guildofblades
First Post
>>Ryan,
What do you see lacking with the current distributors of RPG material?
What business tools (new or othewise) do you feel a "new" distributor could bring to the publishers and retailers?<<
Not sure which Ryan you were addressing, but I'll take the questions just the same.
What is lacking? Oh boy a guy could write a whole book in reply to that question. I'll try and cover the important stuff.
Focus. None of the current distributors seem to have any focus. Every long term successful business not only figured out how to make their operation profitable, but they also keep an eye on their market and make long term business plans to insure the growth of that market and a stronger position within it. None of the hobby game distributors currently do that. The distributors stand in the middle between the manufacturers and retailers and in that roll they stand the best chance of facilitating data collection and sharing. They can implement programs to support the diversity of games, educate retailers, publish sales trends and help local retailers to identify and take advantage of local and regional trends. Market information should also flow upstream to their manufacturer partners, providing data on store types, formats, sales volumes (by city, region/per capita), and much more. In general they don't seek to add any information value adds to manufacturers because they fear if manufacturers somehow magically lay hands on this data they'll just go around the distributors. But the reality is that forward thinking manufacturers NEED market data and if they can't obtain it through the distributors then they pretty much are forced to go around them to get it and once they've gone around them for information its not a big leap to go around them with product.
The current crop of distributors all act like its 1929 and they have advance knowledge of the impending stock market crash and they are all madly racing about trying to sell what they can before the crash happens. Not a one seems to have implemented programs to advance the hobby, the industry or their futures within it. They basically sit astride a product flow and cash in while they can. They act as road blocks on the development of new businesses, fail to restock and fill orders on many manufacturers they supposedly distribute (due to fear of inventory bloat or poor cash flow management leaving them unable to provide the services they should). In short, they really aren't there to build up the industry, they are there to milk the easy sales on the most high demand product only. There is no appearance of investment in the future.
What would a forward thinking distributor look like?
Well, for one thing, unless a new distributor were to enter the market with very deep pockets and thus intended to stock a wide breadth of stock and stock it in a proper fashion so as to actual fill demand and thus service both manufacturers and retailers properly, then a smaller distributor really should find a focus. Back in the late 80s there were maybe 10,000 gaming SKUs (or less) available for a retailer to stock their store from. Today that number is more like 40,000. Yet the number of products the average distributor services is far LESS than it once was, and I will explain in a moment why thats bad for the industry (I suspect Ryan D would present the exact opposite argument regarding how many SKU's should be serviced). The reality is the gaming market has grown a great deal since then. The distributors, however, have not grown. Mostly due to poor management, a large number of mergers and bankruptcies dating back from the mid TCG crash of the mid 90's and the replacement distributors that entered the market afterwards were all small operations trying to grow into the roll. But the reality is that no small, capital strapped, distributor can enter the market and be a "FULL LINE" distributor when there are 40,000 SKUs. Its quite impossible. But they all try to present themselves as such.
The distributor tier needs specialization. When a market matures as the hobby gaming market has been doing, it opens up the possibility and indeed often the need for more specialized companies to service smaller segments of the market. In trying to pretend to be full line distributors what usually ends up happening is each distributor stocks just the products for the top few manufacturers and then they pretend to stock the products from the mid tier manufacturers and more enterprising smaller manufacturers. By pretend I mean, they claim to stock it all. But the reality works more like this. A manufacturer will spend the months prior to the release of a new product marketing that product and building up enough interest for that product on the hopes they can sell enough to cover their printing bills and other overhead and make a profit. As a new product often selling to a built in fan base for that manufacturer and also building on the pre launch marketing campaign and good will the manufacturer has with retailers, the up front sales on that product are stronger (almost always) than they will be in the months and years after its release. Distributors know this so they collect "pre orders" from retailers on a new release, order that much, plus sometimes a bit more, and then sell it to the retailers. These days they thus strive to leave zero of that product in stock. When a retailer calls up that distributors and wants more the distributor doesn't have it so puts it on a "back order" and starts collecting other back orders from other retailers. Then days, weeks or months down the road when there are X number of back orders, the distributor will order X, minus some number on the assumption that not all retailers will still want the thing after so much time.
