why I sell to retailers

[Paul Czege]

On the Forge Booth: Price List thread, Matt Snyder wrote:

No retailer discounts....I don't see how getting, say, a half dozen (or even a dozen) copies of our games into stores is helpful at a discount. Anyone?

To which Clinton concurred.

And damn, have I been back and forth mentally over that ground the past two years. And ultimately I realized the right policy is all about entirely subjective goals. So, here's how I got where I'm at:

I published My Life with Master in the summer of 2003. Later in 2003 I received an offer from a company to publish the game for distribution. And when I looked at it numbers-wise, with the publisher, the fullfillment house, the distributor, and the retailer each taking a share of the MSRP, it didn't make any damn sense. The publisher would have to print and hope to sell many many hundreds of copies for me to have the same revenue stream as I would from selling several dozen copies direct. So that wasn't even the pitch. Instead, it was the emotional pitch, the one about getting the game out there, the one about the idyllic gamer shopping experience of discovering the game in the local store.

So I thought about that a lot. And realized it wasn't my dream. It was this publisher's dream. And he's a great guy. One who loves My Life with Master. But I didn't share the dream. My dream was to change the roleplaying hobby. To wake it up. It wasn't producing games that met my needs as a gamer, and I didn't think I was alone. So, I realized I didn't need My Life with Master to be in stores. I needed it to influence other designers. So I declined the publishing offer.

But maybe you do share that dream, the idyllic one of the unawares gamer discovering your game and being altered by it. Know your goals. I do know that I'm not completely immune to it. Ed Heil bought My Life with Master on the Thursday of GenCon 2003, and him and his friends played it that evening and had a great time. That's damn near my ideal convention experience. Not the experience where you've signed up to play the game you've never been able to get your dysfunctional gaming buddies to play, not the structured trip with 'round the clock scheduled events, but the one where you discover a game, and create the experience yourself, organically. Maybe the possibility of that occurring at local game stores is important to you. Then you need retailer pricing. But facilitating this anonymously isn't my goal.

So, why do I have retailer pricing? Well, because of the girlfriends. These guys drag their girlfriends into game stores to look at Warhammer figures and shit. (And then they borrow money from them to buy more models for their army.) Dammit, these girlfriends need to see great games, ones that deliver collaborative, creative social architectures of play. So, that's why any retailer who's tuned in to My Life with Master as something they want in their store gets a discount. (Still, I'm not a charity. A 50% discount is me giving them free money. So they have to pay up front, via PayPal, and they pay shipping. Every retailer who's done so has sold six copies in 7-10 days.)

Paul

[Matt Snyder]

So I thought about that a lot. And realized it wasn't my dream. It was this publisher's dream. And he's a great guy. One who loves My Life with Master. But I didn't share the dream. My dream was to change the roleplaying hobby. To wake it up. It wasn't producing games that met my needs as a gamer, and I didn't think I was alone. So, I realized I didn't need My Life with Master to be in stores. I needed it to influence other designers. So I declined the publishing offer.

Paul, thanks for posting this in a new thread. I hoped someone would discuss it. I had a similar offer. Unfortunately, I had nowhere near the insight you did. Fortunately, I still turned it down and came out way ahead for it, I think.

When I wrote what I did in the prices thread, I was being honest. I said "Am I missing something?"

It isn't the first time I felt that way. There are times when, even as an indie publisher, I am ignorant. I make decisions on what I know or suspect will be good strategy. (That's the bullshit way of saying I make it up as I go along.) I get this sinking feeling that I have no idea what the hell I'm talking about. Because, frankly, there are very few people in our shoes, fewer who know how to walk in 'em, and we're all bound to make bad decisions. That's ok with me.

The good news is that you and I are on exactly the same ground, philosophically. Girlfriends or no girlfriends (and Ron has made the girlfriend argument before to me --I buy it, but don't know what to do with it yet), you and I hope to alter the way games are designed, produced, published and distributed to people who play them. It's exactly why I'm publishing my work, and it's proven to be quite a challenge with some delightful successes along the way. I have considered throwing in the towel completely many times because the stress and hopelessness of having any effect at all was overwhelming . . . but not quite.

