Not Reading Ryan Dancy

[Mark CMG]

Why?

Time and money. Hundreds of manufacturers/publishers to deal with at an increased cost. There is no real savings, even if a few manufacturers or publishers might heavily discount for dealing direct. It takes time and costs money to call them all (or email/fax orders) and to chase them down with inevitible mis-shipments or damaged shipments. Smaller individual orders to multiple sources removes the discounts one gets by placing larger orders with a few select distributors. Add in the additional costs for shipping when your smaller orders are not large enough to get free or discounted shipping rates. Plus, the amount or paperwork increases tremendously.

I've talked to a number of people on this issue in the past, those who own or order for gamestores, and recently discussed this with a friend who is an owner/orderer of one of the top gamestores in the country (he may even pop in this thread to elucidate further) and it just isn't feasable (unless you, perhaps, have game products in a very, very limited number in a store of another type, e.g. a comic book store with two or three game company lines).

 

[guildofblades]

>>It might be better for your company, specifically, for retailers to deal directly with manufacturers/publishers but this simply is not the case for the retailers themselves.<<

When the retailer can double their year end profit by doing so, yeah, its better for them. The extra labor that entails is easily covered by the additional margin they receive and then some.

Thats why any retailer doing any real volume does indeed directly order from WOTC, Upper Deck and GW. Because at those volumes even a blind man can see the benefit. But with the mid sized (in revenue) product lines and the strong performing small press lines its not so obvious "per product line", but plainly obvious once you lump that volume together and add up the savings. They claim its not time efficient because they simply don't see the need, but some of the more successful stores do order direct on their better performing lines just so they can get the better discount, product availability and service from the manufacturer. Other stores like the mall store I mentioned orders from 150 different sources. Some hobby stores work with dozens of different vendors or more. So why is it that you think game retailers just "can't"? They obviously can. But they have to get organized about the process of doing it. And....the manufacturers willing to sell to them direct also really need to make it a quick and easy process too.

Taking the easy route and simply getting everything their distributor happen to be offering them this month is the crutch that is hindering them from growing. No retail store can hope to perform well if they can't get a reliable supply chain and based on the current distribution climate within the industry, the distributors can only provide that on the top tier lines. Not a coincidence that there has been a trend over the last decade for a shrinking spread of which companies generate the bulk of the revenues in dedicated hobby game stores. Yeah, you are obviously going to sell more of the product you can stock regularly as compared to those you can't.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

 

[RyanD]

It might be better for your company, specifically, for retailers to deal directly with manufacturers/publishers but this simply is not the case for the retailers themselves.

I've done extensive analysis of this issue, both in abstract, and in terms of actually investing in retail stores.

If the store uses a computerized POS system, and tracks its inventory on that system, and the buyer intelligently sets order points and target levels, and the POS system is programmed to generate either email or fax orders (which sound like a lot of big if's but all can be accomodated by QuickBooks, as well as several other POS systems I investigated), the time required to stay current and place orders amounts to about six hours a week. Integration with most major shipping companies (UPS, FedEx, etc.) is so good now that you can usually configure your shipping account to track inbound shipments and notify you when there's a problem.

In return for that six hours (which is likely less than most retailers spend on the phone with distributors each week doing their purchasing), the average retailer can generate between 5 and 10% additional net profit annually. Larger stores get an even better benefit - this is one place where economy of scale works in the retailers favor.

Now, and this gets to Ryan's point obliquily, setting up a store to run this way requires access to either help with technology, or someone with a technical bent and a lot of time to learn new stuff if they don't already know what they're doing. Since many stores start almost like an "Our Gang" episode (hey -- let's put on a show in the barn!) that precondition is not often met.

Which begs the question; Should the publishers tolerate (or even encourage) retailers to be able to stock their products if they can't demonstrate some minimal level of retailing competence? Or should they act to raise the bar, perhaps losing a lot of "new business", but being more likely to see that the new stores that do open and stock their products are more likely to be the stores ready to compete and succeed in today's very challenging market?

Ryan

 

[Mark CMG]

I've done extensive analysis of this issue, both in abstract, and in terms of actually investing in retail stores.

If the store uses a computerized POS system, and tracks its inventory on that system, and the buyer intelligently sets order points and target levels, and the POS system is programmed to generate either email or fax orders (which sound like a lot of big if's but all can be accomodated by QuickBooks, as well as several other POS systems I investigated), the time required to stay current and place orders amounts to about six hours a week. Integration with most major shipping companies (UPS, FedEx, etc.) is so good now that you can usually configure your shipping account to track inbound shipments and notify you when there's a problem.

In return for that six hours (which is likely less than most retailers spend on the phone with distributors each week doing their purchasing), the average retailer can generate between 5 and 10% additional net profit annually. Larger stores get an even better benefit - this is one place where economy of scale works in the retailers favor.