Obviously that system is dramatically flawed. It leaves consumers and retailers waiting far too long to get the products they want. Retailers know thats how it works and thus don't even try half of the time to re order a product that has sold to keep available. The distributor got the best through put on the first month or two of sales so for all intents they are now done with that product and ready for the next set of new releases.
But do game consumers really want their RPGs, Board Games, stand alone card games, miniatures and so all to effectively become short production run collectibles? Obviously not. But that is what is happening. The problems with this situation are many.
1) Manufacturers spent a lot of resources and time to design a new product and bring it to the market. When they can only effectively sell that product for a short window of a few months through retail stores they lose much of their ability to generate profits on that item over time. So without those profits they don't have the resources to support that product for the long term. Sure, they still sell the thing on their website because they have all the left overs from their large print run yet to sell. But they can not dedicate time to really support the product. Game demos for in stores and at conventions, promotions and give aways to generate interest, add on material published online to add further value to the product, etc. Further, with less returns per product you start to find a lot of manufacturers cutting corners on product. Products are rushed through production and suffer from lack of good play testing, editing, less is spent on art, etc,. Because if not enough profit can be generated from a single product sold steadily over time a manufacturer turns to releasing a LOT of new products, so that each new product can take advantage of that initial ordering rush from distributors and retailers. The cash flow demands of any real ongoing business using that distribution system pretty much demand it. This they call the new release of product treadmill.
2) Retailers can't possibly stock all of that. They have less ability to stock all of this than the distributors do. Which isn't too terrible if they could at least lay hands on a copy within a few days to fill special orders. But we're back to the distributors not stocking the things either and putting them on back orders. So a new product sells some copies locally through a store. Some of the early customers buy it and like it. They tell their gaming friends, get online and post reviews or mention it in site discussions, etc. So now the next group of people are interested in the product and go to their local store to buy it...only the store can't get it for them. If the player really wants it they usually have to go online and buy it from the manufacturer (which costs more due to shipping and takes longer). Repeat this process enough times and its easy to see why many of the casual gamers who aren't at their local game store several times a week have given up supporting their local stores.
So what can a distributor do to help BOTH its retail customers and the manufacturers they distribute? A distributor can specialize. Its a forgone conclusion that a distributor is going to sell the leading collectible product of the moment. That plus a few other top sellers are expected to be sold by every distributor. But after that a distributor should pick a specialization of some sort, committing to either a product category, theme or specific set of manufacturers and then provide top notch service on those products. Maintain near 100% availability of those products, provide top levels of product details and work more closely with their manufacturers to run promotions. Retailers will then know they can trust that distributor to get them all the products provided under that specialization. A reliably supply line between manufacturer and retailer is created and game consumers can once again gain faith in their local retailer. (In truth, due to the shier volume of game releases out there most retailers ought to be contemplating specializations. Most already do to some extent but that lesson has been lost on the distribution tier).
Other than specialization distributors could offer some or all of the following:
1) Information. Information. Information. A manufacturer NEEDS a LOT better data than they get today. They need to know which stores are buying their products and how much. This data could be compiled automatically by computer by the distributor and exported in any number of ways from computer print out with stats and graphical and geographical charts, to data dumps that a manufacturer can import into their own CRM (Customer Relations Management) database. With this data a manufacturer can very closely examine sales trends by store and by region and begin to get a real understanding of their market and how their product is doing. Manufacturers can more clearly identify areas that need additional marketing support to generate a cohesive local player base for their games. They can identify stores that are doing well with their product and communicate with them to understand how that success came about, then implement similar programs with other retailers. And perhaps most useful to both distributor and retailer, with accurate data they can more quickly decide when a product line has failed to gain traction and to discontinue it.
