Fulfillment Houses

[JustinB]

Has anyone else whose regular fulfillment house sells to Alliance Distributors gotten an e-mail from Alliance offering to act as a fulfillment house for you?
Is Alliance trying to break into the fulfillment market now so that they can... what, take an extra cut off the top before the distributor discount?
This seems pretty strange to me. I may see what their terms are, though. If they don't take an extra cut from Alliance-distributed games, that would be a quick way to bump up profits.

[iago]

Wish I could help; I'm deliberately not in distribution at all.

[Ron Edwards]

Hi Justin,

I got the email too, from Gabe Gillig, assistant to Danny O'Neill. You're right, it's a little weird ... as far as I can tell, it's a separate discount (i.e. "cut"). The benefit seems to be that this entity would, allegedly, handle orders from anyone else as well as Alliance's own orders.

However, I am skeptical. Can it be relied upon to handle orders from a rival distributor which serves overlapping stores? Would it serve stores which use Alliance but which would prefer to work straight from fulfillment alone?

The potential for abusive, distributor-centric decisions is extremely high, as the mutual benefits of total profits per title may outweighed by the Alliance-only benefits of competitive practices. Especially since the profit margins of my games, for instance, are relatively low.

I'll be talking to the guy today and follow up on these and similar questions. At present, the deal looks suspiciously similar to one "offered for discussion" here at the Forge by Sean Patrick Fannon a couple-three years ago. I use quotes in that sentence because discussion was clearly not what he wanted.

Best, Ron

[Ron Edwards]

OK, it's a lot better than I thought. Those questions remain, but given that Danny O'Neill is the point man, I'm a little more confident that this is an offer worth considering. Maybe not a good fit for everyone (I'm kind of a multi-basketer by preference, for instance), but maybe for more than I'd thought.

I've known Danny as a fellow publisher for a long time, and he's always run his own company, Hammerdog Games, including a line of independent OGL products. My take, for whatever it's worth, is that he's worked hard to make this current deal into a viable offer for independent publishers.

After a conversation with Gabriel, here's how it works:

You send a bunch of books to Alliance. What happens to them financially then splits into two, depending on who is ordering.

1. Retailers who are already Alliance clients get them through Alliance distro. The discount is increased by 5% to (roughly) 65%. So for a copy of Sorcerer (MSRP $20), I get $7. These retailers do not have the option to participate in 2(iii) below.

2. Retailers without an Alliance account, other distributors, and on-line customers are all served through the fulfillment house alone and the Alliance discount does not apply. The fulfillment cut is composed of a 19-cent/item packing fee and shipping fee (less 10%), i.e., that's what you pay. What you make depends on how much each of those guys is charged.

i) I charge $20 for an on-line purchase of Sorcerer, so out of that, Alliance gets 19 cents, and also bills me 90% of the shipping fee. Which is a pretty good margin for me, actually.

ii) For an order by ACD or some other distributor, who for sake of argument also uses the 60% discount, I get the $7, less 19 cents and 90% of shipping - basically the same as if ACD just got it from me direct. (Their logic is apparently that if I'm gonna be dealing with ACD anyway, at least this way Alliance gets a little taste. It also seems a way to look almost directly into the accounts of competitors.)

iii) I forgot to ask how prices for a non-Alliance retailer are determined, but let's say it's 50% discount (I'd prefer that over the standard retailer-40% for incentive reasons). So I'd get $10 less 19 cents and 90% of shipping.

Boy, I hope I got that right. The part I'm not totally confident about is whether I described the shipping right, but perhaps Danny or Gabriel will check me.

Anyway, that's how it plays out, and for better or worse, IPR, Key 20, and the other fulfillment houses are going to have to consider this offer as a competitor.

When it's good, bad, better, or worse for a given independent publisher is going to be a highly individualized issue. I'm interested in any discussion of the variables that lead one way or another, in terms of volume or price-point or relative proportions of on-line vs. store sales.

Oh! And boy, how Lulu publishing might fit into it, I have no idea. I guess the publisher would have to choose whether his or her website sell-button takes the customer to Alliance or to Lulu.

All thoughts are welcome. This is an interesting development.

Best, Ron

[Wingnut]

Ron,

I definitely recommend that ANY publisher talks to a bulk of distributors about who they should go with and each of their personal experiences with the fulfillment houses.

I can tell you from my experience that anyone going with Key20, Studio2, PSI or myself (Impressions) will have a very level playing field in the distribution marketplace.  ACD used to do fulfillment and found that once they started fulfilling for game companies, the other distributors were not happy getting orders from a competitor, thus, giving ACD sales information.  I have heard similar concerns from others about Alliance's fulfillment services...The good side here though is that they are the biggest piece of the pie and you rarely will have to worry about your product not being available for shipping.

In the end, each one of us do different things, and it is all about what each company wants.  For example, Impressions DOES NOT get a booth at conventions to sell like a retailer...Key20 and Studio2 do that.  Impressions has GameBuyer and www.FreeRPGDay.com - lots of access to retailers.  PSI has major access to the book trade.  Again, it all depends on what a publisher wants.

There is enough business for all of us.

Best,
Aldo Ghiozzi
Owner
Impressions Advertising & Marketing
aldo@impressionsadv.net

[guildofblades]

A point to consider.