Please point out a couple/few gamestores currently in business that successfully run under this model. I am sure other retailers will be interested to follow up on your findings given how much is in it for them to do so.

 

[guildofblades]

>>Which begs the question; Should the publishers tolerate (or even encourage) retailers to be able to stock their products if they can't demonstrate some minimal level of retailing competence? Or should they act to raise the bar, perhaps losing a lot of "new business", but being more likely to see that the new stores that do open and stock their products are more likely to be the stores ready to compete and succeed in today's very challenging market?<<

Hi Ryan,

The first year after we went direct we sought sales through any store possible. But as we took a hard look at the market with all the data and experience we gathered over the years we did ultimately arrive at one conclusion. About 75% of existing stores are not worth our time to try and do business with. If that business comes to us, at a reduced discount (42%...and only 20% for drop shipped orders) and orders from us online, its no big deal to fill the order. The account has been paid and the lower discount somewhat justifies the bother. But we don't even remotely think about soliciting those stores. Instead we selectively target a much, much smaller grouping of stores that we're interested in doing business with and work with them with regards to POP shelves and signage, catalogs, fliers, etc. We have found that a "good" store that is dedicated to trying to make money with each product line it decides to service (notice I said service, not simply stock) will easily gross x10 more revenue with the line than stores that don't. The ones that don't aren't worth expending any resources on at all. We can service the end consumer better than them directly. The good stores, however, do add value to our products and are certainly worth working with and trying to cultivate.

Thats been our experience in three years of only selling direct.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.1483online.com

 

[Kristian Serrano]

I'd like to see a game that you can play either on the tabletop, or on the computer. Ideally, you could move characters back and forth between the tabletop and the digital realm, but that might be impossible. You should certainly be able to use one unified toolset to create adventure content that would work both on the tabletop and in the digital realm.

I'd move the game to a subscription service, with a marketplace for adventure content that 3rd party developers could tap into, and an open development model for the rules of the game and for game components, to maximize the value of everyone who would be interested in participating in that process.

I could see people playing with nothing more complex than some dice and some books, and other people playing a 100% digital game with no real-world component of any kind; and both groups would be playing basically the same game -- as well as several hybridized points along that continuum.

Wasn't that one of the initial concepts behind MasterTools?

 

[RyanD]

Please point out a couple/few gamestores currently in business that successfully run under this model. I am sure other retailers will be interested to follow up on your findings given how much is in it for them to do so.

As you can imagine, most of the stores that have evolved to this point have no interest in discussing their internal systems with competitors, so I cannot provide names or sources; which were provided to me in confidence.

I suspect that if you look for the more successful stores in your local area, you'll find stores using some or all of these techniques.

 

[RyanD]

We have found that a "good" store that is dedicated to trying to make money with each product line it decides to service (notice I said service, not simply stock) will easily gross x10 more revenue with the line than stores that don't.

Games Workshop found the same thing. In practice, they don't try to teach stores why GW wants them to do things, they just structure a system that forces stores to do the things GW wants. If a store gets railroaded in this fashion, it often finds long term success (with careful management of inventory), whereas stores that try to "go their own way" with GW often find the line unprofitable after a certain point. This attitude drives retailers nuts, and really good retailers probably lose sales they could earn if the system gave them more independence. But like DMs, the number of really good stores is far less than the number of retailers who think they're really good retailers.

Ryan

 

[RyanD]

Wasn't that one of the initial concepts behind MasterTools?

Master tools was a child of many fathers, many of whom had fundamental disagreements about the desired end state. By the time I was asked to help with the project, massive amounts of money had been spent, but little usable code had been produced. It was a huge opportunity missed.

That said, my evolving ideas for hybridizing tabletop and on-line RPG experiences don't bear much resemblance to any of the MasterTools concepts - at least none that were seriously considered at the time MasterTools was in development.

Ryan

 

[Mark CMG]

As you can imagine, most of the stores that have evolved to this point have no interest in discussing their internal systems with competitors, so I cannot provide names or sources; which were provided to me in confidence.

I suspect that if you look for the more successful stores in your local area, you'll find stores using some or all of these techniques.

The only stores I know of in this area that might function in that manner are actually part of a rather large chain of stores that aren't completely gamestores (Gamer's Paradise are part gamestore, part novelty shop), thus it isn't really part of this discussion (as their buying power is considerably stronger as a chain and with so many locations cannot function in a manner other than as you outline). My own knowledge of individual gamestores in this area (Chicagoland) runs counter to your assertions. What is, perhaps, the most successful gamestore in this area (Games Plus) does not follow your model. It is a shame that you do not know of a couple of gamestores who would not mind their name being mentioned in regard to their general ordering practices, i.e. that would go on the record to say that they feel dealing directly with manufacturers/publishers is a more advantageous route than dealing primarily with distributors. I actually have a hard time imagining that.