The Great Glut of Gaming Guides at "Go away" prices...

[bento]

Books and Secondary Market

Half-Price Books and some online retailers work the secondary market. After a book has been in the market for four to six months, the publisher sends the retailer a title list of books that can be returned for credit. This allows the retailer to keep capital they can then turn around and purchase more new titles. Hardbound and some trade paperbacks are returned whole, while mass paperbacks have their covers stripped off and sent in. The retailer then destroys the mass paperback.

These overstock, unsold books are sent to a warehouse where they are marked, boxed and resold to secondary outlets like HPB, 75% Off Books and other used retailers. Secondary retailers don't have much control over what they are getting, they just know they're buying relatively new books for pennies on the dollar, and then turning around and selling them for a profit.

I'm sure a publisher like WoTC works with Random House or another large distributor, who takes care of all these matters for them.

Disclosure: in the late 1980s I managed stores for Waldenbooks and had roommates that worked for HPB.

 

[Varianor Abroad]

I find that FLGS owners are rather like a bike store owner. (I managed an independant sporting goods store.) Unable to see how much cash is tied up in bloated inventory that could be made to work for the good of the business, the owner sits back and does nothing. It's easiest and safest. One day a year, someone buys that old book, validating their position. Sales continue to slump.

If the owner educated themselves on inventory turns and cashflow, life might be different. It would however disappoint the (very) occasional thrill seeker who finds just the book they are looking for. Assuming that the store doesn't vanish first.

 

[Olaf the Stout]

I find that FLGS owners are rather like a bike store owner. (I managed an independant sporting goods store.) Unable to see how much cash is tied up in bloated inventory that could be made to work for the good of the business, the owner sits back and does nothing. It's easiest and safest. One day a year, someone buys that old book, validating their position. Sales continue to slump.

If the owner educated themselves on inventory turns and cashflow, life might be different. It would however disappoint the (very) occasional thrill seeker who finds just the book they are looking for. Assuming that the store doesn't vanish first.

I would have to agree with you here Varianor. Sure, you may be able to sell that book at some time in the future for cover price, but there is a reasonably good chance that you won't. In the meantime it is taking up selling space in your store and inflation is eroding away it's value.

Also, $20 today is more valuable than $20 at some date in the future. Depending on how far in the future, $10 today may even be better for the retailer than $10 in the future. Holding on to inventory like this can also cause cashflow problems. Cashflow is extremly important in running a successful business and many people that run businesses don't seem to understand that. I bet that there have been many profitable businesses have closed their doors because they had cashflow problems.

Of course, discounting products locks in the loss and that is often something that businesses don't like to admit. It is like the gambler that keeps going when he is on a losing streak, rationalising it by thinking that his luck is bound to turn around. His loss doesn't "count" until he goes home. Until then, he can still make it back. By the same logic, the retailer doesn't count his loss on the sale of the book until he actually marks it down. Until then there is still a chance that someone will buy it at full cover price.

Olaf the Stout

 

[TheAuldGrump]

I would have to agree with you here Varianor. Sure, you may be able to sell that book at some time in the future for cover price, but there is a reasonably good chance that you won't. In the meantime it is taking up selling space in your store and inflation is eroding away it's value.

Also, $20 today is more valuable than $20 at some date in the future. Depending on how far in the future, $10 today may even be better for the retailer than $10 in the future. Holding on to inventory like this can also cause cashflow problems. Cashflow is extremly important in running a successful business and many people that run businesses don't seem to understand that. I bet that there have been many profitable businesses have closed their doors because they had cashflow problems.

Of course, discounting products locks in the loss and that is often something that businesses don't like to admit. It is like the gambler that keeps going when he is on a losing streak, rationalising it by thinking that his luck is bound to turn around. His loss doesn't "count" until he goes home. Until then, he can still make it back. By the same logic, the retailer doesn't count his loss on the sale of the book until he actually marks it down. Until then there is still a chance that someone will buy it at full cover price.

