Used-game seller Goozex expands into movie sales

Goozex has bootstrapped a solid business selling used games online. Now, at the urging of its own customers, it is expanding into selling movie disks online.
The idea is to make the chore of selling used goods online a hassle-free process that doesn’t cost as much as it does on other sites such as eBay. Goozex does this by handling transactions for you. Selling games has worked out well, so now the company is using the same system to let users sell movies.
You purchase Goozex points, a virtual currency, to buy movies or games from others. You also acquire trade points for a dollar each to conduct a transaction. Every time you buy or sell, you use a trade point, so the fee is fixed at a dollar. You then list the games or movies that you want to buy, and you also list the items you have to sell. Goozex determines the best prices for what it considers to be fair market value. Then Goozex automatically matches the buyers and sellers who have the closest matches on requests and offers. Goozex claims it can save $16.50 on the average used game compared to buying used games at stores.
The process is simple, and it seems that more consumers are getting comfortable with the process of online trading. This summer, the company’s sales of used fare have been brisk even though the recession has put a damper on sales of new games in the U.S. market.
The College Park, Md.-based company was started in 2006 by three co-founders, including two who met each other while at business school at the University of Maryland. One of the founders, Jonathan Dugan, got the idea when he traded in 17 games at a GameStop store, only to get $30 in credit towards buying other games. The company raised a small amount of money from friends and family and is now profitable. It has four employees. (Pictured right: Jonathan Dugan, co-founder and chief operating officer; Mark Nebesky, co-founder and chief marketing officer; and Valerio Zanini, co-founder and chief executive officer).
Now it handles more than 20,000 trades a month, and there are more than 10,000 different games available on the site. Those users wanted to use the trading platform to sell more than just games. That was especially true among owners of Xbox 360s and PlayStation 3s, both of which can play movies.
So Goozex accommodated them, kicking off the sale of Blu-ray, DVD, and other formats of movies this week. The more you trade, the more you earn points that you can apply toward trading.
Rivals include Swap Tree, Switch Games, and others. In movies, there were other players, including Pure Flicks, which folded. Mark Nebesky, co-founder and chief marketing officer at Goozex, says his company hopes to fill a void in used movie sales.
Goozex sells points in 50 point increments. To buy 100 points, you spend $5. To buy 1,200 points, you spend $60. The purchase of points and tokens accounts for about 80 percent of revenue, while ads supply the rest.
Goozex’s trading volume has been growing about 30 percent a year. In 2008, it saw 160,000 trades. In 2009, the company expects that revenues will grow 75 percent. In July alone, revenue grew 30 percent. The private company does not disclose exact revenues.
The company is starting to do some marketing and advertising, since it has to compete with the big gorilla in the market, GameStop, which is counting on used game revenue in the recession to shore up its bottom line. The company does promotions on some gamer sites, including Crispy Gamer, CheapAssGamer, and GameDNA.
In February, Goozex started selling used games in Europe. The company has thought about raising money but for now it has put that plan on hold as it executes on its movie sales business.