Barak said:
I dunno man. While it's possible, it requires a bit too much tinfoil for me to believe that Amazon would lose money on the sale of RPG books to drive FLGS out of business, given how small potatoes RPG books are for them overall. And when you look around Amazon.com, you realize they have similar discounts on -everything-, which means that they'd.. What, take a loss on everything they sell in order to run everyone else out of business? They'd have been the first to go, long ago.
You are right, they don't intentionally lose money.
Roughly 14 years ago I worked with a guy that had proposed to the owners of our then employer to create an online bookstore. His idea was to provide a low cost storefront that would specialize in providing books for people that couldn't get to bookstores. Since the business was a bookstore, he had access to cost structures and could do a business plan/proposition. Unfortunately, http/html wasn't widely adopted and he proposed using gopher as the interface to the (internet savvy) customer. The plan was good in principle - provide a service to people who didn't have a local bookstore, at a low cost of business to the existing Brick & Mortar business. There were also ideas on how to offer discounting to increase the number of customers and begin to create a larger discount structure, based on quantity, for the entire business.
Unfortunately the plan was rejected. A few years later, Amazon.com came around. (And no, I didn't know Jeff Bezos. Bezos was hardly original in his ideas. He was original in finding a way to implement them! And he did so successfully.)
Many small bookstores use Ingram Micro to fill their stock. Ingram provides a 35% discount. Small bookstores cannot compete with Amazon. Small bookstores cannot compete with the chain stores. Small bookstores cannot purchase in sufficient quantities to be worth the time of a publisher to deal with directly. Believe it or not, a publisher doesn't want to deal with collections and lines of credit on such small invoices. Small bookstores purchase in single and double digit quantities for titles. Large chains and Amazon purchase in much, much, greater quantities.
It is very similar when dealing with game stores. I have worked at a local bookstore. Years ago I worked at the FLGS/Distributor.
Amazon doesn't need to try to sell below cost. Amazon does need to sell at a high enough margin to remain profitable. (They have been profitable since late 2002, early 2003.) But they specialize in leveraging quantity sales and providing online service that is comparable, if not better, than traditional brick & mortar businesses. They build enough customer base that they can purchase (and then resell) at the same rates that chain stores can.
I readily admit I am not well versed in WotC's practices at the moment. But it seems unlikely that very many gaming resellers (online or B&M) in the US are purchasing directly from WotC. They are purchasing from the distribution chain. Most people that tell you WotC won't sell to them are correct. But the reasons might not be as apparent, or accurate.
WotC is not in business to deal directly with hundreds of small resellers with questionable lines of credit. WotC doesn't maintain a large Accounts Receivable department solely to collect from small resellers. WotC doesn't maintain a large shipping department to individually package 3 copies of the latest splatbook. They sell in bulk, they sell a case or several cases of each splatbook.
The problem is that the distribution channel cuts an extra 10% off your discounts. So savvy online resellers would rather not deal with the distribution channel. They want to deal with the publisher. Of course, they want to deal with the publisher on their own terms, deeper discount, smaller revolving inventory, without recognizing that the competition (Amazon) is working with economies of scale. Amazon might order more copies of Complete Mage in their initial purchase than entire gamestores will purchase in their operational lifetime.
Online businesses are hurting brick & mortars. But that is because many brick & mortars are not nimble enough to adjust to the rapidly changing climate. They cut costs by having less motivated/skilled workers? Online stores respond by provide customer provided reviews that are at least as good as the lacadasical employee at the local store. Then the online store might choose to give you a slight credit for the time you took to write the review. B&M cut costs by moving to a smaller, cheaper location? The online store doesn't have a location, and doesn't need one. Reduce stock to keep your cash flow healthier? Good idea! Just don't be out of stock when the customer comes in. Amazon is rarely out of stock and they can tell you when they will fill your order. The best brick & mortar businesses have always been running a good business. They have built customer loyalty by providing the things that an online store simply cannot. They run efficiently and employ people that truly care. Online resellers are simply culling the herd of the less efficient business.
It's rough and in some ways it sucks. There are people going out of business. People who always dreamed of owning their own business. Unfortunately, some of those people were not well suited to running an efficient business. Now they are losing. Not because they didn't have heart, but just because they can't respond rapidly enough to the changes in our society. It is the same thing that happens when the big chain stores come into a new town.
Could there be improper business practices? Sure, I suppose there could. But we have little proof of that. Especially not from a few authors that don't understand how WotC is accounting for royalty payments.
