Behind the Counter
Back in 1986, I opened my first business, and first game store, in Anchorage, Alaska. Back then, my rent was so cheap, and my customers so vast, that it was impossible not to make money. As such, I didn't have to work very hard, and my only criteria for ordering product was “If I can’t sell this, would I want to own it?” If the answer was yes, I ordered it. If not, skip it. Being a miniatures nut, I had over 10,000 blisters of miniatures in my store.
Years later, I had a “Real Game Store” - the kind with a couple dozen tables, and 140 chairs, people playing cards and board games and miniatures games all time of day. The racks were full of Games Workshop miniatures, and we had over 5000 Harlequin figures in stock, as well as Ral Partha, and many others!! We had singles for Magic, Star Wars, Star Trek and Pokemon - binders of every set, cases full of the rarest cards! We had over 4000 POUNDS of dice in stock, and over 500 board games, and nearly 2500 RPG books.
The internet changed that for us, all the big Games Workshop players went online to get their figures, and we had to close those tables down, and fill our new, smaller, retail store with merchandise to sell, rather than tables to play at. The Pokemon bubble burst at about the same time - it wasn’t just one thing, it was several. And, eBay made finding rare game items easy.
Today, I own a store that is more profitable than the one I owned then. But, is it really a “Game Store”? Maybe not compared to what I owned back in 1997, or 1986, but certainly what I own now is a game store by today’s standards - though many would disagree, I am sure.
But, lately - you see - I have been thinking about how the industry “is”, how it works, what makes it tick, and what keeps it from ticking better. This will probably be “done” in a year or two, but this is what I have so far. To start with, I am defining for my own purposes the terms that are bantered about in the industry, such as:
Game Industry: that industry which is involved with the production, design, sales, marketing and promotion of table top games (be they card games, board games, war games, miniature games or other). This includes publishers and manufacturers, distributors, designers, artists and retailers, and others. MANY others.
Three Tier Distribution System: currently, and for a long time, the method of distribution of games merchandise has been referred to as the Three Tier System. Using this method, games and game accessories have flowed from hundreds of diverse companies producing the games, to several distributor companies, then to the retailers. This helped everyone, because a single retailer may not need more than $100 or so of any given small publishers products in any year, let alone every order - so direct sales from publisher to retailer was not ideal. Especially for the retailer, who could just skip such a small product unless it was EXTREMELY easy to order. “Back in the Day” distributors were the retailers primary source of information - since the internet didn’t exist, and since the only other way to hear about games was at conventions, from customers, and from Dragon Magazine. Today, many distributors function as an order clearing house, and the information is so readily available online that the onus is on the retailer to be informed about the products, not on the distributor to educate them. Certainly, many distributors fill that same function of education when they need to. But, the system has flowed largely unchanged for 30 years (though individual distributors come and go, and discounts fluctuate). Thus, the system has been called the three tier system.
More recently, the system has to a large degree begun to become a 4 tier system. Publishers who are large enough continue to sell directly to a hand-full of distributors - but, smaller companies have had to use consolidators so that distributors did not have to order one or two titles per order, and could themselves consolidate orders through the fulfillment house or consolidating house. Calling the current system the three tier system would be untrue, but we don’t really have a more accepted name for it. The reason for this is that collectible games changed the way the industry works. Previous to the mid 1990's, games were produced by a publisher, and sold to the distributors who generally bought a fair quantity of those games - and then in turn sold them to retailers. A boxed wargame might only sell 1 copy to about 1/3rd of a distributors accounts, but as the retailers sold and reordered the merchandise, the quantities would eventually (and in theory) sell through. However, generally all game merchandise was aimed at selling one copy to one customer, then selling another copy to another customer. This meant if you produced 5000 board games, you needed to eventually sell them to 5000 different people who enjoy that game. With the advent of Magic: The Gathering (and many other collectible games) the retail industry for games changed. Now, one “item” (sku, product code, etc) of product could be sold to the same customer many multiples of times. In fact, if you count the booster pack of Magic as an individual sku, most avid players will buy 36 to 100+ of each new SKU released. This meant that real money could be made by real companies in this industry. And, that changed things. Retailers changed, distributors changed, publishers and manufacturers changed.