If this philosophy sounds like a big middle finger to a lot of people, um . . . it is. But, I'm a positive, friendly guy. . I'm not interested in shitting on anyone or any games. Besides, there's not a dime in that! ;) I'd rather be creative and offer some alternatives. That's what we do. It's what I do, at least.

What I'm saying is that my success is not determined by sales exactly. Certainly, sales keeps my future plans sustainable. But, my success is determined by steering people in a slightly different direction than they assumed they'd go with their hobby, with their friends. I achieve that success by getting people to play my games. And, I get people to play my games by making a connection with them. So far, I can't figure out a way to make that happen from store shelves. (shrug) Maybe there is a way. I want to know about it, and how it applies to me!

I have had Dust Devils on store shelves. They NEVER sold. Meanwhile, I sold well over 100 copies (More? Maybe, dunno.) online thanks to good reviews, viral marketing, buzz at cons, and actual play reports.

Like I said, I'm pretty ignorant. I make most of this up as I go along. I'm as likely to be wrong as I am right, but I believe in my philosophy. I have a gauge for success, and I can live with that, win lose or draw. To be frank, I've won a little and drawn a little. I'd call Dust Devils a win. So far, I'd call Nine Worlds a draw. I'd like to turn it into a win this year. I can't yet connect with people actually playing Nine Worlds, and I hope to turn that around.

[Ron Edwards]

Hiya,

I thought I'd chime in from a little further down the road.

It really wasn't that long ago, but it was before POD printing was any good, and it was before Paypal and fulfillment houses as honest & reliable as Indie Press Revolution and Key 20. To make any profit on my book printing of Sorcerer, I had to get it into stores.

I knew I didn't need to keep it there. I merely wanted to reap enough profit from the first round of distributor orders to make back my expenses. With the help of the Sphinx Group (now no longer involved with games) and Tundra Sales Organization (which to put it mildly, later changed from one sort of organization into another). After that, I was confident that direct sales would keep the newly-minted corporate Adept Press fat and happy. The whole point of getting into stores aside from that initial wave was mainly promotional - the game in the store acts like a commercial for a sale, regardless of whether it's in that store, another store, or on-line.

And that's just what did happen. But here's my point from this thread: the stores keep ordering the damn thing. Yes, to my surprise, and apparently in response to nothing but demand, enough stores keep ordering to keep the distributors filling their bins.

Frankly, I have no idea why this happens. I am reasonably confident that a copy of Sorcerer can move perhaps once month at a given retail store, especially if it's in a college town or perhaps a city with a strong pop-culture teen crowd. But more than that, I doubt very strongly. My experience with retailers is that only a select few actually pay attention to what moves at their registers, instead of basing their judgment on some kind of gut-sense and anxiety about they just deep-ordered. Could Sorcerer and its supplements actually be doing that well in the stores of these few, good retailers? I don't know. It's a puzzle.

But that's not the point. Here's my main point: I do not curry the attention of retailers. I made it clear to the retailers I met at the GAMA Trade Show, three years in a row, that I like but really don't need their custom. If they want to cash in a little (very little) on Sorcerer's success, I'm happy for them to have it, but not to expect too much and not to look for bang-smash sales on a monthly basis.

If you are going to have any interaction with retail sales, then I suggest keeping these points in mind. (1) It is additional, not fundamental, to sales success. (2) Its prime benefit is promotional. (3) Accept that the retailer does not love you or your game. (4) Make sure the entire interaction occurs because they come to you, not the other way around.

And one last bit, some advice to keep the retailer-publisher relationship a nice positive one. Offer 50% discount, for anyone - retailer or distributor alike; don't privilege distributors. Practice full returnability, which is to say, if the retailer calls it a bad buy-choice for his store after it sits for a while, just take it back and refund the money. This hardly ever happens, and the retailer will often work that much harder in your favor if he knows you'll cut him slack if he needs it. Don't sell it direct for under retail price. And give the stores some promotion on your website.

Best,
Ron

[Valamir]

The way I look at it is gravy.

Sure, you make less per book through retail or distributor-to-retail than you do direct.
BUT, at the level of sales we're talking about you aren't really cannibalizing your direct sales.

