Publisher and reatiler -- competing roles?

[Michael Hopcroft]

My immersion into the RPG businbess is getting deeper. I have finally accepted an offer to run an online store selling RPG books, and Hopcroft Hobby games should be open for business the second or thrid week in August. I want to carry as many indie games as my distribution channel allows, but don;t know if I'll be able to carry Seraphim Guard products.

I have no desire or plans to direcltly cpompete with RPGnow or RPGMall. I will mainly be selling "mainstream' RPG books from publishers like Hero Games, Guardians of order and iron Crown Enterprises. Stephen lee of Heresy Distribution is setting me up, so I'm asking him to do the engotiating with the various publishers and other distributors so I have the widest possible range of choices for my store. I even want to branch out and carry wargames, sports simulation games, and even anime if the deals can be worked out.

what I am asking about is whether my new role is going to conflict with my current role as publisher at Seraphim Guard. is there a conflict of interest that I should be aware of in running two different companies in two different areas of the same industry?

Also, do retailers who go through a specific distributor get any special perks when it comes to things like picking up products for themselves, either for preview or just because they want a copy?

[Michael Hopcroft]

It seems that I have quite uninetntionally stared a flame war on the GOA list when i brought up this very subject. One member of the list voiced his opinion against my starting this business in very strong langauge, and I fear I did not take it very well and responded accordingly.

I apologized immeidately, both publicly and privately. I hope there will be no hard feelings. But this illustrates the problems of being in a publuisher's trade organization and suddenly putting on the second hat of a retailer.

[jgbrowning]

Personally, I wouldn't care what other people thought about apparant conflicts of interest. They're a fool to think that anything but what you've put your time in will have equal interest to what you have put your time into.

I'm openly biased towards my book and I'll freely admit it. We're I a retailer, I'd prominanty display my book, even over WoTC. Why?  Because I'll make more money for every one of my books I sell.

Not really saying much in this post, but don't worry about what people think. Worry about having a business plan (and if i understand getting into opening retail shops properly) enough capital to survive until you start turning a profit.

joe b.

[jdagna]

Personally, I don't see why there'd be much of a fuss about it.  I personally know of several cases where an author who owns or works at a store has used that front to aid book sales.

I'd do two things if I were you, though:

1) Don't discount your own book any differently than you discount other products.  If you want other people to carry you, you'd better not be competing on unfair ground with them - and retailers already hold a grudge against places like Amazon.com that discount everything, so you might want to avoid the discounting game altogether.  This is where the dual role can trip you up.  A retailer might improve profit by discounting, without worrying about whether other retailers hate him.  But if you do it, and other retailers boycott your publishing because of it, then you have to make a tough choice: stop discounting (hurting your retail end) to help the publishing, or continue it and risk alienating customers from the publishing end.

2) Keep the businesses legally separate.  By this, I mean keep separate bank accounts, file separate taxes and keep separate records.  Treat them as two businesses that just happen to have you as the owner.  Thus, you'll be selling books to the retail shop from your publishing company just like everyone else will.  I'm not recommending this to remove bias (it may not make a difference in people's minds) but because it'll help show you which business is profiting and why.  It'll also help you write a better business plan if you do two focused plans.

[Michael Hopcroft]

Personally, I don't see why there'd be much of a fuss about it.  I personally know of several cases where an author who owns or works at a store has used that front to aid book sales.

I know companies as big as WotC have tried that. When WotC tried it, it didn;t work.

I'd do two things if I were you, though:

1) Don't discount your own book any differently than you discount other products.  If you want other people to carry you, you'd better not be competing on unfair ground with them - and retailers already hold a grudge against places like Amazon.com that discount everything, so you might want to avoid the discounting game altogether.  This is where the dual role can trip you up.  A retailer might improve profit by discounting, without worrying about whether other retailers hate him.  But if you do it, and other retailers boycott your publishing because of it, then you have to make a tough choice: stop discounting (hurting your retail end) to help the publishing, or continue it and risk alienating customers from the publishing end.

I wasn;t planning on discounting at all -- which is actually the most controversial thing about the venture. People who are looking out for my best interests believe I am setting myself up for disaster whatever I do -- by discounting I alienate publishers, but not discounting I alienate customers.

2) Keep the businesses legally separate.  By this, I mean keep separate bank accounts, file separate taxes and keep separate records.  Treat them as two businesses that just happen to have you as the owner.  Thus, you'll be selling books to the retail shop from your publishing company just like everyone else will.  I'm not recommending this to remove bias (it may not make a difference in people's minds) but because it'll help show you which business is profiting and why.  It'll also help you write a better business plan if you do two focused plans.

I don;t even keep a bank account for Seraphim Guard. However, I'm going to open one for Hopcroft Hobby Games as soon as my business license goes through. I figure the advanatge of keeping separate books outweighs the disadvantages. Mind you, I paid the initial setup fee out of my personal bank account so my accounts look weird. (Right now I've made only one double-entry, and my cash balance stands at -49). I studied accounting at a business college, so I should know better. I hope I get successful enough to hire an accountant, but real accountants are expensive.

[Christian Walker]

I see no problem with your dual roles. In fact, take advantage of the situation by stuffing a flier for your game(s) into each book you ship.

[Space Cowboy]

Hmmm.... Pardon me, but I don't see where there would be a "conflict of interest", which is a legal term of art with a very specific definition.  After all, WotC both publishes D&D and has a number of retail outlets.

Are you worried about something else like perceived favoritism for your product over others?  If so, that's not really a conflict of interest, though it may make some of the owners of other products that you are trying to sell angry.  

In any case, you should be trying to maximize revenues for your online retail store- I would think that means promoting stuff that sells well, regardless of whether it is your product or not.

[kwill]

as others have pointed out, there is basically no "conflict of interest" as long as you don't actively antagonise other retailers

my suggestion: why not distribute your own product through your store? (rather than as a seperate entity)

just offer distributor-type discounts to other retailers on that product

for non-retailers, treat all products equally (eg, offering site-wide discounts/promos)

(accounting-wise you will obviously still want to keep track of costs of product and store seperately, this is not my area of expertise)

> stuffing a flier for your game(s) into each book you ship.

this, on the other hand, sounds a bit dodgy; if it was a STORE flier that happened to mention your product (and others), maybe that's a bit better

> Also, do retailers who go through a specific distributor get
> any special perks when it comes to things like picking up
> products for themselves, either for preview or just because
> they want a copy?

not sure about online stores and roleplaying, but the book trade in general seems to rely on advance copies/freebie copies for promotional purposes (we forward these on a return basis to our big buyers: book clubs and libraries)
(and for the few books that we do distribute we make sure we get them to the libraries and such before the competition!)

and of course, you can order yourself stuff and get a staff discount :) (I'm going to miss that)

d@vid