Olaf the Stout

And every year you will pay tax on the product if it remains in your stock....

The Auld Grump

 

[CharlesRyan]

And don't forget the opportunity cost. That dead inventory is taking up space that could be used for inventory that actually turns, or for organized play that drives sales.

 

[GQuail]

As others have said, the phenomenon can be traced to the fact that many RPG shops are not run by people who are businessmen first: they are often RPG fans first, who got into the business for love rather than profit. THey don't turn over a huge amount, but don't always realise that discounting a book m eans something comes in rather than spending years waiting for that £20 book to finally sell.

(OK, $35 or whatever, you get the point) ;-)

My local shops aren't too bad for this, to be fair: I have seen stock marked down for a sale, and have seen books I've eyed and passed up at £22 drop down to £16 when I finally decide to pick it up. Also, one of my local shops gives me a 10% discount that's part "used to be in student gaming group", part "comes in most weeks so I'll throw him a bone" - so he's obviously not afraid to reconsider marked prices.

I wonder if part of the reluctance to lower prices comes from competition online. A local games store owner must know he can never compete with prices on Amazon or what have you, or at least not in any real long-term capacity - enough games shops deal in other material beyond RPG books (like CCGs, board games, tradeable figure games etc) that they must feel RPGs can't be relied upon alone to pay the bills. Perhaps they think that no markdown will ever beat the competition, so they might as well keep it at top and rely on passing trade and customer good will? Certainly, I've spoken to some of my game group and they've told me that they would prefer to support their local shop even if it's more expensive than buy online.

 

[GQuail]

Of course, if they're smart and they watch eBay prices, this might never happen. Certain books are only going to become more valuable as time goes on. It might be a long-term investment that won't help in the next couple of years, but if they keep an eye out for what's hot and what's not, they could possibly make a killing.

I'm not sure they can rely on that. When dealing in older game material on eBay, I had no trouble picking up quite a few tomes. The ones that are worth appreciably more are usually quite rare, and almost always because of a smallish print run or some sort of controversy: so, for D&D that means the original 1E Deities & Demigods, and with Warhammer there's the two Realms of Chaos books. (I am the proud owner of both of the latter, but the first is not one I've ever pounced on ;-) ) Am I missing an obvious one, perhaps for another game system I don't know? And how big a mark-up are we talking here? Because it's got to counteract all those other books he isn't reducing the price of...

There may be one or two books that skyrocket in value: but most will not, and will in fact go down. The ones that will go up are usually obvious from the get-go: something like Ptolus will probably be a banker for the futre, and the short-run games from White Wolf might do alright, but I doubt that most of the books in print will become reliable collector's items. As devoted as some fans can be, the death of an edition/game line does not make material more valuable for the most part. (You need only look at 3.0s death and the carnage of old 3.0 products left behind in most shops.)

Betting on eBay is not worth it for a game shop owner. If it ain't selling quickly, it ain't likely to sell.

 

[werk]

*sigh*

I've said this so many times, but the FLGS does not have the ability to deep discount those books. For most of them, the price generally reflects what they truly paid for it. Paid. Money is gone. The books can't be returned for credit and reissued to them as remainders. If they mark the books down, it's money out of their pockets. And if the customers don't want them now, they aren't losing anything. Someday, someone will buy them.

Someone like me, digging through bins for 2Edition books.

I think you have to pay taxes on inventory anyway.

So how would you like to bleed money today?

EDIT: Err...what Auld Grump said...

 

[Greylock]

I think you have to pay taxes on inventory anyway.

I'm not a lawyer, but I was under the impression that reducing prices on backstock inventory to reduce the tax was considered a tax dodge, and not allowed.

 

[PoeticJustice]

I'm not a lawyer, but I was under the impression that reducing prices on backstock inventory to reduce the tax was considered a tax dodge, and not allowed.

I think this is correct, but I also believe one pays taxes based on the price they paid for it, not the shelf price.