Sell Through: - the point at which an entire shipment or order of games has sold through one destination, and a reorder may occur. A publisher producing 5000 copies of a game may take a long time to reach sell through, so they may never re-produce that product. A Retailer may only order, for example, 4 copies of a game item - so their sell through may occur quickly, or not. The distributor in the middle of this chain has to order enough to satisfy pre-orders, regular orders, and some reorders - but not so much that when the product is no longer “green” that they have lots of money tied up in merchandise that is no longer sellable.
Pre-Order: The preorder system has worked on and off over the years. Generally, not in the favor of the retailer. A distributor takes your pre-order for a card game set. Lets call it “Legends”. You order 10 cases (100 boxes). The product is released, and you get 2 boxes. Wow, aren’t you glad you pre-ordered? Those boxes were selling so fast that you could have sold all 100 in a week, but you got two. Feel special? You ordered a LOT of a product that turned out to be HUGE for you. But, you only got to sell 2 boxes. Which, if you were making $50 a box, you missed out on making another $4800 in sales. A year later, you get the chance to pre-order another card set, lets call this one “Fallen Empires”. You ordered 200 boxes, cause you hoped you might get 20. Fallen Empires is released, and it is a dog. It was overproduced, it is in every gas station, convenience store and mens room john in the country. You got 200 Boxes Delivered!!! Feeling special again, aren’t ya? Generally, things have improved. However, if you are owning a game store, and you ever hear the word “Allocation” from your primary distributor - as in “We’re sorry, but this product was over ordered, so we are allocating your order from 12 cases to just 1" then, it’s time to change distributors. If you are going to be HELD to your pre-orders - and most distributors WILL hold you to them - then, why aren’t then held to them? If every retailer in the industry were to pre-order at least 1 copy of every item they wanted, the whole system would work much better.
How it is supposed to work is: Retailers pre-order what they know they will want. Then, the distributors pre-order what they know they have sold, plus some for additional sales and reorders. Then, the publishers deliver the goods, and the goods are sold to the retailers, who then have them for their customers. However, when things are hot, “some” distributors have channeled products out the back door directly to eBay, other online sales, and even made special deals with specific retailers. I don’t speculate, I know of this - I once was told I could buy 35 cases of Pokemon (when Pokemon was selling for 150% of MSRP on eBay) for regular wholesale, if I would take 35 cases of another product (which was a dog). I would never tell you with whom I made this deal, but I would make it again in a minute if the circumstances were the same. Perhaps, in this case, that product was not allocated to other retailers - but, maybe it was.
My main point being: Retailers should either get what they order, or not be held to TAKE what they order. I may decide after ordering it - that I don’t want 10 cases of “Billy Jack the Trading Card Game” after all. Why should I “have to” take it? That is only reasonable if, when I ordered 2 cases of the hottest game every to come out, I get all 2 cases of it, regardless that the distributor could have sold it for 5 times as much money elsewhere!! It has to be a two way street.
Nowadays - I keep accounts with 5 distributors. If a big game came out and my primary distributor would not fill my order - I would be changing primary distributors very quickly. Luckily, in the marketplace today - with no products reaching the frenzy feeding point that Pokemon or Magic did in the past - I can pretty assuredly expect to receive 100% of my pre-order quantity on all of my products ordered. But, change happens slowly, and may retailers who have had to take a few cases of unsellable crap - and who were also shorted on other products - don’t really want to preorder stuff.
The Effect of Not Pre-Ordering: The net effect of all this is that when a distributor has, lets say, 300 retail stores buying from them - and only 10% do pre-orders - then they are really guessing as to what demand will be. Lets think that the other 90% of retailers may want the same number as the 10% who preorder do. But, the distributor has preorders from only 30 retailers, who lets say want a total of 80 copies of a $60 board game. Should the distributor cross their fingers, and order 800 copies? Cause, if you are off, being off by 720 copies of a $60 game is NOT the right time to be off!! So, the pre-order system often does not work for the retailers benefit. But, if you don’t preorder a product, it is unlikley you will have it on it’s street or release date.
Game Orders in the Real World: A lot of retailers call with their weekly reorder for stuff they have sold, and then say “So, what is new since the last time I ordered?” Their intent is to order all the new releases that are suitable for their stores. But, that is not what really happens. What REALLY happens is that the stuff that came in the previous 5 to 10 days at the distributor - some of it is already sold out - having had a SELL THROUGH at the distributor, who is not out of stock till their next reorder (which can be a few days, a few week, a bit longer.....). So, the retailer who calls in the order like this may miss several key things a week. At the end of the year, this may mean the retailer has lost out on hundreds of potential sales. And, worse - they may have alienated some customers with their sporadic ordering methods.
