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Message: <blockquote data-quote="CharlesRyan" data-source="post: 3284563" data-attributes="member: 5265">Great analogy, mmasden. The impact of SKU proliferation is really hard to understand, and frankly somewhat counterintuitive. But it's the single biggest factor in the costs of a business centered on a huge range of low-priced items.Here's another way of understanding the economics of the game retailing biz, and why easy SKU management is so important.Imagine you run a game store, and a new game--we'll call it Ultragame!--is announced. It's clearly a solid product that you want to carry in your store.Now, you get a typical discount from your distributor, let's say 40%.And you have a typical overhead, say 25% of revenues.So if Ultragame! retails for $20, you pay your distributor $12 for it. You keep $8, but $5 of that goes to paying the electric bill, rent, payroll, etc. Your profit (which, for an LGS, usually means "the money you personally get to pay your own rent") is $3.You decide to order 5 copies of Ultragame! Four of them fly off the shelves. Great--you've just made $12. The fifth one, however, sits and gathers dust.Guess what? That fifth game cost you $12 from your distributor. The fact that it didn't move means that your profit from the 4 copies you did sell was completely wiped out. All your time and effort netted you exactly $0, and you have nothing to show from Ultragame!--despite the fact that it sold reasonably well (4 copies!).Managing your inventory with great precision is key to successful retailing (and successful distribution as well--even more so, as distributors work on much narrower margins (manufacturers usually have a bit more leeway, but it's a big factor for them too)). Maintaining that precision across a large range of SKUs is exceedingly difficult, especially when the popularity of any given SKU can vary widely and is hard to predict--which is exactly what happens with large miniature lines.Randomized miniatures allow the distributors and retailers to satisfy a demand for a large range with a very small number of SKUs. The popularity of the SKUs is relatively easy to predict, and their volume is forgiving of mistakes. (A store owner can afford to be off by 5 or 10 boosters if he's selling 200--whereas he loses everything if he's off by 1 of something that sells 4 or 5.)I hope that continues to clarify the hidden business life of minis!</blockquote>

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