Distribution

[LloydBrown]

Does anyone here have actual RPG distribution experience?

[Eero Tuovinen]

I don't know what distribution means. I supply games regularly to Finnish rpg retail stores. Does that count? Probably not, because I work on a very small scale and do both publishing and retail on the side.

Anyway, do you mean "distribution experience" as in "selling through distribution" or "working for a distribution company"?

[Luke]

Hi Lloyd,

do you mean experience distributing rpgs or experience in having rpgs distributed? I suspect it's the former, but I wanted to clarify.

-L

[Ron Edwards]

Hi Lloyd,

The two questions so far illustrate the problem with this way of starting threads. For this conversation to continue, you'll have to propose a topic for discussion, perhaps beginning with the point you'd like to make, rather than tossing out a poll-style question.

For example, if you'd like to clarify how distribution works or what it's like to work as one, then simply describe it and then state why you are posting it.

Best,
Ron

[guildofblades]

Hi Lloyd,

If you mean, having worked for a distributor. No. But been to enough of their warehouses over the years.

If you mean, actually dealing with the distributors as a primary part of our business. Yes. We began dealing with distributors back in 1996 with our first publication and kept on "trying" to deal with them through about the end of 2003.

In late 1997 and early 1999 we were doing business with 13 distributors in the US and Canada (including every major game distributor except for Diamond..but I would argue about them having a "major" presence in gaming), and another 6 international distributors betwen England, Germany, Itlay and Australia.

However, the distribution tier as a whole was fundamentally changed after the tier nearly collapsed in 1998. It just was never the same after all the closures and buyouts and mergers that stretched through 99.

For the first couple of years, distribution was a viable and reasonable stable channel and it allowed our business to grow. After that the entire channel started to become entirely unstable for most any publisher that wasn't in the top tier. That is why shortly thereafter both White Wolf and Steve Jackson were forced to move to flooring arrangements with their distributors, as a last ditch efforts to regain some form of viable stability and availability for their titles.

Just to give you some perspective, back in 97 and 98, our average title would sell between 400 and 800 units upon release. Then depending on the strength of the title, we would sell between 50 and 600 upon re-orders in the first month. Thereafter we would see continual re-order business ranging from 25 units to 200 units a month and that stayed steady until the collapse. After the collapse and the advent of Pokemon, the way the distributors operated fundamentally changed with regards to everyone but the largest publishers. Out the door unit sales droppd by over 50% and re-order volumes existing for only the first month. After that, all distributors aggressively tried to zero out titles and relegated them to special order status only. Right now, in selling only direct to consumers and direct to retail account, we are doing nearly the same unit volumes as we were withthe distributors during the post collapse period, but our distribution channel is 100% stable, and our margins are far, far better.

Its like this Lloyd. If every American made automoble you ever bought just died on you within the first six months after purchasing it, my bet is you would stop buying those cars. You would buy German or Japanese brands, so you could more reliably get to the places you had to go. And it would not matter if 99 out of 100 people you knew were pleading with you to keep buying American for the "good of the country" or whatever, you would be amazingly dumb to keep doing that. You would, of course, have to ask the very important questions. "What has changed since I last bought an American car? Why, if I buy one today, will it not fall apart on me?". It like that for our businesses. It does not matter if 99 out of 100 retailers would prefer if our titles were available from distribution. Distribution has fallen apart on us one too many times. It has proven itself to be entirely too unreliable for us to build our own business upon in a stable manner. If people want us to consider using distributors again, Ihave to ask the very important questions. "What has changed since I last used the distributors? Why, if I begin using distributors again, will the channel not fall apart of me again and fail to effectively service my needs of providing stable sales down channel to our prospective retail partners?".

Without some damn good answers to those questions, there is just no way I would even contemplate using distributors again. At the end we tried addressing these problems by instituting a distribution contract, which if our distributors operated under, would have addressed our primary concerns. None would work under that contract. So, now we self distribute. Those retailers who can deal with that, we sell to. Those who can't...well, I honestly don't believe their long term prospects in the industry look very good anyway, because they aren't willing to do what is neccessary to service their customers to the best of their ability. As that become more evident, their customers will come around less and less often until they go under.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com

[LloydBrown]

You're right, Ron.  I was very vague. 

I'm looking for past employment in Alliance Games, ACD, Blackhawk, Edsevium, Chessex, Armory, Gameboard, Premier Hobby, GAMUS, Centurion, Wargames West or in the warehouse for Wizards of the Coast or Games Workshop.