2) Seminars and Education. There are new retailers (and manufacturers) that open up all the time. As the middle man in the business distributors deal with both. They are also uniquely positioned to hold education seminars in the primary zones that they service to help teach possibly new entrants to the field some key basics about the industry. These can be done for a profit also. Most important for their own business would be an outreach and educational process for new stores, as this would directly grow their direct customer base.
3) A well capitalized and forward thinking distributor might consider the creation of its own retailing brand and then set about establishing a franchise system for such. Backing them with some of the resources, stock and connections a distributor has access to, perhaps for a slice of ownership in the new stores.
4) Real time data delivery. Why in this modern era of computers and the internet are so many of the companies in our industry so backwards. A distributor is as much information broker as it is shipping consolidator. Yet few distributors have tried to leverage technology to their advantage in this roll. A couple distributors have current stock reporting. But provide no online sales trends of retail customer data to their manufacturers. A distributor could easily (well, perhaps not easily, but it wouldn't be all that challenging) set up a system where manufacturers could log in to input and update their own product sell sheets for new and existing products. This would be updated online in real time. Whenever a retailer placed an order, first thing that should happen would be that a button on a computer is pressed which would automatically go through a program that would check all sell sheets and compare it against those not yet received by that retailer and then print one of each sheet in a stack. As the warehouse staff went to the warehouse shelves to pack the order these would be printing, along with the invoice and packing slip for the order. The stack of sell sheets along with invoice and packing slip then get dumped into the box and off the order goes. On the manufacturers own control panel area inside that distributor's system the manufacturer would get reports of which stores had receieved which sell sheets and when.
Presently distributors just say "print us your sell sheets and we'll put them into boxes" which means the manufacturer must print them and then ship them. The warehouse staff must sort them manually (many sheets from many different manufacturers) and insert them into boxes. The usual result is only a few sheets make it into any given order going out and those just what happen to be laying around. More than once did I visit our old distributors' warehouses only to find boxes full of fliers sitting as of yet unopened months or years after sending them to them. Additionally, real time printing will allow for the most up to date information.
There is absolutely no good reason that pre order solicitations processes should take 3-6 months ahead of release, but thats where things stand now. Distributors like Alliance use that time to make a catalog of forthcoming products and send/sell it to their retailers. The information it in must be submitted to them at least 90-120 days in advance. This is usually before the item has even been printed. By the time of actual projected release the release date is often off and half the product specs have changed. Worse, retailers presented their pre orders so far in advance they can't remember what they pre ordered. That couple with variable actual release times makes it very difficult for smaller stores to dare even place pre orders on anything but the most sought after products because they are afraid too many items they pre ordered will release at once and they won't have the cash flow to handle it. So manufacturers should be able to update their own pre order info in the system and pre orders should be gathered as little as 2-4 weeks in advance. These catalogs can be printed on demand and be bundled with special buy in sell sheets to better inform retailers of their ordering options. Further, with each new pre order catalog sent, a database of what was already pre ordered could easily spit out a record for the retailer of what they already have on pre order but has not yet released and manufacturer updated projected release dates (assuming the manufacturer put the release date back for some reason).
5) Automated product recommendations. By examining the data of what actually is ordered and sold through their retail stores it would not be hard to develop lists of products that do well within a specific store and other products likely to also do well in that store. This can all be figured out by computer process. When it comes time to send pre order catalogs to retailers it wouldn't be too difficult to include a computerized print out of the following: A re order sheet for things likely to be sold out (figured by past sales / re order trends and sales trend averages among the total retail customer base serviced by that distributor) and plus a product recommendation sheet for products they have not yet ordered that are likely to have solid cross over appeal to products they have already ordered.
---
Seriously, I have never run a distribution company before but it doesn't take a rocket scientist to see how they can leverage technology a whole lot better than they do now, which is pretty much not at all. A little innovation and a commitment to solid service levels would pretty well be a revolution in hobby game distribution.
Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com
What do you see lacking with the current distributors of RPG material?
What business tools (new or othewise) do you feel a "new" distributor could bring to the publishers and retailers?<<
Not sure which Ryan you were addressing, but I'll take the questions just the same.
What is lacking? Oh boy a guy could write a whole book in reply to that question. I'll try and cover the important stuff.
Focus. None of the current distributors seem to have any focus. Every long term successful business not only figured out how to make their operation profitable, but they also keep an eye on their market and make long term business plans to insure the growth of that market and a stronger position within it. None of the hobby game distributors currently do that. The distributors stand in the middle between the manufacturers and retailers and in that roll they stand the best chance of facilitating data collection and sharing. They can implement programs to support the diversity of games, educate retailers, publish sales trends and help local retailers to identify and take advantage of local and regional trends. Market information should also flow upstream to their manufacturer partners, providing data on store types, formats, sales volumes (by city, region/per capita), and much more. In general they don't seek to add any information value adds to manufacturers because they fear if manufacturers somehow magically lay hands on this data they'll just go around the distributors. But the reality is that forward thinking manufacturers NEED market data and if they can't obtain it through the distributors then they pretty much are forced to go around them to get it and once they've gone around them for information its not a big leap to go around them with product.
The current crop of distributors all act like its 1929 and they have advance knowledge of the impending stock market crash and they are all madly racing about trying to sell what they can before the crash happens. Not a one seems to have implemented programs to advance the hobby, the industry or their futures within it. They basically sit astride a product flow and cash in while they can. They act as road blocks on the development of new businesses, fail to restock and fill orders on many manufacturers they supposedly distribute (due to fear of inventory bloat or poor cash flow management leaving them unable to provide the services they should). In short, they really aren't there to build up the industry, they are there to milk the easy sales on the most high demand product only. There is no appearance of investment in the future.
What would a forward thinking distributor look like?
Well, for one thing, unless a new distributor were to enter the market with very deep pockets and thus intended to stock a wide breadth of stock and stock it in a proper fashion so as to actual fill demand and thus service both manufacturers and retailers properly, then a smaller distributor really should find a focus. Back in the late 80s there were maybe 10,000 gaming SKUs (or less) available for a retailer to stock their store from. Today that number is more like 40,000. Yet the number of products the average distributor services is far LESS than it once was, and I will explain in a moment why thats bad for the industry (I suspect Ryan D would present the exact opposite argument regarding how many SKU's should be serviced). The reality is the gaming market has grown a great deal since then. The distributors, however, have not grown. Mostly due to poor management, a large number of mergers and bankruptcies dating back from the mid TCG crash of the mid 90's and the replacement distributors that entered the market afterwards were all small operations trying to grow into the roll. But the reality is that no small, capital strapped, distributor can enter the market and be a "FULL LINE" distributor when there are 40,000 SKUs. Its quite impossible. But they all try to present themselves as such.
The distributor tier needs specialization. When a market matures as the hobby gaming market has been doing, it opens up the possibility and indeed often the need for more specialized companies to service smaller segments of the market. In trying to pretend to be full line distributors what usually ends up happening is each distributor stocks just the products for the top few manufacturers and then they pretend to stock the products from the mid tier manufacturers and more enterprising smaller manufacturers. By pretend I mean, they claim to stock it all. But the reality works more like this. A manufacturer will spend the months prior to the release of a new product marketing that product and building up enough interest for that product on the hopes they can sell enough to cover their printing bills and other overhead and make a profit. As a new product often selling to a built in fan base for that manufacturer and also building on the pre launch marketing campaign and good will the manufacturer has with retailers, the up front sales on that product are stronger (almost always) than they will be in the months and years after its release. Distributors know this so they collect "pre orders" from retailers on a new release, order that much, plus sometimes a bit more, and then sell it to the retailers. These days they thus strive to leave zero of that product in stock. When a retailer calls up that distributors and wants more the distributor doesn't have it so puts it on a "back order" and starts collecting other back orders from other retailers. Then days, weeks or months down the road when there are X number of back orders, the distributor will order X, minus some number on the assumption that not all retailers will still want the thing after so much time.
