> GameStop is setup as a legal pawnshop in every state. So a pawnshop buying out eBay makes insane sense.
It doesn't though. eBay could easily set itself up as a legal pawnshop in every state if it wanted to. It doesn't because there's no advantage to doing so.
There are already third-party sellers in many areas who will take your physical merchandise and sell it on eBay in exchange for a cut. eBay doesn't need to enter that market, it's simply not profitable enough.
You're right that there's no real advantage to eBay buying a pawnshop conglomerate, but a pawnshop conglomerate buying eBay gets a massive advantage. They're already sitting on a mountain of used inventory, and at some point a lot of it will be thrown away because there are no local buyers for it. Having a commission-free way to offload that inventory would be huge for them.
Ebay commissions are not that high, 13.25% for most items.
The barrier to listing huge amounts of merchandise is not the commission, but rather the amount of labor it takes to list and price everything and pack and ship it and deal with refunds and returns for items that turn out to have problems. And how a lot of items are only economical to sell locally, because when you add in shipping costs it approaches the value of buying something new.
Buying eBay doesn't provide any kind of easy way to help offload inventory at all. The way inventory is offloaded in bulk is in bulk pallets sold at auction, where people bid on them and then do all of the grunt work involved in photographing and listing and packing and shipping. Which is a significant proportion of sales on eBay today. GameStop can easily auction off pallets of their merchandise if they want, today. In fact, there's a good chance they already do.
> Ebay commissions are not that high, 13.25% for most items.
13.25% isn't zero.
> The barrier to listing [is] the amount of labor it takes to list and price everything
GameStop has a surprising amount of technology around their pawnshop activities. My son traded in his laptop last month and they had him wipe it, enable developer mode, and plug it in to do automated tests and make sure they knew what they were getting. They're already doing the labor to price everything. They're not going to have people type up listings, they'll just automate posting off of their inventory system.
> when you add in shipping costs it approaches the value of buying something new.
They get to skip the shipping costs. You could choose to have them ship the item to a GameStop near you which would cost them pennies. This is an advantage of having stores in every city with a population over 50,000 in the US.
And a huge amount of the stuff that GameStop buys and sells is out of print. Buying new is simply not an option when you're talking about a game that was released 6 years ago only on physical media.
> The way inventory is offloaded in bulk is in bulk pallets sold at auction, where people bid on them and then do all of the grunt work involved in photographing and listing and packing and shipping.
There must be money in the margins here. Otherwise people wouldn't do it. GameStop has all the technological ability to cut out this grunt work.
I'm just saying, 13.25% isn't the barrier here to making this work.
And shipping things to a "GameStop near you" does not cost pennies, and most people hate having to pick up packages. The reason that can be cheaper for regular stores is because they're distributing from central warehouses to those stores anyways. If GameStop is holding inventory trapped in all these physical stores, shipping an item from one store to another is no cheaper than shipping it directly to the customer -- e.g. it's edge node to edge node, not central node to edge node.
Oh yeah, not a barrier, but for the volume they'd want to enable it's not a complete loss.
Remember who uses GameStop. It's certainly not me, and it's probably not you. I'd guess that their core demographic is 14-25 year olds that are cash-strapped. You don't go to a GameStop for the experience, and their prices aren't any better than any other retailer. You go there because you don't have options or for their secondary market. And at that point, $5 in shipping fees matters.
Why would it be edge --> edge and not edge --> central --> edge? For common stuff keep half of it at the edge for local sales. For uncommon stuff or the other half ship it back to central so they can re-ship it quickly and easily. Including something in a shipment is orders of magnitude cheaper than shipping a single item, just in packaging costs and time alone.
They must have items going both directions (to handle overstock, returns, defectives, etc.). I assume those all go in a large box and are shipped together. At that point I'd need to see some actual numbers to agree that it's not pennies.
Interesting discussion. Something it made me think about is trading cards or other items you typically might want to sell as graded items. If you’ve got a physical GameStop with the digital eBay footprint maybe you’ve got the makings of a nice little ecosystem for selling Pokémon cards, video games, antiques, and other items in an inspected condition.
But the brick and mortar distribution is hard to build and gives a structural advantage. As another poster pointed out, you could sell your items locally and not need to deal with shipping, communication with buyers and other stuff. It would reduce friction which might actually expand the marketplace significantly. I personally have multiple family members that throw stuff away because listing on eBay is too hard and pawnshops too sketchy
Why does it give structural advantage to own a bunch of dead mall and strip mall brick and mortar stores that have been on the verge of bankruptcy for well over a decade?
They haven't been on the verge of bankruptcy since they paid off their own loans. This deal will actually be the closest they've been to bankruptcy since like 2022, because they'll actually have interest payments to make.