Ryan:  I almost mentioned you by name, since I know you guys probably move as much product as a small distributor and effectively work in all tiers.

I see a lot of discussion about how distribution is "broken."  I see a lot of evidence that "distribution doesn't work for me or my company."  I have not seen any indication as a retailer or freelancer the distribution doesn't work across the board.

[guildofblades]

>>Ryan:  I almost mentioned you by name, since I know you guys probably move as much product as a small distributor and effectively work in all tiers.<<

Well, I actually doubt that. We move enough product to support two full timers and two part timers and have a bit left over to invest in more equipment and more new products. And an interactive computer game. But I doubt we're moving enough product tobe equal to any real distributor. Maybe some garage operation masking as a distributor somewhere. But by in large, our margns are a great deal better, which is what lets us exist at all.  But right now, I can't say that we are in al tiers either, since we're really not actively selling to any distribution accounts.

>>I see a lot of discussion about how distribution is "broken."  I see a lot of evidence that "distribution doesn't work for me or my company."  I have not seen any indication as a retailer or freelancer the distribution doesn't work across the board.<<

Well, it DOES work for retailers who don't work too hard at product sourcing. A lot of retailers have managed to subsist by just ordering through one, two or three distribution accounts for a lot of years now. But starting around 2000 and progessing a great deal eachyear since, more and more product out there has become not available through the distribution tier. And of the product currently being offered, a great deal of it is not "reliably available", and recieve constant zero fills. Just to give you an example, Chessex Distributing used to service around 22,000 total SKUs. Last time I heard (and this was before several rounds of cut backs) Alliance only handles around 12,000 gaming related SKUs now. Sure, they also sell DVDs and other things. But thats ultimately fairly irrelevant when looking at the health of just "Hobby Gaming". And these days, there are probably more than twice as many total SKUs available (maybe even 3 times or greater) than there were when Chessex stocked those 22,000 SKUs.

The net result of this is, there is a huge amount of gaming product that simply can not reliably be found in most game stores total. Because it is not reliably made available to them  and most stores won't expend the energy to source the product through other means. When so much gaming product is being advertised by so many companies, and is not available in game stores, it dramatically increases the chance a consumer will walk into the store and not see what they are looking for. And we all know the "average" consumer won't ask about special ordering or anything like that. They walk out. And IF they really want the item, they then look elsewhere. Well, if they find themselves all the time having to look elsewhere for their gaming wants,then they stop showing up at the stores.

We see retailers complaining ALL THE TIME about the negative affects of internet discounters. But the average customer these days has to turn to the internet a lot now to track down some of the products they want. So once they get used to shopping online, its just that much easier for them to then find the discounts where they can even buy those few mainstream products that the B&M retailer actually does stock. As a retailer, certainly you can see how this trend is going to hurt the viability of a game store as the first place to shop for many consumers.

This says nothing of retailers shooting themselves in the foot by not regularly stocking many of the titles they actually CAN stock. Yes, I know it takes more capital than the average retailer has, and more display space as well, to manage to stock everything. But treating a huge number of new releases as a periodical only makes the customer experience in that store worse. Because gaming is a shared experience, and word of mouth through gaming groups still has a huge impact, what happens is gamer 1 who buy s a product inthe store takes it home. They play it with their core group.  MAYBE that happens within the initial 30,60,90 days that a retailer and distributor will actively support that SKU through the system, so MAYB the retailer can handle re-orders to then sell that same SKU to the gamer's buddies. But many games get shelves after buying. Especially board games. And sometimes they don't get played for many months, or even a year or two. But when the game does get dusted off and played and other players in that gaming group, or friends of persons in that gaming group, are then told all these positive things about the game, they then go down to their local retailer to buy it themselves. But it is now many months after the SKUs initial release and the retailer sold his initial stock, re-ordered once or maybe twice, sold that, and then forgot about the SKU. The distributor zeroed it out at the warehouse as well. Now, realistically, this consumer, who was more than willing to shop at the retail store, must turn to the internet, and either the official manufacturer website or some used retailer like a titangames or noble knights or wherever. But they now know, it can't be found at their local game store.

