Wednesday, January 28, 2015

Those Broken Street Date Blues

ICV2 ran a story last Friday on the early release of Fate Reforged by a Target in Anchorage Alaska. The headline was somewhat misleading, reading “Target Store Says Magic Release Dates Don’t Apply”. If you read the article, and of course a lot of retailers did, generating discussion of petitions and boycotts,  what actually happened demonstrates what generally happens with product like Magic and Pokemon and Yu Gi Oh and baseball cards and football cards and other stuff that Target and other big box stores do not want to mess with.  When the owner of BOSCO’s asked the Target manager on duty about it, she said told him that it was not Target's issue since they get it from their vendor Excell. She knew nothing about the product, it scanned through her registers, ergo it must be OK to sell.

Excell is what is called a rack jobber. Much like with Frito Lay, Little Debbie snack cakes and assorted cigarette manufacturers, Target does not actually stock the racks of trading card games and sports cards in their stores. There is a lot of product with which to deal and Target knows customers come in looking for it but Target also does not really want to mess with it. Nor do Wal-mart, K-mart or any other mass market discounter. Instead, the store turns the product line over to a specific manufacturer or distributor, known in the trade as a “jobber” or “rack jobber”.  The store assigns a specific section of shelf space to the jobber and it now becomes the jobber’s responsibility to generate sufficient levels of sales and profits to justify getting that shelf space in the store. The jobber keeps very close track of what they stock in their space, wanting to produce as much inventory turnover (I will talk about inventory turnover and why it is important some other time) and hence profit as possible. 

Since it is their livelihood the jobber is also very protective of their space. When I worked for Wal-mart a number of years ago, we would occasionally find bags of chips lying on the floor in the snack food aisle. Someone would stock another company’s chips in the Frito Lay section and the Frito jobber would clear them out of their space. They paid for the space and they wanted their products in it.

Ultimately, when street dates are broken, as in the case here, typically it is Excell’s or a similar company’s fault, not Target or Wal-mart. The mass merchant assumes that the jobber knows its product line and when it can go on sale and acts accordingly. When contacted about a broken street date, the distributor will usually act to pull the product from the shelves until it can go on sale. Unfortunately, however, once a street date gets broken, no-one at the offending store particularly cares since TCGs make up such a tiny part of their sales, meaning the LGS’s customers can buy all they one until an injured party, typically the Local Game Store, take action.  Until that happens, the LGS, who also has to compete with the mass merchant in other areas such as price,  sees a significant portion of new release sales flowing into the mass merchant’s registers.

And the most galling thing? Breaking a street date brings a comparatively tiny percentage of increased sales to the mass merchant, significant loss of sales to the LGS, l and no apparent repercussions from the publisher time after time. Stores keep hearing the publishers will take action against broken street dates but the only place that ever appears to suffer repercussions from breaking a street date is the LGS.

Monday, January 26, 2015

Yu Gi Oh Day

The store hosted YU Gi Oh Saturday and surprisingly, we had a much better turnout that we did for the Secrets of Eternity Sneak Peek a couple of weeks ago . I do not know if the very limited edition playmat or that it was not a $20 buy in to play but we had a number of Yu Gi Oh players in that we had not seen for awhile.

Wednesday, January 21, 2015

Sneak Peeks Vs. Pre-releases: And the Winner Is....

I’ve said it before and I will say it again:  while both make me money, I much prefer WOTC’s Magic Pre-releases to a Yu Gi Oh Sneak Peek (Still waiting to get approved for Pokemon Pre-releases and Wizkids keeps having to push back their scheduled release dates to the point that scheduling a pre-release for any of their games is problematic. The last time we tried running a release tournament for a HeroClix product, we found out a week ahead of time that the date of the release had moved back a week. Sigh.). We ran a Sneak Peek for the Yu Gi Oh Secrets of Eternity last weekend and are wrapping up a Pre-release weekend for  the new Magic set, Fate Reforged, as I write this.
There are two major reasons I prefer a WOTC event to a Konami one:

1)      More flexibility in running the event.  I can understand some of Konami’s concerns regarding running tournaments, since they generally perceive as they company generally perceives the game as targeting younger players (most Yu Gi Oh players that play here and in other stores with which I am familiar are high school age and up), but having to run events between during certain times of the day excludes the possibility of a midnight release for a new set as well as running evening events. Additionally, Konami wants stores to submit 3 photographs of each event, get the ages of players as well as their sex and poll them as to their favorite and least favorite cards. WOTC does not ask for any of that. Running a pre-release is hectic enough as it is without the additional headache of asking questions of players regarding age and card likes during the event.