Sure Universalis is available in retail stores (even a few overseas), a sizeable chunk of my total volume this past year has been into the distribution channel (thanks to Key20).  But the total volume of Uni on retail shelves around the country is a tiny tiny fraction of the total volume of the latest Exalted splat, so its still pretty uncommon to find it on a store shelf.

So, those who know about Uni, those who've heard about it on RPG.net or the Forge or GenCon or through friends who have can still get the game most easily by buying direct.  That's my core revenue source.

The folks who find it in a retail store and buy it are those (mostly) who never ever would have stumbled upon it via RPG.net or the Forge or GenCon...because if they had...they'd likely have already bought it direct.  So (with the exception of a few who knew about it, were on the fence, and then saw it on a shelf and bought on impulse) all those retail sales are pure bonus sales for me.  So a lower per unit profit on them is better than no profit without them.

The key of course is effective pricing.  You have to make sure that your MSRP is set high enough so that after the string of people taking a chunk out of the cover you're left with enough to make it worth while.  For me if I can be left with double the printing cost of the book that's a pretty good deal.  \

If I can print for $2 and pocket $4 from every sale that's great for me in three ways.  First I get an extra $2 on each sale I wouldn't have gotten otherwise.  Second there are more people out there playing the game, which is good for all of the soft reasons already noted but also good from a hard business perspective in terms of generating buzz, building a brand, expanding the customer base etc.  But third, the additional volumes of sales let me print larger print runs which means my per unit costs go down so essentially I'm making more than $2 on each retail sale.

Case in point, I'll be doing another print run of Uni soon and thought maybe I'd just do a 200 unit run.  At talking with Jason at Key20 he indicated that based on reorder volumes he figures he could move 500 units pretty easily so I'll probably go ahead and do 500-1000 units.  That will certainly lower my costs...probably by a couple bucks a book.


The big deal to me however, is to structure your business so the retail end is just gravy.  I can make back my costs and a nice profit on direct sales alone.  Every check Key20 sends me is pure bonus.  Relying on the three tier channel as the core profit driver I think is a pretty broken business model.  But snagging some extra cash by participating in that channel on the side...perfectly viable.

That's why I do retail sales.

[gsoylent]

Just a peep from a 'target customer kind of person' in the UK. I tend to check the "New Releases" page of the England's best established rolepalying game shop each week. Now that I am in any club or getting any hobby magazines, it's a way to keep an eye on the new games coming out.

Follow the link and you can see Universalis and few other indie games  side by side with mainstream games.
http://www.leisuregames.com/acatalog/New_Releases__Week_Commencing_18th_July_2005_.html

That to me the looks like pretty good advertising.

Oh, and I did buy the "No Press Anthology" from Leisure Games where I maight have been more nervous buyinging from an unknown website.

[Eero Tuovinen]

Well, here's your friendly neighbourhood retailer writing. I sell games from all of you ;) And I do genuinely hope that it's because you, after all, think retailing can be a good idea, and not just because of misgiven sympathy or friendliness towards my person.

My take is that by choosing your retailers carefully any sales to retailers will only help you move product (more frequent reprints, larger print runs, more publicity, more potential players) and give a slight profit. The only potential problem is if the retailer is eating your own sales, and that's why you should be choosing the retailer solely based on the product you sell, the channels you use, and the channels used by the retailer. If there's overlap, a retailer is a bad idea, otherwise it's all a bonus. (This is assuming you have room for a retailer discount to begin with.) I should think that this is all pretty self-evident.

So yeah, I'm pretty much agreeing with Ralph here. But I'm also very interested about all you folk's opinions, because I'm just now preparing a new delivery of games, and if you find it problematic to give me that retailer discount when I come asking, then don't. I respect the attitude, and won't get offended or start breaking relations. Matt, you specifically: I'd like to sell 9W, but don't feel like you'll have to let me.

[guildofblades]

>>(1) It is additional, not fundamental, to sales success.<<

This I agree with completely. Many of us have learned that the 3 tier system is not a requirement to staying in business and being profitable. Nor or even retailers. Not when, as indie publishers, we have so many avenues of retailing our own goods these days.