Look at their fulfillment contract and find out who is responsible for the inventory. In other words, do they take responsibility for shrinkage and damages while the inventory is in their care?

If not, you are exposed to a great deal of potential risk.

Ryan S. Johnson
Guild of Blades Retail Group - http://www.guildofblades.com/retailgroup.php
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com

[Danny O]

Ron,

First off, thanks so much for the kind words. I would like to start off by saying this is my first post to a forum *anywhere* *ever*. So if I break the convention of forums, well, please cut a noob some slack. I should also tell you I am addicted to emoticons. Sorry about that.

Ron, you got it *almost* right. I know you spoke to Gabe on the phone and that likely accounts for the few inconsistencies in your description. But rather than go over what you said point-by-point, I am having Gabe prep a document that explains things more clearly. We have also prepared a Power Point Presentation about our services. It's about 2.5MB and we are happy to mail it to whomever would like to see it. Just let us know.

In the meantime let me speak a bit about myself and the creation of the Alliance Fulfillment Department.

I have been a fanboy of the Adventure Hobby Industry for the past 25+ years, and I have been a professional for almost 12 years now. I began to design my own games at a very early age and fell in love with RPGs, board games, and later TCGs. I volunteered my time to help run a university game club and several conventions in the Edmonton, Alberta area. For two years I managed a local game store named Warp 2, and soon created the premiere open gaming experience in Edmonton by hosting weekly tournaments, leagues, and demonstrations for all kinds of games. Eventually I graduated into distribution, working first for a Canadian outfit named TDI, before moving to Fort Wayne where I have been Alliance's Midwest Sales Manager for close to a decade.

Along the way I created my own imprint, Hammerdog Games which I manage from home on evenings and weekends. Hammerdog was designed to give myself and some friends an outlet for our creative urges and for that it worked very very well. As a business however, it was challenging to keep things in the black without cutting corners somewhere. All too often the corner that got cut was my wage. That meant that the guy who was designing the products, brokering their printing, liaising with distributors, shipping the product, and eventually collecting the monies was the guy that wasn't drawing a wage. I realized this couldn't last and started to analyze my business model and look for ways to improve it. Working for Alliance I knew how difficult it was to even get products placed into distribution and wondered how other micromanufacturers were managing the issue.

When the first fulfillment houses began to appear, I was wildly excited about them. Here was a means for the micromanufacturer to reach a wider audience. When two notable fulfillment houses faltered, I began to consult with professionals inside and outside of Alliance to determine what could be done to improve the situation. The eventual result was the creation of the Alliance Fulfillment Department. Luckily for me, my bosses recognized that my experiences at all levels of the industry (fanboy, retailer, distributer, manufacturer) made me a good candidate for the position. Furthermore, when I explained that I would create things to be fair to all manufacturers, from the biggest to the smallest, they backed me up 100%.

And that brings me here. I am not going to tell you that Alliance is the perfect solution for you. There are too many business models and too many variables for me to make such a claim. However, I have designed Alliances fullfillment services to match the business models of *most* manufacturers in the industry and that includes micromanufacturers like the ones in this forum. Our services are "a la carte" meaning you choose and pay for only those services that fit your needs. So if this sounds like something you would be interested in, please contact us at your earliest convenience. We'll discuss your personal situation and see if there is a way we can help you reach your audience more efficiently and more profitably. If we can we will create a customized solution for you. If we cannot, all we have spent is some time.

Thank you everyone for reading this far. If you have any further questions please contact Gabe (gjg@alliance-games.com) or myself (djo@alliance-games.com) and we will get back to you as soon as possible. I will also try to answer questions on this forum whenever possible.

Best,

Danny O'Neill
Fulfillment Coordinator
Sales Manager
Alliance Games
Fort Wayne, IN

[Danny O]

Hey folks, I thought I'd jump in real quick to clear up a misunderstanding that seems to be going around. Those of you that have contacted us so far seem to think that Alliance is looking to be the exclusive distributor of your product.

This is inaccurate. Fulfillment services exist to help you with your operations, not to create an exclusivity deal. The idea is that you can pass on to us the parts of your business that you can't or don't like to do. That way you can focus on creating great games and accessories. Fulfillment includes services like storage and shipping, collections services, sales help, marketing incentives, consumer orders, assembly, and print brokering. So if you sell to somebody else, say another distributor, then we will store your product and ship it to that distributor for you. Every week we ship fulfillment orders to people like ACD, Blackhawk, PHD, Lion Rampant, Universal Distribution, Esdevium, and so on. Furthermore, distributors have been performing these services for each other for almost a decade.

I hope that helps clear the air on this issue. If there are any new questions or concerns in this area, just drop us an e-mail or post the question to this forum and we will get you an answer as soon as possible.

Have a great weekend everybody.

Danny O'Neill
Alliance Game Distributors

[Eero Tuovinen]

Oh, just to note: while I don't need an American distributor right now, this is an interesting read anyway. Welcome to the Forge, Danny and Aldo, and thanks for your perspective.

[iago]

I don't have a lot to bring into this discussion right now, but it does overlap some of the territory that IPR (www.indiepressrevolution.com) walks in as well, though that overlap is not complete.  Folks can find a link to some initial information about becoming one of IPR's publishers here:

http://www.indiepressrevolution.com/xcart/manufacturers.php