Every year about this time there seems to be a dearth of new stuff. The summer con season is about to kick off, and hundreds of companies want to wow the audience with new products so they will spend a few dollars with them on the show floor. Publishers sell this to customers direct at the show and make three to five times as much as they make selling through distribution. Distributors are pissed, but there is nothing they can do about it.
This calls into mind the distribution dilemma, which calls in to mind the sanity of the current three-tiered system in RPGs, board, and card games. The math is simple, and it does not work. In the old days the distributor carried enough for five to six months, usually on pretty reasonable terms and they reordered usually once a month. The retailer was able to go to the distributor, set up a credit account (usually after a few months of COD sales or a letter of credit), and order everything they needed from one distributor.
The distributor functioned as both a financier and a distributor. They extended credit to the individual retailers and funded the publishers. In the late eighties and early nineties distribution abandoned this idea and went to a "just in time" model. At least that was what they called it when asked, which wasn't often. This was supposedly to cut inventory costs so they could serve the customer (in this case the retailer) better.
No distributor has ever approached this with either adequate capital or adequate technology to make it right. The "just in time" ordering system in most manufacturing companies works because the quantities of production (in the car industry for example) is steady. The product arrives before it is needed, although instead of months before it is only days before. Most importantly there is commonly a margin for error.
When the distributors went to this "just in time" model, none of them were computerized, and the one that is computerized now does not have end-end integration with the business office and the shipping office. The right hand never knows what the left hand is doing, and none of them knows what sales they are losing every day. Meanwhile the retailer has to maintain relationships with three to five distributors, when two should suffice.
Here is what that really means. Distributors order just enough to cover their pre-orders, with no margin of error. They thus sell out of a new product. Then it takes them several weeks to re-order if they feel the re-orders are worth it. If a hot new card game expansion coming the distributor commonly guts their orders for everything else to have more money for the cards. If that card expansion does not move at the estimated speed, it can have serious effects on the distributors (and so the publishers) for several months to come, as that needed capital is not replaced in the system.
Added to this is the periodical business model brought on in large part by the DDL glut. That is if it does not sell in the first ninety days it will never sell again. The problem is that this is not completely true.
This is further complicated by the commission-only model that all distribution sales people are paid. No one is paid to service accounts, they are not paid if their accounts are healthy, they are not paid for solving problems, they commonly are not even paid for collections or research, they never visit the retailers, and they really cannot afford to give a shit. They are paid to cram the store with as much shit as possible. Nothing else matters, period, end of story.
There are many products with what are called "evergreen" status, that sell all the time and in some cases for years. Core rules for D&D and World of Darkness are evergreen. In fact, most core game books should be, but are not.
This is further aggravated by support issues. If players cannot by a basic rulebook, they are not going to buy supplements unless they already own the core rules. New players cannot get the core rules when they join the group. Then customers abandon traditional retailers for eBay, Amazon, RPGNow, or Warehouse23. This causes decline in retail sales, distributors order less, and the entire vicious cycle gets worse and worse.
Bring any of this up and distributors get huffy. They threaten, they beg, they plead, because we need them. What if we would be better off without them as they are? Running a business is tough, no doubt about it. Money is tight, and it does not look rosy any time soon. If a distributor cannot offer their clients a service, then they should not be paid.
It used to be that distribution sales people were knowledgeable and could help the retailer make decisions about the products they carried, not any more. It used to be that the distributor introduced new companies and new products to the retailer, not any more. These days most distributors will not even talk to new publishers, sometimes for years.
Meanwhile smart companies like Hero Games are selling direct like mad from Amazon, from their own online stores, and from web-based game stores like RPGNow.com, not because they have an axe to grind, but because the incredibly broken distribution system is not servicing their customers. If a publisher wants to survive they have to sell product, and with no one else doing it they have to do it themselves. So how should it work?
The distributor invests in an integrated distribution software package, a modern phone system, and networked computers and printers throughout the company. Sales people are paid a base salary plus bonuses for not only productivity, but also re-orders, length of the relationship, and credit status. If you are a salesperson who has developed a relationship with an FLGS for years, they sell what we sell them, they re-order regularly, and they pay on time you should be paid more than some idiot who just says "how much Magic do you want?" Customers who are past due are transferred to the accounting department automatically when they call. New customers are transferred to a specialist who understands how to "hold hands" and help them build their business. Orders are packed and shipped on the same day they are placed, inventory is updated in real-time, and buyers are responsible for forecasting sales, identifying new opportunities, and manufacturer relationships. Buyers keep a ninety-day supply of new products and if products go out of stock, the bonus of that buyer is affected. Oh, one last thing, everyone is paid on time.
Distributors keep telling us this is impossible. Even when smaller computer distributors with margins thinner on average (by a factor often) realize higher profits because the systems they invest in pay for themselves many times over. It is possible, but no one has both the cash and the sense to start it up.
If distributors were doing their job publishers would not go through the hassles of being a publisher, their own distributor, and their own retailer; they would just make games. Therefore, the distributor can either change the way they do business or disappear. If they are not carrying inventory the retailer does not need them, if they are not extending credit the manufacturer does not need them, and if they are not actually filling orders and shipping product than no one needs them.
No one wants to be caught holding the bag on unsold goods, as a friend so correctly points out. The retail channel has a huge number of filings as well, and I could do at least one other column on failures there. There are also some retailers that are doing a pretty amazing job. It is just that they are so few facing such challenges.
Rest in Peace:
In case anyone missed it, Tim Hildebrandt passed away on June 11th of complications from diabetes. His work with his brother Greg defined the very idea of fantasy art for over 40 years. The original painted poster for Star Wars was painted by them, as were the covers of scores of fantasy novels. The most widely known were probably the Pern Novels or their Middle Earth paintings from the Tolkien calendars of the 1970s. Suffice it to say, the world is just a little darker for his passing, the music not so sweet. Thankfully the pictures, in all their beauty, will remain forever.
