Operating Expenses – or that hole at the bottom of the bucket

As briefly mentioned in our previous capitilisation post, we are going to go into some detail about operating costs.  After working through the post, we realised it was getting rather long, so it’s now broken into two parts.   This is the first part, arbitrarily named the hard costs.
Operating expenses for an online board games store comes in a variety of ways, most of them pretty common to most businesses but some that are specifically unique to the industry.  I’ll cover most of the big ticket expenses here.  All the figures provided here are figures based on professional quotes, but with some personal connections and favors, could potentially be lowered.

The Hard Costs
All these costs are fixed costs and are related to physical aspects of the business, whether it is your rental space or storage boxes or server bandwidth.

Rent
Rental cost is obviously going to be dependent on the size of your business and how much stock you carry.  Currently, warehouse space in Vancouver is about $1.50 per square foot and office space between $1.50 to $5.  As a comparison, retail space can go from $3 to $10.  Above estimates all include taxes and other gross expenses such as heating and electricity.

However, it is quite unlikely that you would find a warehouse for less than 1,000 sq ft, while you could easily find office space of 300 to 500 sq ft.

Hosting & Domain Name Purchase
This is another form of rent for an online business, in this case for your site.  Purchasing a domain name is really cheap, as GoDaddy has happily advertised – as low as $2.00.  Of course, the better domain names are already taken, and you probably don’t want a .biz or .net domain name, so you are looking at about $20 a year for domain name purchase.  Minimal.

Hosting varies, with starter hosting packages from $5 to 20.  For a more dedicated site, you are looking at about $50 – 100 which is what you will need for a site of any size.  Again, this can also depend on how you code the site – heavy database and image based sites will require more dedicated hosting than others.

Shipping & Packaging
Firstly, there is the cost of shipping games to your customers which can be a significant cost due to reshipments for missed games, mistakes on the costing of shipping during order processing and free shipping costs.  If you are wondering, no, we don’t actually make any money on shipping -the cost quoted on the site is our cost (plus box cost), give or take a dollar or so.  Sometimes we lose, sometimes we gain as the software isn’t 100% accurate.

On top of the actual shipping cost with your carrier; you have the cost of boxes, packing materials and tape.  Most cardboard boxes will cost you between $1 to 3 depending on size and stock, while packing materials can generally be purchased on the cheap.  In fact, if you save up the packing material you get sent yourself and all your junk mail, packing material costs can be negligible.

In addition, you have shipping costs to you from your distributor.  Unlike the US where some of the distributors will provide shipping for free after a certain order size, Canadian distributors do not offer this.  Generally, shipping cost from distributors within Canada is about 4 – 7% of the cost of goods.  Note that due to our location in Vancouver we mostly have orders shipped across the country so Eastern stores are actually better off.

If you are shipping up from the US, which is a possibility as not all the Canadian distributors will have what you want, shipping cost is much more significant and can be from 8 – 12%.  This does not include brokerage costs, which is another 1 to 2% generally speaking.

You can see why we prefer to just pick up our games ourselves from the US rather than pay all the shipping costs.  Admittedly, there is a hidden time cost here, but one of the advantages of an online business is that you can work at 2am and still get sales.

Social marketing and interacting with customers

Perhaps one of the most interesting and terrifying aspects of the web is social marketing.  As a company, we’ve dabbled in it including having a Facebook page and Twitter account.  Obviously, the blog is here as well and we’ve been commenting and submitting to BoardGameGeek and other forums as we go along.  And along the way, three aspects jumped out at us:

 – Time cost

Creating blog posts, updating the Facebook page and Twitter, reviewing forums and replying, all of it eats up a lot of time.   We’ve not even dabbled in video posts or podcasts at all, mostly because the amount of time it would take to do so on an on-going basis is way too high.  As it stands, we do our best, but sometimes, the blog doesn’t get replied to nor forums visited because we’re busy with all the other aspects of running a business.

 – The line between personal and professional

Especially with the new social media applications (Facebook and Twitter), its really easy for the line between personal and professional to blur.  While we would like to be transparent,  there are opinions and issues that; while they affect the business, might not be suitable for personal consumption.  An example would be the problems we had during 2008 that we never really detailed.  Most of them were personal, but it would help explain things to customers more – how far and where do we draw the line?

There are numerous, more directly related frustrations that occur for us as a business.  Discussing them in detail, on one hand, gives our customers an interesting view of our business.  On the other, it can be viewed as direct attacks on other competitors, organisations and individuals (beliefs  and otherwise).

Where is the line?  Mostly, we’ve been erring on the side of caution.

– Invasiveness

This relates to the above point, both for our own lives (how much do we want to link our personal blogs / profiles / etc to the company?) and for customers.  We get good reviews, we get bad reviews on other sites like BGG.  Sometimes, the reviews are very fair (yes, we did screw up that order); other times, the reviews are 90% correct but that 10% loss shines a bad light on us.  Well, when do we step in? Do customers who post these threads have a right to some privacy from us interjecting?  Would it be better to leave those 90% correct posts up as is – after all, to really ‘correct’ a post, we would have to C&P private e-mail exchanges.