Obviously that system is dramatically flawed. It leaves consumers and retailers waiting far too long to get the products they want. Retailers know thats how it works and thus don't even try half of the time to re order a product that has sold to keep available. The distributor got the best through put on the first month or two of sales so for all intents they are now done with that product and ready for the next set of new releases.
But do game consumers really want their RPGs, Board Games, stand alone card games, miniatures and so all to effectively become short production run collectibles? Obviously not. But that is what is happening. The problems with this situation are many.
1) Manufacturers spent a lot of resources and time to design a new product and bring it to the market. When they can only effectively sell that product for a short window of a few months through retail stores they lose much of their ability to generate profits on that item over time. So without those profits they don't have the resources to support that product for the long term. Sure, they still sell the thing on their website because they have all the left overs from their large print run yet to sell. But they can not dedicate time to really support the product. Game demos for in stores and at conventions, promotions and give aways to generate interest, add on material published online to add further value to the product, etc. Further, with less returns per product you start to find a lot of manufacturers cutting corners on product. Products are rushed through production and suffer from lack of good play testing, editing, less is spent on art, etc,. Because if not enough profit can be generated from a single product sold steadily over time a manufacturer turns to releasing a LOT of new products, so that each new product can take advantage of that initial ordering rush from distributors and retailers. The cash flow demands of any real ongoing business using that distribution system pretty much demand it. This they call the new release of product treadmill.
2) Retailers can't possibly stock all of that. They have less ability to stock all of this than the distributors do. Which isn't too terrible if they could at least lay hands on a copy within a few days to fill special orders. But we're back to the distributors not stocking the things either and putting them on back orders. So a new product sells some copies locally through a store. Some of the early customers buy it and like it. They tell their gaming friends, get online and post reviews or mention it in site discussions, etc. So now the next group of people are interested in the product and go to their local store to buy it...only the store can't get it for them. If the player really wants it they usually have to go online and buy it from the manufacturer (which costs more due to shipping and takes longer). Repeat this process enough times and its easy to see why many of the casual gamers who aren't at their local game store several times a week have given up supporting their local stores.
So what can a distributor do to help BOTH its retail customers and the manufacturers they distribute? A distributor can specialize. Its a forgone conclusion that a distributor is going to sell the leading collectible product of the moment. That plus a few other top sellers are expected to be sold by every distributor. But after that a distributor should pick a specialization of some sort, committing to either a product category, theme or specific set of manufacturers and then provide top notch service on those products. Maintain near 100% availability of those products, provide top levels of product details and work more closely with their manufacturers to run promotions. Retailers will then know they can trust that distributor to get them all the products provided under that specialization. A reliably supply line between manufacturer and retailer is created and game consumers can once again gain faith in their local retailer. (In truth, due to the shier volume of game releases out there most retailers ought to be contemplating specializations. Most already do to some extent but that lesson has been lost on the distribution tier).
Other than specialization distributors could offer some or all of the following:
1) Information. Information. Information. A manufacturer NEEDS a LOT better data than they get today. They need to know which stores are buying their products and how much. This data could be compiled automatically by computer by the distributor and exported in any number of ways from computer print out with stats and graphical and geographical charts, to data dumps that a manufacturer can import into their own CRM (Customer Relations Management) database. With this data a manufacturer can very closely examine sales trends by store and by region and begin to get a real understanding of their market and how their product is doing. Manufacturers can more clearly identify areas that need additional marketing support to generate a cohesive local player base for their games. They can identify stores that are doing well with their product and communicate with them to understand how that success came about, then implement similar programs with other retailers. And perhaps most useful to both distributor and retailer, with accurate data they can more quickly decide when a product line has failed to gain traction and to discontinue it.
