Online Retailer slams Video Games industry for favoring large chain stores

[mandy]

We are closing our video games division?

We are sad to say that we are closing down our video games division. We also feel we owe our customers an explanation:

1. Video Game Industry Does Not Care:
The video game industry only cares about mass merchandisers like Toys-R-Us, Wal-Mart, Best Buy, etc. They completely ignore the needs and wants of the medium to small game retailers. Below is how they do it.
2. Can’t Make Money:
You may not care whether or not we make money, but we cannot continue to pay to sell video games. It is impossible for us to make money selling video games. Video Game Manufacturers set the price using what is called MSRP (Manufacturers Suggested Retail Price). Here is an example of the video gaming industry greed: they set the retail price at just $5 above the product cost (buy it for $54.99, sell it for $59.99). When we sell a game we make on average 8.3% gross margin. That does not take into account any of the cost to store the video game or labor to receive/ship an item. The only way we can make a profit on an item is to sell it over the MSRP, but unfortunately we are not allowed to do this. Take a $400 console; we only make $5 on the sale—that is a 1.25% gross margin. The game companies make their profit selling to us. We make no profit selling to you...

full statement: http://www.dvdempire.com/index.asp?useri...5307766861&tab_id=3&site_id=2&site_media_id=0

[amy]

When we sell a game we make on average 8.3% gross margin. That does not take into account any of the cost to store the video game or labor to receive/ship an item.

Our margin on video games and equipment is about the same but we've eliminated the storage/shipping costs by dropshipping them.