Video Review: Blood Bowl Team Manager

After a brief hiatus brought on by the Christmas rush and its aftermath, we’re back with a look at Fantasy Flight’s Blood Bowl Team Manager.

From here onwards, we should be on a regular once-a-week release schedule for our video reviews. If there’s anything you’d really like to see us review, let us know, and we’ll do our best to get it into our filming schedule.

Cashflow, Retail Prices & Kickstarter

I was recently thinking about Kickstarter again, with the number of new and interesting projects popping up on that site for funding.   Now, having helped fund a few games – none of which have arrived; I’ve started trying to figure out at what level (on a purely mathematical basis) a discount would work for us.

The Calculations

The question is ROI here, and to do that, we’d need make a few assumptions on:

• Timeframe – amount of time from funding to delivery of a project
• Number of copies purchased
• Turn rate of inventory
• Gross Profit Margin Percentage

So, let’s say we invest \$100 in a Kickstarter project to purchase 12 copies.  It takes 6 months for a project to be delivered and we have a turn rate of 4 and are using our Gross Profit Margin of 50%.

So for example, if we manage to acquire 12 copies at a turn rate of 4; the \$100 investment is actually invested for 3.5 years (delivery time & time to sell all pre-purchased copies).  Invested normally (i.e. into other stock), that’d be a gross profit of \$700 on \$2,100 of revenue.

Here’s a little chart based on gross margin that we’d receive if the \$100 was invested in ‘normal’ stock.

 Years Turn Rate 0.5 1 1.5 2 2.5 3 3.5 4 \$100 \$200 \$300 \$400 \$500 \$600 \$700 6 \$150 \$300 \$450 \$600 \$750 12 \$300 \$600 \$900

So, those 12 game copies would have to make \$700 of gross profit, or approximately \$58 each. That’d be about a 90% discount on an MSRP of \$65.

Let’s say we only get 4 copies on a \$100 investment in Kickstarter.  That means it’d sell out in 1.5 years from now.  The Kickstarter-games would then have to generate only \$300 in gross profit- which again works out to be about \$75 each.

Conclusion

With there continuing to be a constant flow of games via publishes in the ‘normal’ channel; I just can’t see a reason to invest in Kickstarter anymore as a retailer.  The time delay between purchasing a game and having them come out is a significant opportunity cost – at a turn rate of 4; we forego \$100 in gross profit.  As such, a game has to ‘make’ back that amount in discount for us immediately; which seems almost impossible and still be profitable for the publisher.

December 2011 Bestsellers & Hottest Pre-Orders Updated

Our apologies on the delay getting the December 2011 lists up.  We were just swamped over the past few days, but have now managed to update everything.  As always, here’s November’s 2011’s information as a record and comparison.

Following is the Bestseller’s list for the month of November 2011. We’ve excluded any accessories and any pre-orders from this list to provide an idea of ranking for in-stock items.

3. Dominion

8. Pandemic

Our Hottest Pre-Orders for November 2011

1. Eclipse

Perhaps the most interesting aspect of all this is how big a drop Settlers has taken in our bestsellers list. The prevalence of the game outside of jobby stores has seen it drop in overall popularity with us it seems.

One of the biggest drains on capital and cash in a retail business is inventory.  Now, inventory comes in two parts for us – general gaming stock & accessories and packing materials.  With our gaming stock, we manage it as best we can on a Just-in-Time basis; while packing materials we actually purchase in bulk and stock.   The reasoning for each stocking method is based on the frequency of restocks, the cost of shipping, the amount of capital tied-up and any bulk-purchasing discounts we might receive from our suppliers in each case.

We carry a relatively lean inventory for most items; attempting to stock 1 1/2 weeks worth of inventory for each time at any one time.  Of course, due to the nature of retail, there’s no telling which items will sell in any given week; so we actually stock 1 1/2 weeks worth of the expected average quantity sold.  As an example, we generally keep 7 copies of Settlers of Catan in-stock and 5 of each of the Ticket to Ride & Ticket to Ride Europe.    In any given week though, we might only sell 2 copies of Settlers, 4 of Ticket to Ride and 0 of Ticket to Ride Europe.

With board game stock; we have 3 main distributors that we use and a number of other minor distributors.  For the main distributors, we generally place an order with them once a week throughout the year, picking it up on Thursdays.   However, during Christmas; we increase the frequency of pick-ups to twice a week to deal with the increased volume of sales.

This saves us a huge amount of committed capital – by doubling the number of pick-ups we do; we effectively increase our stock by 1.5-2 times.  Why not 2 exactly? That’s due to the in-transit times of our shipments to us.    For 2 of our main distributors; we are a 2 day ship – which means an order shipped on a Tuesday arrives on a Thursday.  Knowing this, we need to plan for a 5 day gap (Wed – Monday) where no new stock would arrive from these distributors.

While our distributors have generally been extremely good at shipping out orders placed on the same day; there is unfortunately an occasional hiccup and that’s when relying on a lean inventory system becomes a huge problem; especially when we do pick-ups only once (or twice) a week.  If we place the order, expecting them to ship the same day and they miss by one day; we end up waiting an entire extra week (or half-week during Christmas) for our stock.

If it’s a week, and we have only 1 1/2 week worth of inventory in-stock; that means we are actually ‘missing’ sales for up to a week.  E.g. I place an order for 5 copies of Settlers of Catan on Tuesday, having sold them the week before.  I now have 2 copies left.  By Thursday, when I expect my restock, I might have 0 copies left.  However, if my distributor  or UPS misses their shipment to us by a day; we must now wait till next Thursday to receive our stock – missing out on the sale of another 7 copies.

