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Taking on GameStop: Q&A with NextWorth
- November 04, 2009 12:28 PM PST
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Looking for an alternative to GameStop's used games racket? Looking to make more money off your other, non-gaming electronics? Dave Rudden asks Bob Wesley, the CMO of NextWorth, some key questions about his company and how they do trade-ins differently.
GP: Why do you think retailers who deal in used video games haven't included gaming platforms like the iPod Touch in their trade-in platform?
The iPod Touch has not been traditionally marketed as a mobile gaming device. It has been sold as an MP3/iPod music and video player. More recently the mobile computing (e-mail) feature is being heavily marketed. The Apple App Store is a recent phenomenon that has drawn in developers because of the great form factor and user interface. The result is more than 23,000 games from all the major publishers today -- with no trip to the local store necessary to begin playing. Apple has created an open environment where it is easy for game developers to publish their games for both the iPod Touch and the iPhone. When you trade-in an iPod Touch you do not have to give up your games to trade-up to a newest model. All of the games are retained in your iTunes account.
Retailers focused on the gaming market are more comfortable focusing on single use mobile gaming platforms like Sony PSP or Nintendo DS. Many Gaming Retailers offer existing PSP or DS mobile gamers a trade-up to a new PSP bundled offer. Retailers like the older mobile gaming devices because there are follow-on game sales. This, however, may be a thing of the past.
NextWorth's trade-in model accepts more than just gaming consoles and used games. They'll also give you a price for your old electronics, too. Got more than one iPhone? Just trade it in, and NextWorth will price your gear based on "patent pending pricing algorithms".
GP: How many of your customers do you think are trading in traditional gaming portables like the Sony PSP or DS in for iPod products? How many do you think are trading in iPod products for the PSP and DS?
We do see a number of PSP and DS trade-ins. However we can not determine whether the consumer is actually using the trade-in cash to buy a iPod iTouch or a newer PSP or DS device. We do receive thousands of iPod and iPhone trade-ins a month. Based upon some recent retailer programs, we do see many customers trade-in their old iPods and iPhones for the latest version Apple product. One of the benefits of trading up to a new Apple product is that it allows the customer to keep their games and music and simply transfer it to the new device. They have solved the upward compatible problems.
GP: Does the fact that the iPhone contains a lot more personal information than usual gaming platforms make procuring them and making them sale-ready difficult?
This is not a problem for NextWorth. NextWorth has develop an efficient process which erases all personal information from iPhone. Consumers like the convenience and price of our trade-in iPhone programs. As a result we receive a large number each month. Many of our customers have told us they use our program as a way to trade-up to the latest iPhone product.
GP: Have users been trading their old PSP's more frequently since the revelation of the PSP Go? Has the announcement last week that gamers won't be able to transfer their UMDs tapered that?
The PSP Go has not created an incentive to trade-in existing PSPs. Gamers need to hold on to their old PSP just to play their old games. The lack of upward compatibility of old games to the new PSP Go has created a disincentive to adopt this new product. We believe that more gamers who want to move to this new mobile computing platform will be looking at the alternatives such as the iPod Touch.
When Apple introduces a new iPod or iPhone we do see a surge in trade-ins because they allow consumers to utilize their old games and music.
NextWorth says that their trade-in prices are very transparent, and based on actual retail value, unlike GameStop's nebulous system. If you trade in a PSP for a PSP Go with NextWorth, you'll get a credit based on major online pricing databases like Amazon and eBay.
GP: How do you determine your trade-in prices?
Our realtime patent pending pricing algorithms takes input from major online pricing databases such as Amazon and eBay and from competitor and retail prices set by pre-owned products sold at both online and physical at major retailers nationwide. We also review the competitive trade-in market place to ensure our prices are among the best in the market. Our proprietary pricing model then utilizes the customer's input on condition, functionality and the trade-in of product and accessories to offer the best possible price.
GP: How do you think your trade-in prices compare to GameStop's?
GameStop's trade-in prices are not transparent. The only place to receive a reliable GameStop trade-in price is to go the store. Our customers have consistently told us that the trade-in specials quoted on-line are sometimes not honored at the store. Often the reason quoted is that they are out-of-date and subject to inventory levels and store specific demand of a particular title.
GameStop also bundles trade-ins with promotional offers, so it is not always clear how much they are. However based on this week's GameStop offer for a PSP (Slim or 3000) and 3 PSP games for $60, NextWorth's trade-in value for the same trade-in offer is $62.