>> (2) Its prime benefit is promotional.<<

I'm not sure I agree with that. I think a lot will depend on the type of product you make and the way you produce it. For us, every game we produce, except our PDF products, is made in a manner to give us a suitable profit when selling it at a 60% discount. We don't use distributors in North America anymore, but have a program set up for our best retailers to get a 60% discount and terms. If, however, you are doing POD productions and you make very little profit off of retail sales, then yes, I could see your arguement.

>> (3) Accept that the retailer does not love you or your game.<<

True. And even if they did, any retailer really worth doing business with will be making stocking and selling dicisions based on good business judgement anyway, not which games they like to play personally.

>> (4) Make sure the entire interaction occurs because they  come to you, not the other way around.<<

Well, we certainly haven't been following that phylosophy this year. We've been aggresively contacting and presenting our company to retailers this year. This being the first year that we've finally and completely written off distributors and have set about forging direct distribution relationships with as many retailers as have stocked our products in the past. Along the way we've also managed to introduce our products to a few stores that were new to us as well. Of the stores we currently do business with I would say only 1 in 10 originally came to us instead of us going to them.

>>Practice full returnability, which is to say, if the retailer calls it a bad buy-choice for his store after it sits for a while, just take it back and refund the money. <<

We tried that years ago. That and consignment deals. On several occassions we had stores returning product, not because it wasn't selling at a reasonable pace, but because they had mismanaged their cash flow and were trying to scrape together money to order some new CCG release. Or in the case of consignment, we had one store running a going out of business sale, liquidating all of our inventory at 90% off for product he was to owe us 50% of MSRP once it sold. We caught him red handed on that one, just one day before the landlord was going to lock him out of the place. Don't get me wrong, we do offer our retailers returnability, but only for product credit that they may redeem on any other titles we offer. Hard to manipulate that too much (though we've had a retailer or two find ways, I tell you....). If I were a publisher with just one or two titles, I would likely seek to band together with a few other good small publishers and offer a product exchange system with them as a group. Where if the retailer wanted to exchange one of my titles they could use that credit towards one of their or vice versus. Prevents silly cash flow manipulations on stock, gives the retailer some flexibility and instead of sticking them with potential dead stock, incents them to experiment with some other indie titles they might not have sampled yet. The downside is the occassionally balancing of accounts between the publishers.

Why we sell to retailers. Well, it is profitable. Our "average" product these days has a cost of goods sold that allows us a 450% mark up over manufacturing cost when selling the title at a 60% discount. We have enough titles to offer that our average sale to a retail shop now brings in as much in revenue as our average distribution order once did. About $200 per order. The good retailers are much better about restocking the backlist as it proves itself as steady sellers, which distributors really became lacking at.

Yes, we do generate about 400% more profit for each title we sell direct over our website versus the same title sold to a retailer at a 60% discount. But, for many of our products at least, the total market out there is potentiall very large. Our online sales, while still representing nearly 90% of our revenues, have virtually no chance of reaching more than a tiny fraction of our total market. So it is my belief that sales through retailers very rarely cannibalize our online sales. Further, for the last couple of years I have been tracking sales by zip code, both for direct orders online and by retail direct sales. A trend I have begun to notice is, in areas where we have a good store selling our products, we also sell a considerable amount more product direct over the Internet. My theory on that is one of player bases. In areas where we are reaching part of the market from our direct sales efforts while reaching other parts of the market through retail sales, the two groups are combining to create a local network of players large enough to allow more active play of our games than could otherwise be created through just one venue or the other. The result of that being that players actively playing the games is what is driving increased sales for both those retailers and for us online. Or in other words, its not a sell sell direct or sell via retailers and prioritize one over the other to see it blossom and the other wither. Instead the two seem to be mutually supporting each other and creating stronger sales through both venues in those areas.

(information I will continue to track and hope to refine my results even more. I only began to seriously notice this trend recently as our direct to retail sales have picked up. Tracking this sort of data with sales through distribution was impossible as I often did not know which retailers were buying our products, hence obvious did not know their zip codes).

Now I have to contemplate the value of running co-op sales through specific retail venues on the premise that in the following months such sales will actually increase our mail order volumes from that area...and as we all know, its those mail order sales that really pad the bottom line.