Street Date: The street date on a product is the date it can be first sold to the consumer by the retail outlet. Not all products bother with such things. However, a game like Magic or Yugioh or even HeroClix has a street date because collectible games can cause a buying frenzy, and often the first retailer in an area to have it available will sell most of their product before the other retailers have that product in their stores. This can occur because of the following example. Lets say BIG BOX GAMES has a product that is in high demand. They are in New York, but they have their game produced in China. It comes into the country from the West Coast somewhere, and goes from there directly to distributors across the country. The distributor in California would likely get it before the distributors in Texas, Mississippi, Indiana and New Jersey - so those cunning retailers who have accounts with the company in California may be paying more for shipping, but they can have the product overnighted to them anywhere in the country, far ahead of the trucks still to arrive in Texas, Mississippi, Indiana and New Jersey.
So, street dates became quite common place in the game industry for collectible games. And, so did finding way to BREAK the street dates. Today, most big companies have their street dates broken on EVERY RELEASE. Mostly by places like Target, WalMart, Barnes & Noble and other big chains. While retailers cry foul every time, the reality is that there is little that can be done. Those large chains are not trying to hurt small retailers any more than a elephant is trying to hurt an ant if it steps on it. They simply are not motivated to have to NOT break an inconsequential street date. They manage not to break Harry Potter release dates, or DVD release dates - because the companies who enforce those street dates CAN and WILL cut them off for some future releases. But, game companies are not Sony or Paramount. They are WotC or Hasbro, and they don’t have the TEETH to FORCE the big boxed retailers to not break street dates. Also, not every Toys R Us, Target or other big chain store breaks the street dates. But, over 200 or 1500 stores, some do.
So, why do we have street dates at all? Hell if I know!
Cycle Sheets: Cycle sheets are a tool of the Comic Book retail trade, and I learned about them there. I have been using cycle sheets for games for some time - I keep a list of all games I have on preorder in the front of my cycle sheet binder. I also have an individual sheet for EACH GAME title I stock (board, card, war and RPG games - I don’t do this with miniatures or CCGs). By starting a sheet when the product arrives, and inventorying the games each week, I have a nice sales history and know what is, and what isn’t, selling. This allows me to make knowledgeable reorders, and new orders. It allows me to know that this RPG is selling poorly, so drop my orders on items in that line from 4 to 2. And, that this other line is selling too fast, I need to go from 2 to 3 or 4 copies. It also helps me determine which board games sell regularly enough to maintain them in my store long term - and which have not sold in so long that I may as well dump them or trade them to other retailers.
GAMA: Game Manufacturers Association. A trade organization which has the unfortunate misnomer that conveys to many (specifically retailers in the game trade) that the organization is just for manufacturers. GAMA does many good things, including but not limited to: Hosting the GAMA Trade Show (see GTS) and the Origins Game Fair, as well as offering educational opportunities for retailers, and aspiring retailers, and educational and other opportunities for publishers, large and small. I am sure they do a lot more, this is just what I am personally aware of.
GPA: Game Publishers Association - another trade organization, with a different scope. They hold or host no trade shows or conventions, but they concentrate on helping the small publishers and manufacturers with insight, education and feedback. I am sure they do a lot more, this is just what I am personally aware of.
GRD: the GAMA Retail Division. The only true organization of retailers in our industry. Funded and subsidized by GAMA, the GRD has a seat on the GAMA Main Board of Directors, and has their own programming track at GTS (see GTS later). The GRD elects its own board of directors called the GRD Board of Directors. Though their efforts and responsibilities are varied, the GRD is instrumental in the success of GTS, and helps with Origins and other outreach programs. I am sure they do a lot more, this is just what I am personally aware of.
GTS: The GAMA Trade Show - a show run by and for GAMA in Las Vegas (traditionally) in the Spring. GTS is part vacation, part work, and lots of fun. Seminars about how to run a more profitable business (and other topics to be sure) are conducted by GAMA, the GRD and other speakers at GTS. An exhibitors hall with hundreds of publishers exhibiting their products, food functions, parties and fun. Also a good tax write off to go to Vegas, if you are so inclined.