2)      More profitability in running the event. Konami sets a $20 limit that stores can charge for the Sneak Peek and the only prizes provided are the promo card and playmats. If a store wants to give out additional prizes, and over time tournament prizing has conditioned players to expect additional prizing at a pre-release event. Ergo, if a store wants to offer additional prizes, the store has to foot the cost and cannot charge anything extra to cover the cost of the additional prizes. Any more prizes provided come directly out of the store’s gross, making the Sneak Peek much less profitable for stores to run. Contrast this with WOTC, which provides displays of boosters at no charge for stores to use as prizing for the event AND allows stores to charge whatever they way, rather than mandating a specific fee. Unlike Konami, WOTC appears to realize that  pre-releases are highly competitive events, meaning that competition will work to keep the fees stores charge for pre-releases within a certain competitive range, generally within the $20 to $30 dollar range, though I did hear of stores going as cheap as $15 for a Fate Reforged event

Monday, January 19, 2015

Thinking about Thanquol

Games Workshop confused me with the marketing for this week’s Warhammer The End Times Thanquol book. The company’s other End Times books, in general, have released in hardback form through trade distribution, meaning that stores bought them through Games Workshop’s wholesale trade division at our wholesale discount. Stores can buy GW products, generally limited editions or slower selling items, though what GW calls its Direct Sales division but receive a smaller discount than we do on items purchased through the trade division, meaning that items purchased through the Direct Sales division provide less profit to the store. Since they are less profitable, stores generally only purchase items through Direct Sales when they have a special order from a customer or Games Workshop decides to release a limited edition item that stores feel has enough sales potential from GW customers to justify stocking it in at the lower profit level (Generally, this is not a really hard decision to make as 1) GW limited items tend to have high pricepoints, generating larger profits in dollar value, if not percentage and 2) GW players tend to be very avid collectors, much more willing to purchase limited edition items than are players of other games). Clear?

The way The End Times Thanquol’s release was handled created more hoops for retailers to jump through to get the hardback version of the book, which was released as a limited edition only for $75 through Direct Sales, instead of in limited quantities through the trade division. The paperback version, which usually arrived through trade several weeks or months after the hardback release, released simultaneously with the hardback at $66 but through trade instead of direct.
However, Games Workshop put a special incentive in place for those stores wanting to order the limited hardback. Forward the confirmation email for your order to your trade sales representative and the store receives a credit amounting to an extra 10% off plus the shipping charges for the hardback. Ergo a book that stores could normally order in limited amounts for the normal trade discount is going through Direct Sales instead for the same discount.

With me so far? ‘cause it gets better. Games Workshop put an order cap of one copy of Thanquol per order. So now, stores can order as many any they want, but, as of last week, they have to put in an individual order for each and every book, with Games Workshop picking up the freight charges to the retailer for each copy of the book that ships out, amounting to quite a hefty sum. Maybe there is some reason for going this round but it would have been far cheaper in terms of freight for GW to have allowed multiple copy purchase by retailers or by distributing them through the trade division, with the usual cap on the number of copies ordered. I know of at least one retailer that scored almost 50 copies of the book by ordering one copy at a time and having them all arrive on the release day. The freight charges GW absorbed on that had to eat most if not all of the profit GW made on the sale. I guess, with the price point on its line and the corresponding gross profit, GW can afford to do this once in a while but I hope they do not make a habit of it.

Thursday, January 15, 2015

Star Clipper Closing

I owned Star Clipper, arguably the best comic shop in St. Louis, for about 6 years during the late 1990s. I bought it from the original owners, Carol and Sonny Denbow about 1995 and sold it to the current owners, AJ and Ben Trujillo, in 2001 and truly enjoyed visiting the store under all three ownerships. Below is the email AJ sent out to the store's email list today:

Dear Friends of Star Clipper,
It is with great regret Ben and I must inform you that after more than a quarter century serving St. Louis, Star Clipper is closing its doors.