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

[Clinton R. Nixon]

I know this isn't the "why I don't sell to retailers" thread, so I'll keep that to a minimum.

I'm selective about what retailers I'd sell to. Eero, we've already talked and you're in. Any game store local to me that'd I'd shop at, they get the discount.

Joe Random Game Store is not my target market, however. I fail to see any benefit that I want to having my game available when I don't hav a personal relationship with the store owner, a relationship where he knows the quality of my product and will want to sell it because of that quality, not to make a buck.

I do think Paul and Ron have excellent points above, though, and realize my thinking is from personal ethics, not completely from business sense.

[Valamir]

Our "average" product these days has a cost of goods sold that allows us a 450% mark up over manufacturing cost when selling the title at a 60% discount.

Ryan, if you're willing, please start a thread that goes into those numbers in some more depth.  450% over discount is a pretty healthy markup.  That's 1125% over cost.  I'd love to hear how you manage that, print run sizes, and the like.  I'm able to get to 200% over discount (500% over cost) pretty easily but going higher than that is a challenge.  What kind of unit costs are you able to get down to to generate that kind of margin?

[Matt Snyder]

Excellent thread.

A quick clarification on my stance -- I am not saying I won't offer discounts, ever. But if I do, it's got to be a personal relationship (Just like  ... Clinton? ... suggested above). Clearly, Eero, you and I have such a relationship.

And, I'm willing to consider talking to a retailer at GenCon, absolutley. I don't want to sell to him there. I want him to give me a card, talk about the game, and I'll send him material to sell. I'd do that because it builds an actual relationship, and it opens the possibility of additional orders down the road.

Telling the gang at the register to give a 50% discount to anyone who says he's a retailer doesn't do much for me. If retailers want to talk to me, I'm thrilled to do so.

[TonyLB]

Matt:  The personal-relationship thing is a big deal to me too.  But, Devil's Advocate:  If someone from a store nobody's heard of in (say) Kansas City comes in at GenCon and picks up two of each of the following:  Sorceror (and all supplements), Capes, MLwM, DitV, PTA, TSoY, Burning Wheel, Conspiracy of Shadows, Polaris and Breaking the Ice, well I want to reward that person for their general dedication to exposing their clientelle to Indie Games.  I do not want to tell him "Well, you can get a discount if you talk to Ron, Tony, Paul, Vincent, Matt, Clinton, Luke, Keith, Ben and Emily.  Let's see if we can find one of them, so you can start your death-march of discounts."

I'd much rather have the person at the register say "Yo!  Ever'BUDDY!  This guy's stocking his whole store!  How cool is that?  I'm giving him the discounts, come over and shake his hand, exchange cards, say thank you, while I ring this up."  Make that guy feel like he's just been declared our lucky 1000th customer, and we're showering him with confetti, rather than like he's a pan-handler.  Does that make sense?

I've been trying (personally) to dodge the notion that it's entirely incumbent upon either retailers or publishers to make the connection.  It's like a great big cocktail party.  You go over, and you make conversation, and you see whether something clicks... not because you're you're desperate for their attention or because it's your job more than theirs, but because everybody benefits when someone takes the initiative to break the ice.

[MatrixGamer]

Aside from Eero, how many of you have run a retail business? I'm wondering because the feel of the thread is one of retailers being bad people out to screw game makers.

I admit I'd like to sell Matrix Games through distribution. I know it won't make me a lot of money but to spread the word on a game idea, people have to see it. When the see it in a book, a boxed game etc. it becomes "real" to them. When they read about it in magazines, play it at cons, or I suspect read about it on line - it's not as psychologically real. I've spent 17 years working on spreading the word about Matrix Games and feel pretty good about what I've accomplished but to get greater impact I need to get it in more people's hands.