On the other hand, if I stocked for 2 1/2 weeks worth of inventory, I’d effectively increase my capital investment in stock by 66%.  Which, if you’re talking about \$100,000 in inventory is \$66,000.

FedEx and Free Shipping

As some of you might have heard; we decided to turn off Free Shipping via FedEx completely.  The reason was a simple financial one – it costs too much.   Aftera quick review, we realised that while most of the time it wasn’t bad – the occasional ‘worst case’ scenario could really hurt us.  Specifically, any order that shipped to a rural region across the country ended up costing significantly more than we had planned for.

This is probably due to how FedEx manages rural deliveries – instead of delivering the items themselves; they bring it to their closest location and then puts the item into Canada Posts’ system for delivery.  Obviously, FedEx has to recoup their costs in some way for doing that – and the simplest way is to charge it to us.  It also means that Canada Post is actually going to be cheaper to ship for us.

How much of a savings? In a recent worst case scenario; an order that would have cost us \$50 via FedEx to ship cost us \$30 via Canada Post.  That’s a savings of over \$20 on a \$200 order.

I’ve debated getting rid of FedEx entirely; but it’s obviously a shipping method that is liked by some.  As such; we’ve decided to keep it – it’s a great back-up and the additional work it adds to our workflow right now is minimal.   However, we will only ship for free via Canada Post from now on.

Going Pro

At a recent party, I had an interesting conversation with some party-goers about a friend of theirs who purchases items on deals and resells them for a profit.  One of the comments was that the party-goer had pushed his friend to make it a business, run a whole e-commerce store.  This was after a discussion about running an e-commerce store in Canada.  There are some major issues of course, for the friend to shift from an amateur (hobby / part-time) status to professional.

Scalability

It’s one thing to find a single deal on a website and make a good purchase.  It’s easy to do – in fact, we all do that when we shop sales.  Problem is, this isn’t scalable.  You need more than a single deal a single day (or two).  You need a consistent supply of deals (goods) and that requires a system.  Most retailers purchase from publishers or distributors; getting their “deals” this way, allowing them to find consistent product.  Other sites like Tanga and other deal sites constantly have to source new deals, altering the type of products they sell.

In either case, the need to develop a system that is scalable is paramount.

Paying the Rent

The next big hurdle from switching from an amateur (or hobby) to full-time is t he need to pay the rent and make sufficient margins to cover all your expenses.  This is a major hurdle for many; as there are a lot of activities that are viable on a small scale but are not viable when all the associated costs of actually running a business are added in.

Once again, we start looking at things like margins and profit and the need to cover fixed costs.  Game publishers probably have a similar problem – except with a longer lead time to actual revenue.

Consistency

Consistency is another issue that arises.  It’s one thing to manage a single customer e-mail a day / week.  It’s another to have to manage one every hour.  It’s not just customer service either, it’s logistics (purchasing & shipping), accounting, marketing, the whole shebang.  Making sure to keep doing the same thing, again and again every day with the same consistent level of service can be grueling at the best of times.

The Jump

Making the jump from amateur to professional is hard.  In many ways, the first step is mental – it goes from ‘something I do once in a while’ to ‘something I do all the time’.    It goes from ‘I’ll deal with this later’ to ‘this has to get done now’.  Some people can’t make that jump, others try and fail.

Year in Review : 2011

What a year, 2011 was our best year so far; with solid growth through most of it.   There were significant challenges throughout the year; but I continue to be grateful to all our customers who have made this possible.

Sales & Categories

We continue to be a board game store primarily – the vat majority of our revenue and inventory is devoted to board games.  However, we’ve seen a strong increase in our sale of accessories and the introduction of RPGs has added a new category that seems to be doing really well.  We did introduce a few CCGs and miniatures; but so far; it’s not been something that has taken.  We’re likely to dump our stock of CCGs very soon; and I’m on the fence of our (limited) miniature support.

The Postal Strike

I did say sales was good through most of the year – the Postal Strike being the obvious exception.  We certainly saw quite a drop both before; during and even slightly after the Strike.   On the other hand, the Strike was the impetus for the addition of FedEx as a shipping provider and while the % of orders that ship via FedEx has been low; its addition is a nice back-up. Recent checks on the cost though has had us remove the Free Shipping option for FedEx entirely – it’s way too expensive to offer profitably.

Hiring

This was the year of hiring it seemed.  We added Kaja as a full-time employee in the last 6 months of the year or so; and then proceeded to realise that we needed another full-time employee.  We’re once again in the process of looking for a full-time employee as Pierson unfortunately had to leave for personal reasons.   What hiring new employees also meant that we had to review our processes completely – what worked for myself alone or with Kaja doesn’t work with 2 full-time employees.  We’re still in the process of changing the processes to ensure things run smoothly with 3 of us in the store now.

What it does mean that with new employees, I was able to focus on the website a lot more and start making some real changes.   Some of the changes are rather obvious (Quantity buttons in the front, Pre-Order information pages, etc); others are less so but all are things I’ve been wanting to get done for a while.

Video Reviews

Perhaps the biggest addition this year for customers has been the introduction of our video reviews.  The reviews seem to have been well received; and we’ll begin shooting mid-January.  We’re hoping with that, we should have some reviews available by end-January at least.

The Future

So, what next? It’s hard to say right now.  We’re still paying off all our bills from the Christmas-period which means any future plans are going to wait.  The goal of course it to update the site, redesign it a bit more to make it easier to navigate and of course keep the video reviews going.  Beyond that; this looks to be a year to focus on trimming our costs and working on efficiencies in-house.  There’s a lot of things that need to be done; and a lot of it could be done faster, easier and more accurately with some process changes it seems.  It just means hunkering down and figuring out how – and what new technologies we need to invest. in.