2) Seminars and Education. There are new retailers (and manufacturers) that open up all the time. As the middle man in the business distributors deal with both. They are also uniquely positioned to hold education seminars in the primary zones that they service to help teach possibly new entrants to the field some key basics about the industry. These can be done for a profit also. Most important for their own business would be an outreach and educational process for new stores, as this would directly grow their direct customer base.
3) A well capitalized and forward thinking distributor might consider the creation of its own retailing brand and then set about establishing a franchise system for such. Backing them with some of the resources, stock and connections a distributor has access to, perhaps for a slice of ownership in the new stores.
4) Real time data delivery. Why in this modern era of computers and the internet are so many of the companies in our industry so backwards. A distributor is as much information broker as it is shipping consolidator. Yet few distributors have tried to leverage technology to their advantage in this roll. A couple distributors have current stock reporting. But provide no online sales trends of retail customer data to their manufacturers. A distributor could easily (well, perhaps not easily, but it wouldn't be all that challenging) set up a system where manufacturers could log in to input and update their own product sell sheets for new and existing products. This would be updated online in real time. Whenever a retailer placed an order, first thing that should happen would be that a button on a computer is pressed which would automatically go through a program that would check all sell sheets and compare it against those not yet received by that retailer and then print one of each sheet in a stack. As the warehouse staff went to the warehouse shelves to pack the order these would be printing, along with the invoice and packing slip for the order. The stack of sell sheets along with invoice and packing slip then get dumped into the box and off the order goes. On the manufacturers own control panel area inside that distributor's system the manufacturer would get reports of which stores had receieved which sell sheets and when.
Presently distributors just say "print us your sell sheets and we'll put them into boxes" which means the manufacturer must print them and then ship them. The warehouse staff must sort them manually (many sheets from many different manufacturers) and insert them into boxes. The usual result is only a few sheets make it into any given order going out and those just what happen to be laying around. More than once did I visit our old distributors' warehouses only to find boxes full of fliers sitting as of yet unopened months or years after sending them to them. Additionally, real time printing will allow for the most up to date information.
There is absolutely no good reason that pre order solicitations processes should take 3-6 months ahead of release, but thats where things stand now. Distributors like Alliance use that time to make a catalog of forthcoming products and send/sell it to their retailers. The information it in must be submitted to them at least 90-120 days in advance. This is usually before the item has even been printed. By the time of actual projected release the release date is often off and half the product specs have changed. Worse, retailers presented their pre orders so far in advance they can't remember what they pre ordered. That couple with variable actual release times makes it very difficult for smaller stores to dare even place pre orders on anything but the most sought after products because they are afraid too many items they pre ordered will release at once and they won't have the cash flow to handle it. So manufacturers should be able to update their own pre order info in the system and pre orders should be gathered as little as 2-4 weeks in advance. These catalogs can be printed on demand and be bundled with special buy in sell sheets to better inform retailers of their ordering options. Further, with each new pre order catalog sent, a database of what was already pre ordered could easily spit out a record for the retailer of what they already have on pre order but has not yet released and manufacturer updated projected release dates (assuming the manufacturer put the release date back for some reason).
5) Automated product recommendations. By examining the data of what actually is ordered and sold through their retail stores it would not be hard to develop lists of products that do well within a specific store and other products likely to also do well in that store. This can all be figured out by computer process. When it comes time to send pre order catalogs to retailers it wouldn't be too difficult to include a computerized print out of the following: A re order sheet for things likely to be sold out (figured by past sales / re order trends and sales trend averages among the total retail customer base serviced by that distributor) and plus a product recommendation sheet for products they have not yet ordered that are likely to have solid cross over appeal to products they have already ordered.
---
Seriously, I have never run a distribution company before but it doesn't take a rocket scientist to see how they can leverage technology a whole lot better than they do now, which is pretty much not at all. A little innovation and a commitment to solid service levels would pretty well be a revolution in hobby game distribution.
Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com
