We’re Not Playin’ – Amazon’s the Low Price Leader
By George Anderson
When it comes to video games, consumers will not find the lowest price at Wal-Mart or even Target. No, those retailers and Best Buy, Circuit City and Toys R Us all had higher prices (excluding shipping) than Amazon.com, according to PiperJaffray analyst Anthony Gikas.
Mr. Gikas looked at the aforementioned retailers as well as GameStop and Electronics Boutique in his firm’s semi-annual pricing survey.
According to a Reuters report, Mr. Gikas said Target’s average prices were 9.5 percent higher than Amazon’s. Toys R Us was nine percent higher, Wal-Mart 6.2 percent, Circuit City prices 5.4 percent, Electronics Boutigue 3.6 percent, GameStop 3.2 percent and Best Buy 2.7 percent.
If shipping costs were added in, assuming a minimum for free shipping wasn’t met at Amazon, Best Buy, GameStop and Electronics Boutigue had lower prices than Jeff Bezos and company.
Wal-Mart is currently the leader in the $7.3 billion video games business with a 23 percent market share. Gamestop and Electronics Boutigue may overtake Wal-Mart after a proposed merger between the two gaming retailers takes place. The combined market share of the companies is estimated to be 25 percent.
Moderator’s Comment: Prior to reading about the PiperJaffray research, would you have thought of any of the companies mentioned as low-price leaders
in the video game segment? What role does the perception of price play in the performance of retailers such as Wal-Mart and others covered by PiperJaffray? –
George Anderson – Moderator
If this strategy game (my most recent video game purchase) is any indication (click to view Fry’s pricing), the Amazon price (click to view Amazon’s price) is nearly 3% higher. I’ll stick with Fry’s.
I would not have thought of any of the companies other than Amazon as the low-price leader, excluding a sale on a particular item. I always buy those types of goods, where it doesn’t really matter at all where you buy it as long as it arrives, at the lowest-priced online vendor, which is very often Amazon when shipping is factored in.
It’s so easy to compare prices on branded items on the Internet, that to stay in business for the long-term, e-tailers have to be price competitive, so there shouldn’t be wide discrepancies among the leaders, at least not for long. And, if someone is going to charge any sort of premium over the others, they better have some great features on their site to keep people around. I find Amazon to be at least within striking distance on most items with the best features on its site.
Sidenote: I often hear people gripe about shipping charges for items purchased on the Internet. They don’t stop to think that driving their car to and from the shopping center costs money too.
I use Amazon for several categories other than video games (not a category I buy) because they’ve created in me a level of loyalty that encourages me always to check their prices before I buy. I’m rarely disappointed. So no, no surprise here that they’re the price leader in video games.
Not including the shipping cost makes a pretty meaningless comparison. I saw an ad on History Channel last night for a DVD that was 19.95 — until they mentioned the 6.95 shipping charge. The price of that DVD is 26.90 — 35% higher than the price they touted.
Unless you live fairly distant from a given store and make a trip specifically for a single purchase, the driving cost is minimal.
Amazon is almost always my first port of call, partly because of price expectation, partly because of reliability especially on delivery. I’ve never bought a video game but whatever else I’ve wanted, they’ve either had it or pointed me in the right direction and their recommended partners have also come up trumps.