Why are prices at EB Games so expensive?

MasterNoob on 17/11/2013 - 14:49

As Australia's large gaming specialist chain, you'd expect them to be price compete with Big W, Target and KMart prices. While they do have a price-match policy, it requires that the store must be local and must have the product in stock. I've been denied price checks before because the staff considered a 7 minute drive as not local.

Is there really any incentive then to price match? You can argue that it helps with their carrots reward system, but you have to spend thousands of dollars and you'll only get a $20 trade-in gift voucher. Not a great reward considering that EB price their games much more expensive than other retailers eg http://www.bigw.com.au/entertainment/video-games-consoles/wi… and https://ebgames.com.au/wiiu-161259-Super-Mario-3D-World-Wii-…

Yet the weirdest thing is, people still buy from EB games.

General Discussion

Related Stores

EB Games Australia
EB Games Australia

Comments

  • donga100 on 17/11/2013 - 15:06

    Yeah, they are pretty bad for new game prices. I only buy second hand games from EB and only if I want something to play on that day and don't want to wait for it to be posted from an online shop.

  • wartortle on 17/11/2013 - 15:20
    +68

    I've worked in games retail (not in any companies you mentioned) so I'll try to answer this as best I can, but I can't claim anything I say about these companies is 100% correct.

    Those prices you see on new release games or console hardware in Big W/Target/KMart etc. usually only make the company a small amount of money. The benefit for them is that people may buy other more profitable items while they're there and it helps present them as more of a 'one-stop shop'. Eg parents need to do Christmas shopping, at Big W they can get toys, homewares and games which makes it the most convenient option for the customer. So even if Big W don't make huge dollars on the games they'll get it back on the other stuff.

    As you noted, EB is a specialist where they try to stock more titles with a greater variety, but it means they don't have those other products with a higher margin. EB will always charge full RRP unless they have the item on sale, as this allows them to maximise their gross profit. EB does counter this by offering trade-ins and selling the stock as pre-owned (they make a killing on this) and have also recently started selling more "loot" which includes toys and accessories.

    Don't get me wrong, I'm not trying to say EB doesn't make money on games or wouldn't if they were price-competitive, but I honestly think they need to work harder to stay profitable and having their prices set to RRP helps them do this.

    At Ozbargain most of us will go where the price is the lowest, but for the general public, shopping at EB does have some benefits compared to the other guys:
    - 7 day return policy on console games, even if they've been played and you simply didn't like it.
    - Ability to trade in old games/consoles (not as much money as if you sold it, but far less hassle)
    - Exclusive editions and pre-order bonuses.
    - Wider range of titles including older games, pre-owned and niche titles.
    - Dedicated gaming staff, I think this is a big factor for customers who don't know a whole lot about games (parents/partners buying gifts, etc.) Compared to asking someone at Big W/Target where only a few people will know about games every staff member in EB should know about the latest titles and where they are. Eg 'my grandson wants me to buy him the latest mario game on wii, which one is it?'

    • MasterNoob on 17/11/2013 - 17:16
      +10

      Thanks for your deep insight. :) It was a pleasure to read.

      • wartortle on 17/11/2013 - 21:41
        +1

        No worries, happy to tackle any other games retail related questions as best I can.

      • Eddie8 on 18/11/2013 - 10:09
        +7

        I logged in specifically to up vote cal89's post. Excellently explained!

    • Ventak on 17/11/2013 - 18:39

      This is what puzzles me though. This makes sense…but GameStop, which is EB's parent company, sells exactly the same products in America, and yet matches exactly the price of it's competitors ($59.99 USD for base price new releases in GameStop as well as other places like Target, Walmart etc.). Even with the Australia Tax added, it makes you wonder why prices of new releases (base prices, not preorder discounts) are not consistent in this country.

      • wartortle on 17/11/2013 - 19:23
        +1

        Firstly, let's look at why EB sells much higher than the competition, it comes down to that whole RRP thing.

        The difference is GameStop buys the games from the US vendors and EB buys them from the Australian vendors. The products are identical, but the Australian vendors charge more (and therefore set a higher RRP.) GameStop can't just send their stock over here, that would be a violation of theirs and EB's sales agreements.

        What is happening (I think) is that the US vendors licence/sell the games to the Australian vendors at an inflated cost, because they can (variable exchange rate/Australia tax.) Therefore the Australian vendors have to charge local retailers more, therefore set a higher RRP to make sure retailers can make their cut. Since EB follows Australian RRP for their pricing, it's just how it happens.

        As for the American retail situation, what I suspect is that RRP is set with a much lower margin than it is here. The downside of this is aside from Black Friday nonsense you'll rarely see any discounts or price drops like you do here. Another thing that happens here is the option to import. Someone can buy their PS3 game from America for $59.99 if they wanted to, which forces the local guys here to bring their prices down to remain competitive with other options. In America, there is no other option, so no need to be so competitive.

