I have always been envious of the unique geek merchandise that Thinkgeek.com’s team was able to sell. The coolest things were almost always exclusive to them. And they were always quite reasonably priced. Unfortunately for them the business struggled. Eventually they sold themselves to Hot Topic, which lost out via a higher bid from Gamestop before closing the deal.
Gamestop opened a few Thinkgeek stores, but they either didn’t have enough funds to open more stores or the stores that were opened weren’t performing at a high enough level to justify wider expansion. Either way the end result that was announced in June 2019 is that the Thinkgeek website is closing. Apparently the stores will remain open but Gamestop is hurting so it seems only a matter of time before Thinkgeek closes forever or perhaps is sold again in a fire sale.
Hot Topic would have been the better fit, I have little doubt about that much. First of all Hot Topic and Thinkgeek were more similar than Gamestop and Thinkgeek. Gamers are a subset of the Thinkgeek and Hot Topic customer base, whereas they are the entirety of the Gamestop customer base. Had the Hot Topic acquisition gone through I believe they would have rescued Thinkgeek. And let’s be clear, Thinkgeek needed rescuing.
The most obvious problem was the website. They do a lot right but the product images were tiny. The mobile version is actually usable but the desktop version had terrible zoom capabilities on the product, and it’s all about the product!
The problem that is hard for anyone to see but is obvious to me was scale. In order to get direct licenses or exclusive products from licensees you need to place large bets. Thinkgeek didn’t crowdsource their exclusive merchandise. Even if they did there are problems with crowdfunding (hey that’s a good post for later) that prevent it from being a great solution to the scale problem. What that means is they had a lot of inventory that they sold for meager or negative margins. While that’s typical for retail I believe Thinkgeek had a higher proportion of these distressed sales than needed to run a successful retailer.
A potential solution to the scale problem would have been a hybrid wholesale / retail model. It’s awesome to have exclusive product, but the reality is that Thinkgeek was a small player in the overall market. Had Thinkgeek products been on Amazon, in Target / Wal-Mart / Gamestop (haha) that would have increased their brand awareness. They could have used online marketplaces and smaller retailers to help move distressed inventory as well. There are many times I considered buying their closeouts to resell because the only problem with the merchandise is that the right buyer hadn’t seen it yet.
The other potential to the scale problem would be to scale way back. That’s what I’ve done and we are on the upswing. Gamestop isn’t in the small scale business, though, so that’s not really an option.
I understand why Gamestop is closing the website. It’s a custom system and keeping it running is probably quite expensive. Plus the amount of merchandise is going to decrease dramatically so what’s the point of the website being open if it’s a ghost town?
It’s a sad day to see such a cool retailer dying. The ecommerce game is in constant flux so things like this will happen.