Businessmodel of GameStop

Customer Segments

GameStop has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at anyone who seeks video game and tech products.

Value Proposition

GameStop offers four primary value propositions: accessibility, convenience, innovation, and brand/status.

The company creates accessibility by providing a wide variety of options. It has acquired numerous other game and technology firms in its history, including EB Games, Rhino Video Games, Micromania, Jolt Online Gaming, Spawn Labs, Impulse, BuyMyTronics, and Spring Mobile. These purchases have served to diversify its portfolio and greatly expand its capabilities. GameStop also offers accessibility by making its locations easy to reach. Its stores are typically placed in high-traffic shopping malls, strip centers, and pedestrian spaces in major metropolitan areas.

The company offers convenience by making life simpler for customers. Through its buy-sell-trade program, it enables consumers to trade-in video game software/hardware, tablets, and smartphones that they no longer use or play. Customers are given trade credits to use for new product purchases.

The company embraces innovation as a part of its culture. It operates the GameStop Technology Institute (GTI), a business unit that is dedicated to establishing partnerships with academic institutions and top tech firms in order to explore and deliver innovative technology and business solutions. Specifically, the partners share resources and collaborate on research and development.

The company has established a powerful brand due to its success. It is the world’s largest omnichannel video game retailer, the largest AT&T authorized reseller, the largest Apple-certified products reseller, and owner of www.thinkgeek.com, one of the world’s largest sellers of collectible pop-culture themed products. It maintains over 7,500 stores across 14 countries with more than 40,000 employees. Lastly, it owns Game Informer magazine, the  leading print and digital video game publication in the world.

Channels

GameStop’s main channel is its network of retail stores located throughout the U.S., Canada, Australia, and Europe. It also sells products through its main website and various specific brand websites. The company promotes its offering through its website, social media pages, TV/online/radio advertising, loyalty programs, and in-store marketing efforts such as catalogs.

Customer Relationships

GameStop’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. Its website provides information about topics such as product availability, upcoming game release dates, and store locations.

Key Activities

GameStop’s business model entails distributing video game and technology products to its customers.

Key Partners

GameStop’s key partners are the more than 80 manufacturers, distributors, and software publishers that provide the products it distributes. Its top vendors are Sony (27% of products it purchases), Microsoft (19%), Nintendo (11%), and Electronic Arts (10%).

The company also maintains an affiliate program through which it invites third parties to promote it on their platforms (websites, mobile apps, etc.). Referrals that lead to a purchase result in a commission for the third party.

Key Resources

GameStop’s main resources are its physical resources, namely its network of over 7,500 stores spread across the U.S., Australia, Canada, and Europe. Other essential physical resources are its 353,000 square foot distribution center in Grapevine, Texas and 260,000 square foot distribution center in Louisville, Kentucky, which it uses to distribute products to its U.S. stores.

Lastly, the company depends on human resources in the form of its over 20,000 full-time hourly and salaried employees and between 30,000 and 62,000 part-time hourly employees around the world.

Cost Structure

GameStop has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

GameStop has one revenue stream: revenues it generates from the sale of its products to customers in its various channels.