        • exit on 17/11/2013 - 21:23

          No. You are kind of wrong. Publishers are just pricing their games in Australia higher than they are in American because there is a much bigger market for games in America compared to Australia. there is only 28 million people in Australia but 300+ million in the USA. Publishers are pricing their games in Australia higher than the US to make the profit margin smaller.

          They also know people in Australia will pay more for their games. Many things in Australia have inflated cost to make the margin smaller (such as apple products)

        • wartortle on 17/11/2013 - 21:38

          Good point, I agree. There are many more factors than what I laid out and economies of scale is a big one. The main thing we both noted is that it's an issue with higher RRP coming down the line from publishers rather than local retail just deciding to charge more for the sake of it.

          The original question was more along the line of why GameStop prices line up with other US retailers like Best Buy or Target, where as Australian retail has such a variation. The answer is that EB chooses to price at RRP but for various reasons other local retailers choose to price lower.

        • SirFlibbled on 19/11/2013 - 13:42
          +2

          In summary, importers are charging more for their games because they can.

    • nephilim on 17/11/2013 - 19:32

      I dont agree on the one stop shop argument, large % of games in EB that are either 2nd hand or UK Stock with new classification stickers on. These are the money makers.
      If anything EB should be acting like Target/BigW/Kmart.

      • wartortle on 17/11/2013 - 20:13

        I agree with you that lower prices would definitely get more people into the store. But there are some other things to consider too.

        EB doesn't import that much, it's probably about half/half between pre-owned and new (on relevant platforms.) Stock that EB actually imports themselves is usually sold as pre-owned, an example that comes to mind would be the Ice White 3DS that came with Mario 3D land. Anything you see with an Australian classification stickered over a europen case often comes like that from the supplier. It's common for smaller niche titles that the supplier didn't bother creating Australian stock for. You'll see it a fair bit with stuff that comes from Mindscape or Namco Bandai. Examples that come to mind are New Little Kings Story on Vita, Dream Trigger on 3DS and the day one drop of Batman Arkham Asylum on PS3.

        The other side of this is why the pre-owned stock is a money maker. When you take your $89.95 copy of Assassin's Creed IV up to the counter and the staff ask if you would like to buy a pre-owned copy instead for $79, you'll probably go for it because it's substantially less than the new price. If they drop the price on new releases to get you in the store, they'd have to drop pre-owned prices too. This would then mean either lower trade-in prices (which would make trade-ins drop off) or less margin.

    • Weezle on 19/11/2013 - 20:05

      This is the most i've ever seen any comment up-voted. congratz

  • boonanza on 17/11/2013 - 16:50
    +3

    I purchased PS3 Call of Duty Ghosts today from EB Games who priced matched JB's price at the moment of $63.20. They didn't even notice that the one at JB is standard edition and they gave me the Limited Edition for the same price:)

    • burningrage on 17/11/2013 - 18:09

      Excellent!

    • Super8Tab on 18/11/2013 - 19:58
      +1

      Nice, but it's on sale for $49 here on ozbargain (ebay powerseller).

  • Adz81 on 17/11/2013 - 19:39
    +1

    My local EB is pretty good with price matching… last time I tried it, they had GTA V for $89.95, and I asked if they'd price match Dick Smith's for $59.95 (knowing full well the local DSE did not have a copy)… She didn't even bat an eyelid, simply asked what I wanted to price match to and how much… job done :)

  • cannedhams on 17/11/2013 - 21:25
    +5

    I went to BigW today and there were probably about three staff on the floor in the whole store. I probably could have strangled someone with a Slinky spring Solid-Snake style and no one would have noticed.

    Compare that with EB where they have to have two people man the till, they need to pay the rent, and they have to make their cut just from selling games.

    I have no experience of working in games shops but I assume that those guys must be doing it hard with the internet, mobile platforms, piracy and having to fend off the large retailers.

    Having said that, I have never thought to buy games at BigW or Kmart. They obviously have no idea about games. I saw Max Payne II on sale today in a bargain bin at BigW and I thought: gee guys I think you left your run a bit late.

  • Baghern on 17/11/2013 - 21:45
    +8

    Heh, I remember when they AUD went down to $0.50 USD, and they doubled their prices from 70->150

    Then when it went back to 0.75, the prices didn't go down, and as the AUD started to creep o 0.90, prices still didn't go down and EB was expanding EVERYWHERE…

    I reckon around then people started hitting online purchases hard, because within a couple of years EBs were shutting down everywhere.

    To me they're like Harvey Norman, people go there because they don't know of any other venue, so they can charge higher prices.

  • Harold Halfprice on 17/11/2013 - 23:06

    The way I see it one of the factors is those who KNOW they can get it cheaper elsewhere, will either go there or pricematch at EB
    Those who dont know they can get it cheaper get sucked in and buy at a higher price. Think parents buying games for their children, theyre like going to go to EB or some other games specialist store

    • Baghern on 18/11/2013 - 13:21

      It's like downloading, once you start, its hard to go to the new inferior options.