Manufacturing: a process by which goods are made. Things like car parts, roller skates, other hard durable goods. Most GAME producing companies think of their organizations as a PUBLISHER not a manufacturer - thus another unfortunate part of the GAMA name. While a company like REAPER is clearly a manufacturer, a company like Green Ronin is more aptly a publisher.
Retailers: a group that defies easy and exact definition, and which is hard to label accurately. Most game retail shops are independently owned and operated by one or a few owners, who own just one store. There are chains, and multi store operations, of course - but all of the single store operations clearly outnumber the combined total for chain stores. For this reason, the diversity of retailers is so broad that it can harm the efforts of any subgroup trying to organize themselves for the benefit of all.
Independent Retailers Organization: a fable, like leprechauns or flying pigs. I am only partially kidding. Once, I was asked to assist a group of others in helping to form a Retailers Organization which would work for the benefit of retailers. Much was bandied about as the purpose or scope of the organization. Some retailers wanted to hold a trade show to rival, or to compliment, GTS (GAMA Trade Show). Some wanted to just work for increased margins on buying, or to organize to show the other tiers that the retailers were mighty. But, discussion broke down to the point of acrimony at the mere attempt to define what and who would qualify for membership in the organization itself. For a better idea on how hard it is for retailers to organize themselves attempt to herd stray cats. In a rain and windstorm.
Concepts that I have heard, learned or invented:
Lifters and Leaners: When I was in the Army I found something to be very true - and that is the 80/20 rule. This rule applies in MANY places, seems to be a universal truth in many ways. But, here is how I mean it today: If you have a big project, and you have 20 people in the project, generally you will find that 80% percent of those on the project will be doing about 20% of the work, and 20% of the people will be doing about 80% of the work. I have been both a lifter and a leaner. Early in my GTS and GRD career, I jumped in whenever needed, for any project, and hit it as hard as I could. I did 5 different seminar topics one year, and put about 10-20 hours of preparation on each one. Lately, I have been a total slacker, letting others do the work (which is why I won’t be running for a board position again on the GRD, at least for now).
Other 80/20 rules - 20% of your product accounts for 80% of your sales.
3 Kinds of People:
Those who make things happen.
Those who watch things happening.
Those who wonder what happened.
Generally, I have little use for people who want to bellyache, bitch, wench around about others efforts. If you don’t like what they are doing, or how they are doing it - volunteer, run for a position, apply yourself to the cause, break a sweat, get involved. Of course, many people find it MUCH easier (and more fun!) To simply bitch about the efforts of others. These whiney people are like leeches on any organization or company they are associated with. They do little, other than to draw attention to themselves, and to sap the strength of any organization. You will find this kind of person, however, in any trade organization, social group, non profit, or corporation. Frankly, I more value the mis-spent efforts of those who are truly attempting their best efforts MUCH more highly than the meager efforts that the whiners and complainers meek out while making much ado about nothing.
A 4th Kind of Person: The Burnout.
I once saw someone I thought was a brilliant person be reduced to total apathy by their struggle to help an organization, in which they felt overpowered to accomplish anything. This was a good friend of mine, Nicki - a nice young lady. She was trying to accomplish something in a trade organization which was embroiled in bs, and drowning in its own back room political crap. Nicki eventually left the organization, and though I see her time to time - I know she feel’s abandoned by her peers in her industry. I wonder if she knows how much SOME of us appreciated, and admired her spirit, and efforts? She won’t probably read this, but I hope I can forward it to her sometime - just so she knows.
Anyway, after 5 years on the board of GAMA or the GRD, and working to do seminars at GTS, etc - I am a burnout.
Summary:
I now look at the game industry through VERY different eyes than I did 10 or 20 years ago. The old me would not recognize the current me. I no longer stock most games just because I think they are cool. Now, I stock the sellers, and a few other games I believe in, and will give a TRY to. (A try being 90 days to see if it can find a niche in my store). I am now far less concerned with WHAT I sell, as I am with how much money I can make, how timely my bills can be paid, how nice a home I can buy. And, in the end, maybe that is the ONE thing I learned from GAMA - the Game Industry is a Business. Oh, I still stock my friends products, whether they sell or not - for sure. But that now represents less than 2% of my overall stock (as opposed to maybe 8% previously).
The Game Industry has changed a lot in the past 22 years. But, I may have changed even more.
Marcus King
Titan Games & Music
637 Capital Ave SW
Battle Creek, MI 49015
Titan-Games on eBay