The personal and professional experience of managing Star Clipper has been the most important of our lives. We were lucky to inherit the legacy from wise people ahead of their time, grow with the medium, and love the job. But the time has come to bring Star Clipper to a natural conclusion.

Making the decision to close after our 17-year tenure was very difficult. We will miss the connection to St. Louis' incredible fan community, talented creative professionals and fellow Loop businesses. We have been privileged to work with staff who set the standard for professionalism. Our suppliers and partners have our gratitude for all their support over the years.

Star Clipper gave us a unique opportunity to innovate and explore. We hope you have enjoyed being a part of it! 

Now for some practical considerations:

Starting Saturday, January 17, 2015 we will begin liquidating our inventory with a discount of 25% off everything storewide. We will be happy to accept reasonable offers for our fixtures and other equipment as well.  Preordered items will not be discounted.

We will continue to receive new comics and graphic novels through the month of January. Our subscription customers will receive a separate message about arrangements being made on their behalf.

Our hours of operation are changing. As of this writing we will be open seven days a week from 10 AM to 8 PM.

Gift certificates and store credit will be honored through February 10, 2015. The excellent Fantasy Books, Inc. chain, which offers three metro area locations, will honor valid Star Clipper gift certificates beginning February 10, 2015.  We will no longer be purchasing used Graphic Novels. 

Thank you for everything, St. Louis! See you in the funny papers.

Sincerely Yours,

A.J., Ben, and the Staff of Star Clipper

Wednesday, January 14, 2015

When You Should Not Sell Your Game To Me

Followed a discussion on Facebook for the past couple of days focusing on games launched through Kickstarter and why they not only did not need retail storefronts to sell their game but actually avoid them, failing to see any value in what the retail storefront offers. By handling the shipping functions, they get to keep the part of the profit they would otherwise pay to the distributor and retailer for their services (and believe me, distributors and retailers do provide services for the share of the profits they receive, but that’s another story). For most of those small publishers, they are right. They don’t need my store to sell their game.

From discussions I have had with others in the industry, roughly we have about 1500-2000 dedicated gaming stores. This includes shops that focus on trading card games but excludes the big box stores such as TRU, Barnes and Noble and Target that carry board and card games but would view a day’s sales of them as a rounding error in the total.

For a small press game, which frankly most Kickstarted games are, unless you go the Print on Demand route, in order to keep costs as low as possible, a publisher plans for a print run of between 1000 to 5000 or so copies, with pretty poor pricing until you hit the 2000-3000 copy mark, meaning lower profit per unit.  Unless things have changed drastically in the past couple of years, a publisher can roughly expect to sell about 300 copies of a RPG and 1000 copies of a boardgame to non-crowdsourcing backers, that is into the general market, meaning that about only one out of every 5 stores will stock a publisher’s RPG and 1 out of every 2 stores will stock a publisher’s board game. Those aren’t very good odds, either for the publisher or the store. In a case like this, barring such special circumstances as a local fan base, it is probably better for the publisher to print in smaller quantities, increasing the cost but allowing them to skip the store and sell direct while making comparable levels of profit. Without pre-sales, this means a lot of copies left over from the initial sales push. However, the “long tail” of the internet makes it possible for those extra copies to sell eventually, rather than get sold as remainders.

The long tail is a marketing concept that developed to explain how companies like Amazon and Netflix can offer millions of products and still remain profitable. Essentially, it’s the 80/20 rule extended (You remember the 80/20 rule:  80% of sales come from 20% of products). The long tail says that comparatively few products account for the majority of a company’s sales and that the vast majority of them only sell a few units per month or even year.  Since the marginal cost of adding a new item listing to a website is next to nothing and the cost of storage has dropped dramatically over the past decade (Digital storage costs are minute and more companies are using Fulfillment by Amazon, piggy backing on Amazon to drastically cut their storage costs), small press companies can much more easily make a profit while conversely selling fewer copies of a game to do so, meaning, that, at this point, they don’t really need to sell to me. It’s when demand for the game outstrips the ability of the publisher to also handle sales that distributors and retailers provide the needed services