Conclusion

At the end of the day, the line for social mediaa is rather interesting.  We’ve decided, for the most part, to try to keep things as professional as possible on these terms.  Sometimes that means leaving the egg on our face, sometimes it means not explaining things as much as we’d like if we were discussing it with a customer in-perso.  The fact is, anything written / posted / mailed online is subject to replication to infinity, so if we’re even slightly unsure, its probably best to not say anything.

Board Games for the Community

Starlit Citadel; a board games store in Vancouver, Canada; has launched its Board Games for the Community program after the successful Games Night at Lumby, BC held by the JW Inglis Parents Advisory Committee.  The program provides an exciting new way for libraries, schools and parent advisory committees to introduce board games to their local community and potentially raise additional funds for programs and services.

“Board games emphasize social interaction, analytical ability and mathematical skills in a fun environment that encourages learning;” said Tao Wong, CEO of Starlit Citadel. “Over the years, board games have continued to develop in sophistication, originality and playability and have come to be awarded prizes from organizations like Mensa and GAMES Magazine.”

“Our Board Games for the Community program aims to bring these games to the wider community.  After the successful Game Night event at the JW Inglis Elementary School, we realised that this was a great way for schools, Parent Advisory Committees (PAC) and other community organisations to raise funds during this troubled economic times.”

In the Board Games for the Community program, Starlit Citadel will significantly discount all games purchased by a registered school, PAC or community institution looking to use the games as an educational tool, fundraising venture or other community outreach programs.

Additional details about the Fundraising through Board Games initiative may be found on Starlit Citadel’s website.

Starlit Citadel is a board games and role-playing games store based in Vancouver, BC.  It was incorporated in 2007 and provides over 900 board games across Canada.   The Board Games for the Community program is its first initiative focusing on the development of gaming in the community.

US board game sales up 6% last year

An interesting snippet of information about how board games sales have gone up 6%. I am guessing this is based on Hasbro and Mattel numbers, not so much our niche hobby numbers. And of course, this isn’t Canadian numbers.

I’d love to see what the numbers are like for Canada and our own hobby, but I doubt it’d drill down that far. Heck, I’d love to see more games like Settlers of Catan or Ticket to Ride but at least both Blokus and Apples to Apples are on Mattel’s print list.

Fixes, fixes, fixes

Part of the fun of owning an open source e-commerce software is that there are bugs.  And modules to add, and new versions and the like.  Add that to changes to server side software and updates on browsers and you run into glitches every once in a while.

We’ve finally fixed 3 glitches in the system, or at least believe we have.  They were:

– Layered navigation not actually doing a full listing of all games.

The problem was the system was not doing a complete refresh whenever we updated the products, so it only listed the most recent updates.

– Addresses not saving in My Account page.

We figured out what happened – the new versions of Magento had new table formats, so the old tables that our site was designed on wasn’t capturing and placing the information into the database properly.  It’s now fixed.

– Session and firewall problems.

This is the problem that had us puzzled forever. At first it seemed to only affect people who had IE, then as we got more information, it included people using Mozilla as well and Safari.  After a review, it seemed to have something to do with our servers, so we went digging.  We finally found that it had to do with the way sessions were being recorded and the firewalls that were being used. We’ve got a temporary fix on this by turning off session verification checking on the site (i.e. it isn’t checking to make sure each session is unique anymore).  Hopefully, the new version of Magento will solve the bad coding problems in this permanently, but for now we’re sticking to this version for a long time.

Con reports and disappointments

Well, the weekend was a ton of fun. While I was only there for 1 day, GottaCon was quite worth going and I’m looking forward to it next year. Hopefully, I’ll be able to make it for all 3 days.

Victoria’s always a nice to place to visit, and getting to the Con from Downtown Victoria was easy and fast. The hall where the Con was held was huge – 20,000 sq ft swallows up everyone real fast. There were at least 300 – 400 people in the hall throughout the day, but it did look a bit sparse just because of the pure size.

As was mentioned, gaming stations were set-up all across the halls with the vendors in the center. Vendors were a bit sparse this year, no surprise since it’s the first year and there wasn’t much going on there beyond one highly impressive Magic singles vendor.

Of the gaming offered, CCGs were packed (probably because of the multiple Tournaments offered) and there were at least 3 to 4 tables filled with miniature players, RPGers and board gamers at any one time. For myself, I had a chance to play RoboRally and Betrayal that day. Set-up as well was Tide of Iron, Memoir ’44 and a pair of tables with a ton of games that were being played on request. I noticed both Nefertiti, Apples to Apples, Settlers of Catan, Zombies, Intrigue and Wings of War being played while I was on RoboRally. Overall, a great time.

Probably the biggest draw for me of that weekend (well beyond Steven Erikson) was the Auction. A ton of great games were on auction, from the World of Darkness main rulebook to D&D Starter Sets to old Dreamblades and a ton of board games. Everything from Guillotine to Ticket to Ride to Samurai Swords was on sale. Sadly, everyone bid the games higher than I could afford….

Overall, GottaCon was fun, but I had to say, we could have done with some board game tournaments for us. It would probably have dragged more CCGers over to test things out.  I’m thinking we should look at working with VCon and/or Anime Evolution to set one up.  Any ideas/suggestions on the best way to do that?

On another note, Salute came back and rescinded our right to be a Vendor at their upcoming Con.  It seems there’s an issue with our business model causing conflicts with their existing sponsors and vendors.  Rather upsetting I must say, but there’s nothing we can do about it.