / online etc.. and they put my order on backorder, they don’t get to raise the price when it comes in. They can cancel it when out of stock, but they can’t change the terms they were offering. Here it isn’t a matter of being out of stock, it’s a matter of being offered a guarantee… he didn’t make a refundable down payment on something that didn’t have a price yet (like the Nissan Leaf early purchasers did). he paid for the product in full. Might be worth contacting the AG since this seems to be a bait and switch tactic (on price) that is widespread policy.

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