      If they introduced fast track and digital TV with the current obscure shows they have, at the same time cheap Dvds and blu rays - cheap compared to the past, itunes… etcs the plethora of cheap payment methods years ago. I would never of gone down the download route.

  • IMBI3 on 17/11/2013 - 23:16
    -1

    They are franchise model therefore profit margin needs to be higher. Simple

  • [Deactivated] on 17/11/2013 - 23:17

    I happen to live in an area where EB, JB hifi, Target and Kmart are in one building. EB always seems to be happy to price-match with other stores as long as other stores have stocks for that particular game. Only store that refused to price match with others was Dick Smith.

  • [Deactivated] on 18/11/2013 - 02:12

    It's called The Australia Tax.

    • IMBI3 on 18/11/2013 - 06:56

      Using your logic, everyone else should be as expensive as EB Games then?

      • trinest on 18/11/2013 - 09:22

        Its called charging Recommended Retail Prices and calling it a day.

  • tonyjzx on 18/11/2013 - 10:22
    +2

    i think one thing you dont see is that there's two different clientele

    some people go to EB and they want recommendations and they want to talk to the 'expert' behind the counter

    do you get that at BigW?

    a person will most likely see BigW's ad and go straight to pick up

    would this person ever go to EB when all they do is shop on price?

    i agree that it doesnt make sense for someone who buys solely on price but there's more to it than that in our marketplace.

  • [Deactivated] on 18/11/2013 - 15:02
    -7

    Buying from EB is helping the economy as you contribute on paying the salary of the staff and also paying the rent of westfield, etc…

    • tyler.durden on 18/11/2013 - 15:13
      +3

      You can do that at Big W/Target as well…

      only difference is EB is ripping you off.

      Just look at how much they offer your for a trade in, and how much they make reselling the same item…

      • IMBI3 on 18/11/2013 - 17:37

        They need to pay for franchise fees unlike big w etc which are corporate-owned

        • wartortle on 18/11/2013 - 21:48

          EB is not franchised, it's a part of the GameStop corporation.

          (I didn't neg you fwiw.)

  • lamerthanlam on 18/11/2013 - 18:20
    +4

    My local EB Games have an even better policy.

    When you try to price matching something by showing them the website of a competitor with its price listing (note prices online reflect in store prices), they will claim item is not in stock. When you then mention you saw a copy on the shelves, they will say they don't price match online.

    GAME was way better than EB Games.

    • pikapika on 18/11/2013 - 20:00
      +1

      I miss game :(

  • ikaruga on 18/11/2013 - 22:30

    EB games probably not the best place to buy new copy of a game but sometimes they do have some good deals on preowned games especially around this time.

    Though JB will give you more credit if you trade in your game to them

  • wonderboy on 19/11/2013 - 11:11

    It's not that they are expensive it's that Big W,etc are selling games for a lot less. If RRP on games were $60 Big W will sell for less. I highly doubt Big W are making anything when they sell a game for nearly half the price of the RRP. Also have you seen their prices with a 1-2 year old game? Still $80+. I saw Alan Wake at Kmart recently for $90.

    If you know what your doing you can get games on the super cheap. Look at JB's trading deals (which suck now), go to cash converters/ebay buy 2 games for $20-$30, trade them to JB, play game, trade to EB for $40-50 or sell on ebay for $60-$70.

    Only reason I buy from EB is because my local Big W never has workers in the entertainment section. So I either stand there for 10mins to buy a game or go to EB and price match and walk out within 2mins. Also have a few hundred in store credit.

  • ThisJustin on 19/11/2013 - 21:11
    +1

    I think they just charge RRP where they can and only offer a comparable price if the customer asks. Every time they sell a game at RRP they make the extra profit and across all of the stores for an entire year that could be a considerable amount of money.

  • twig on 20/11/2013 - 11:15
    +1

    They have high stock, and sell at a "premium" price because parents short on time won't look around or know that other stores have games.

    Also, their business model (price matching only when the competitor has stock) is built around the premium pricing. They know the other stores will sell out because of low stock, so they just wait.

    When stock runs out and you're desparate, you pay premium price.

  • Wampus on 20/11/2013 - 14:41
    +1

    As a PC gamer, Steam killed any retail purchases I make, apart from Blizz titles

    • twig on 20/11/2013 - 16:58

      I pretty much buy everything on Steam now too lol

      Except for Blizzard, I've stopped buying their games after D3…

  • 2ndeffort on 20/11/2013 - 23:50
    +1

    Isnt this just the same as every other retail purchase? Convenience is the most expensive commodity you can buy. Want to just ask a helpful shop assistant and take the easy route and you will pay for it. Want to be an OZBargainer and spend time trawling forums looking for discount codes etc and you'll get it cheaper.

    • Tal_Shiar on 21/11/2013 - 03:26

      I like to do both :)

  • chandom on 24/02/2014 - 08:14

    How can EB Games attempt to be price competitive with Kmart/BigW/Target? Those stores stock way more than just video games. They have hundreds of products with much higher margins.

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