There's something else going on. The other companies known for being meme stocks are doing substantially worse in terms of share price. AMC is below what it was before early 2021, down 90% from its high. That holds for most of them. Bed, Bath, and Beyond famously went bankrupt.
Meanwhile, yeah, Gamestop is down about 75% from its high. But it's also 2.5x its post-top low, and... um, about 24x its 2020 low. Go ahead and check. Makes at least some sense, when you understand that they stemmed an EPS bleed and turned it into a profitable company.
A sinking company buying a healthy company several times larger and more profitable doesn't make sense. The eBay board and shareholders would be crazy to participate in this fantasy. GME shareholders are already known to be of questionable judgment, so whatever they do is SNAFU. So, it's not surprising GameStop would try something crazy, what's surprising is anyone is taking it seriously.
Shrinking. Which is smart, if you see a recession on the horizon or in-progress. If profit is increasing anyway? Well, that's either a miracle or someone who really knows what they're doing. You understand that profit is supposed to go DOWN when revenue declines, right? Which is bad. But Gamestop is doing the opposite. Which is...?
Not smart. If a recession is coming, the last thing you want is to reduce your revenue in advance. Or during! That's like saying, better to take some poison now if there's a flu going around I might catch!
And yes their profitability has gone up. Due to massive cuts. Slashing stores, slashing normal investment in stores, and laying off everyone they can.
This is what you do when your business model is completely failing -- you stop all normal investment that sustains the business for the long term, so you can make more profit in the short term. But it's not sustainable. It's what happens when you realize you're going out of business, and you want to take out as much money as you can, while you still can.
So the increased profit isn't a good sign in this case. It's precisely the opposite -- the end is near for this business model. It is indeed sinking.
And their desperate and nonsensical bid for eBay is another sign of this -- a kind of Hail Mary pass since their original business model is busted.
OK, great, they've maybe backed off of the iceberg that was sinking them, I guess through cost-cutting and layoffs. Good for them.
That doesn't mean it's a reasonable idea for GME to buy a company with ten times their revenue and five times their market cap, that hasn't been declining every year for a decade. This is a ridiculous stunt by a ridiculous CEO, and shouldn't be taken seriously. If somehow all the grownups did allow such a merger and the insane leverage that would be required, it would sink both companies.
Gamestop in Canada isn't owned by Gamestop in the US. They were also historically unprofitable so people might be in the stores but they aren't buying enough.
There's friction though, if the process is under one roof end-to-end, ebay can take 30-40% (15-20% today) of every transaction by just letting you dump your old stuff. Might even eat FB marketplace and CL.
Not exactly, the biggest annoyance with eBay (in my experience) is dealing with shipping, disputes and returns. If I could recover even 50% of the value of unused items without dealing with the ridiculousness of p2p transactions (flakes, tire-kickers, scammers) I'd do it in a heartbeat.
Don't pawn shops already solve this problem? Make your way there, dump your stuff, get peanuts for it in exchange (but might still be worth it if you truly don't need said stuff).
I regularly accept a 40% cut or more at “Hard Off” (a chain store that buys and sells used electronics in Japan). Why? Because I don’t want to deal with the hassle and risk of selling the items myself.
I’m able to bring in a box of items that I don’t use and are taking up space, and they pay me cash on the spot. It’s very convenient.
I think eBay buyers would also have more confidence buying from eBay/Gamestop than direct from other users.
Checkout the insane amount of money Goodwill makes because of people getting rid of their "junk". There are 151 independent Goodwill organizations and all of them have a CEO, usually making 6 figures a year.
"Goodwill Industries was established in 1902 and is widely known across the country as the place where we all donate clothing and household goods to help others."
That's the first sentence from your link. Clearly people don't treat this org, literally called "good will", the same as they treat freakin eBay.
I don't think this is true, because people are often willing to spend a bit of extra time to do something good, like make a donation, but wouldn't be willing to take that same time to make $10.
I would. I don't sell on eBay because it's a hassle to manage all the rest of it. So I end up taking it to a place like Half-Price Books instead and get hardly anything, but at least it gets out of the house. 30-40% cut would be a significant step up compared to what I get from those places.
Speak for yourself. There's a reason places like Once Upon a Child and their parent stores exist. There's even other entirely digital stores on the sell for pennies instead of donating market.
People regularly give businesses >50% cut to get cash immediately and this isn't even counting resellers who low ball people who don't know what they have.
It doesn't though. eBay could easily set itself up as a legal pawnshop in every state if it wanted to. It doesn't because there's no advantage to doing so.
There are already third-party sellers in many areas who will take your physical merchandise and sell it on eBay in exchange for a cut. eBay doesn't need to enter that market, it's simply not profitable enough.