Unavailability of so many SKUs at the retail level is slowly killing brick and mortar game stores, one negative customer shopping experience at a time. Its killing gaming strongest sales too...word ofmouth sales. Yes, you see word of mouth sales within the first 30 to 90 days after a products release. But you are only seeing wordof mouth sales from your most die hard customers; those customers who are sure to play those items within that limited time window. For the much larger populace of casual gamers, the store is just not able to service them well right now. Some eventually give up buying new games and other turn to the internet.

The answer? I can think of several answers, but none of the are easy to swallow for the small indie retailer. The rela problem is, there is just too much stuff out there. No small retailer can stock it all. And no distributor can stock it all. So right now, your average distributor and your average retailer just tries to skim to cream of the crop...milk the easy sales. But its costing them the diversity in their customer base, and to some extent, the customer base itself. And retailers are left servicing only SKUs where there is heavy competition for, both from the mass markets andthe internet discounters...both arenas the stores can not compete heads up in.

One solution is the industry needs specialization at the distribution tier. A distributor has to come along and say, screw trying to stock everything. I just can't. But rather than just stocking the cream of the crop for a variety of product segments (TCGs, RPG, Board Games, Miniatures, etc), they could realy differentiate themselves by becoming the true master of a given category. Pick an area of gaming and offer the absolute broadest selection of SKUs, and best fill rates on the products of that selected niche. Become "The Source" for products of that type.

Frankly, I think the future of small game retail ships lies in the same direction. That way they can at least keep a segment of the gaming community totally happy and in doing so, gaming of that type in that area will also flourish. The store will be rewarded with a near dedicated consumer base and for at least that segment of consumers, they will be the absolute no question first place those customers will turn for their gaming needs.

The other solution is...we need big box game stores. Stores large enough to stock this huge diversity of gaming products. Like a Borders or Barns & Nobles of gaming. A store that can stock a huge selection of SKUs and become the absolute destination location in their area for game. Have enough floor space that can generate plenty of additional revenue by having a coffee shop and/or dehli attached to their fairly posh gaming area. Think what Borders does in this regards. A store with enough volume of products and enough capital that it can do some serious marketing outreach in their local area to draw in the consumer base they need to get the foot traffic needed to move that diversity. Chains of such stores would service themselves as becoming their own distribution systems and they would have a chain wide ordering system capable of dealing with all the vendors they needed.

Yes, I think there is enough diversity in gaming today to support such a vision. Such a store would probably best combine electronic gaming with traditional gaming items. As well as maintain strong sections for party games, family games, children games and even religious games as well. Right now, many many games are sold and piecemailed off to other only semi related industries. Some RPGs and TCGs are sold through book stores, along with...occasionally, a small selection of family board games. Hot collectibles like TCGs, clickies, pirates, etc, are sold through comic stores, mass marketers like Wamart, etc. Thereare chains of electronic game stores that also dabble in the hot collectibles from our industry, but do not stock the rest. Hell, even Calender Club has a retail option around Christmass time for family and party card and boardgames. Our industry is entirely spread to the four winds at the retail level. Where specialization should be occuring, at the small local store level, its not, except with the case of the growing (and very successful) chain of GW stores, which have taken niche specialization to the extreme and is making it work great. And there is no big business that has chosen yet to round up all of these different catagories of games and made a uniquely branded big box store.

But that day is coming. If that happens before the independant retailers wise up and realize they need to start specializing more, then the independant stores will get entirely stamped out, just about likethe independent book stores had happen to them. Once upon a time there were no "big bix" book stores. There were only small independant book stores, and all other books were sold by topic niche through select department stores, and sold via mail order, book expos, etc. Then the entire market grew enough for a big box retailer to round up all the little market segments and make a uniquely branded big box store, offering the largest selection of books in one place. In the last 10-15 years, the hobby gameindustryhas grown by absolute leaps and bounds. It has grown from a 40-50 million dollar industry to a 500 million to 700 million dollar industry, which spikes even higher with fads like Magic, Pokemon, and Yu-gio. Its rather hard to track how much more sales are now done by companies like mine who sell a great deal direct. GW continues to grow, and has at least shown a willingness to sell to Toys R Us in the past. If a big box retailer enters the game with some serious venture capital, or even if a Barns & Noble takes a crack at a test store with such a model, they'll find every single manufacturer out there willing to supply them. And all the distributors as well. Because everyone is hungry for more sales now. The industry is simply large enough and diverse enough to support this type of retailing business model now.The smart indie retailer ought to start planning for that day now.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com