Legacy has been selling casual games on Amazon for a little more than a year.
We sell more than 80 game packs in DVD cases with digital codes. Old school, I know, but you might be surprised to learn how many collectors still like physical product!
About 50% of Amazon customers ultimately come to the Legacy Games website, sign up for an account, and download digital versions of the games, especially if they no longer have a working disc drive or if the game is so large it can’t fit on a disc.
When we launched the business on Amazon back in March 2022, we weren’t sure if this new distribution channel would be successful or not. We knew there were plenty of resellers on Amazon hawking old discs of ours that they bought at Walmart, but we didn’t know if the casual PC games business on Amazon could scale. Plus, we had to learn how to profitably manufacture and ship one unit at a time to customers, rather than mass produce 20,000 units and ship to Walmart, the historical mainstay of our business.
Despite many challenges, our sales on Amazon have grown to $10,000 to $15,000/month in the past six months. (Seasonality plays a big role in sales, with Christmas being huge.)
Currently, you can find 80+ different game packs in Legacy’s Amazon store. The games cover every major category of PC casual games, although the best sellers are almost always hidden object bundles of 5, 10, or 15 games packaged together.
What makes Amazon so challenging?
Legacy has been selling physical products to Walmart for all of its 25-year history so retail is not new territory for us, but Amazon is a different beast. It’s a distribution business, like any other, which means it comes down to operations, costs, and having the right product.
Selling to Amazon involves some of the same types of costs as Walmart, except Amazon has assumed both the role of distributor and retailer; hence they get a bigger piece of the pie. In addition, there are significant automatic penalties on Amazon if you don’t manage your inventory and operations. You are fined for having too much product, penalized in your vendor rating if you don’t ship inventory quickly enough, and lose sales if you run out of inventory… all of which has happened to Legacy when selling on Amazon.
Marketing costs are the real challenge, however.
Legacy spends very little on marketing when it sells games at Walmart. We’re basically marketing to people with our packaging as they walk by the shelf. But marketing on Amazon is another story entirely. It’s complicated, layered, and incredibly easy to overspend and lose money. If you don’t know what TACOS is, and keep it below 10%, you’re in trouble.
Amazon marketing involves many of the same tricks as Google search ads or user acquisition for mobile games. Optimizing your price, copy, and product pages with “A+ content” and key words, using a variety of different advertising vehicles such as sponsored brands and video, retargeting customers, and much more. Not surprisingly, advertising is a huge profit center for Amazon. In 2022, Amazon reported $37.7 billion in revenue from advertising sales worldwide, an increase of over 21% from the previous year.
So one year into our Amazon experiment, what is the conclusion? Is it possible to successfully sell PC DVD games (with digital codes) on Amazon?
Amazon sales are growing and profitable, and we have more ambitious goals for the remainder of the year. Perhaps the biggest surprise, however, is how our Amazon sales have benefited Legacy’s website and direct-to-consumer business.. We have been able to build critical synergies between our digital business, at www.legacygames.com, our Walmart retail business, and our sales on Amazon.
Best sellers on the Legacy website influence what we decide to manufacture and sell on Amazon and Walmart. (The channels may be different, but the customers are not; they all seemingly like the same games.) More importantly, many customers who initially find our packs on Amazon end up as a direct customer of Legacy’s. Direct customers are more profitable and easier to reach through efficient marketing tools, such as newsletters.
Ultimately, the most important benefit of selling on Amazon may be its usefulness as a source of new customers looking to buy casual PC games. For all its challenges, Amazon provides the largest storefront in the US, which makes it difficult not to have a presence there. Check out Legacy’s store on Amazon and let us know what you think!