Back to being a retailer. In the late 90's my wife and I sold used books at SCA events. A less rewarding venue is hard to imagine! While we didn't make much money at it it was great fun to buy the books and I learned a lot about selling. The 50% discount thing is just standard business in retail. We bought a book for a dollar at a library sale and sold it for $2 unless we thought we could get more. We made a lot of bad buying decisions (I think I still have some History of the Ostrogoths areound somewhere) but that was okay if we sold more than 50% of the other books. When a retailer gets a catalog from a distributor that is their window into what is new. They know their audience and make educated guesses about what will go. They order and find out if they're right. If an item sells (quick enough) they restock it so the distributor reorders it. It's nothing personal if they don't reorder your game - that just meant it didn't sell well. Customers are a fickle lot - it's always a challenge figuring out what they want. But that is part of the fun of game making. It's not just about ideas but also about the haggling of the market place. Like Guild of Blades I do my production in house so I am inprofit for every game I sell but that is because I like working with paper and print. I also enjoy what I've learned about business, accounting and all that - it's just like haggling in a Morrocan Suk (which I haven't done in 20 years.)

So I guess I asking you all to think not just about "Changing the hobby" but to try and enjoy the process of doing business.

So why sell to stores? Because it's fun. You meet new people. You get to learn stuff you would not learn any other way. It is personally impowering to do business well.

Chris Engle
Hamster Press

[Clinton R. Nixon]

So I guess I asking you all to think not just about "Changing the hobby" but to try and enjoy the process of doing business.

So why sell to stores? Because it's fun. You meet new people. You get to learn stuff you would not learn any other way. It is personally impowering to do business well.

Chris,

The part of your post which was about your personal reasons - great.

The rest of this is dangerously passive-aggressive. You're "asking you all to think not just about 'changing the hobby' but to try and enjoy the process of doing business?" If this forum didn't have rules that even I have to live by, there'd be some foul language coming out of my keyboard right now.

I am in no way interested in doing business. The moment "business" is what Anvilwerks is about, I quit. You know where most of my profits go? Toward the Forge. At$65/month out of pocket, my monthly PDF sales just cover it. My IPR check's a little bonus for print games, which I make only because the PDF of The Shadow of Yesterday would be too bulky.

So what's my point? I'm only interested in making neat games and changing the idea of what role-playing can be. Business? I'd rather choke.

[Ron Edwards]

Guys, guys. Cool all jets. This isn't about defending any one person's personal take on money and effort in their publishing.

Best,
Ron

[Paul Czege]

Hey Chris,

So I guess I asking you all to think not just about "Changing the hobby" but to try and enjoy the process of doing business.

I've been reading a lot of Brian Hibbs lately. He's the comic store owner who boosted his sales by 20% during the dark years after the Death of Superman in the early 90's (the time when more than 60% of the comic stores in the country went out of business). He did it simply by focusing his business on comics with entertainment value. He did it despite the focus of the big publishers on flashy foil covers, crossover series, a steady stream of new first issues, multiple covers, and polybagged collectible issues, basically everything except good stories that were enjoyable to read. He found the good stuff (the indie stuff) among the noise, and advocated it. He built a customer base for it. At a time when thousands and thousands of folks were swearing off comics.

Lee Garvin posted this week that the game store he used to work for fell on hard times when their best customers, who were armed services personnel, got sent overseas. Well, unfortunately, that isn't why the store fell on hard times. They fell on hard times because they weren't prepared, they were vulnerable, hadn't done the work of growing their business by advocating and focusing on games that actually deliver more than twenty minutes of fun for a four hour time investment. The situation is exactly parallel to comic book retailing in the 90's. Comic publishers were relying on materialism and fetishism and fear (of missing out) to drive sales. They were basing their business growth on the crazy endeavor of extracting an increasing amount of dollars from a shrinking pool of existing customers. And that's demonstrably a recipe for disaster. Your customers ultimately and inevitibly get disillusioned. Game publishers have been doing the same thing for years, releasing an increasingly heavy stream of increasingly flashier and more expensive books to a shrinking pool of existing customers, many of whom aren't actually playing the games they buy, but just haven't yet purged "gamer" from their self image. If a retailer relies on that stream of product for his business, he's every bit as vulnerable as all the the comic stores that died in the early 90s. A retailer needs to demand better, more fun games from game publishers. And he needs to find the good ones out there and advocate them in his store.

As far as I'm concerned, any retailer who's doing so, on behalf of the strength of his business, is in my corner. We're on the same side, working together to change the hobby. That's why they get a discount. The girlfriends are where they grow the customer base.

Paul