Distribution Challenges for the Gaming Industry in 2016

My initial title for this post was ‘market failures’ but I realised that that wasn’t entirely accurate, even if it is a better sounding title.  What I wanted to talk about was the increasing fragmentation of the market and the complicating of the supply chain that we are seeing.

Vector illustration of red exclusive stamp on white background
Vector illustration of red exclusive stamp on white background

Exclusive Distribution & Monopolies

Exclusive distribution agreements aren’t new, I’ve written about them previously.  Right now, the vast majority of our products (a good 70% of game sales I’d say) are under exclusive distribution agreements.  Our biggest problem with exclusive agreements is the fact that it can be often difficult to locate who has the exclusive agreement in a country and just as importantly, be able to purchase the product in sufficient quantity to make it worthwhile.  A few great examples?

  • Qwirkle is the only game that sells for us from their distributor in Canada.
  • Celestia and Haru Ichiban are carried by Le Valet who at least have some other ‘good’ games, albeit at a higher markup

As many of you know, shipping in Canada is expensive.  Most places cost us at least $30-40 to ship a parcel at any ‘size’, sometimes much more.  Excluding any minimum’s that a publisher might have (and some sell by case quantities only!), that means to keep shipping cost at only 5% of an order, we’d need to put a $600 order with the publisher.  However, many of these publishers have maybe 5 to 6 items (sometimes even less!) which would sell in our business.  When this happens, we often end up deciding to either / or /and :

  • restock very, very slowly
  • not carry the product / product line
  • increase the price of the product to save on our margin

Geographic Boundaries

Geographic boundary restrictions (essentially stopping us from purchasing from the USA) is another extremely frustrating restriction.  It used to be that we could purchase almost our entire catalog from the US.  Over the years, it’s now slipped to about 30% of the gaming catalog.  This can often lead to some extremely frustrating instances such as:

  • Monikers which signed an exclusive agreement with On the Right Track. Who don’t carry the expansion but we can’t purchase the expansion as the publisher can’t sell it to us due to geographic restrictions.
  • Forbidden Island whose US MSRP is $19.  The lowest Canadian price we can get from a wholesaler? CAD$18.

Non-Gaming Distributors

This one amuses me and frustrates me.  For a while, CV was only purchasable from Pierre Belvedere as they had an exclsusive agreement for it in Canada.  Their main business? Selling calendars from what I recall and various kitchen ware items.  They were a distributor, but there was literally nothing else that was worth buying from them.

We recently had a request from Raincoast Books to buy Osprey Games from them. At least, in this case, they are in Vancouver so we’d save on shipping; but really? Again, see above about hitting minimums and shipping costs for why we generally try to stay away from this.  When a game ends up with a non-gaming distributor, it often becomes dead to us because there’s no way to hit a minimum threshold.

Direct from Publisher

I don’t categorise direct from publisher sales as onerous just by existing, mostly because in many cases, these publishers might not have a choice.  Unable to get into ‘normal’ distribution, they’ve decided to sell direct to retailers who are interested.  What I do find frustrating are publishers who don’t understand the normal discount thresholds for sales.  A recent trend has been for publishers to offer discounts of 25-30% off MSRP and charge for shipping.  At those levels, not surprisingly, most retailers would not bother carrying these products.  If a game is selling at $30, then a 30% discount indicates a gross profit of $9. Add in shipping cost, our gateway processing fees and the time taken to handle the order and we barely make anything on such an order.  No surprise that in those cases, we often decide to not carry those products at all.

The current discount rates seem to vary between 45-50% with some particularly aggressive groups as low as 40%.  Not surprisingly, most retailers don’t even both with those at 40% so if you are offering discount rates at 30%, expect that we won’t be purchasing from you at all unless you hold an extremely, extremely in-demand game (see Cards Against Humanity).

Direct to Consumer Sales

Firstly, let’s be clear – a publisher has the right to decide who to sell to or not.  If a publisher decides to go direct to consumer (via Amazon and their own sites) or Kickstarter only, that’s their choice.  It’s not our area to decide their business model.  In fact, when you have a product that is in such demand, it makes sense to keep more of the profit for yourselves.

However, there are numerous publishers who don’t just sell direct to consumers exclusively, they also sell it at a discount from their own MSRP.  Tasty Minstrel Games is an example of a publisher whose games we have had to cut back on significantly due to regular periods of them running regular sales on their own products. Kickstarter’s that roll previous games into the current promotion fall into the same annoyance area if they provide a discount on those games.  If they don’t, it’s not a huge problem normally.

Big Box Store Exclusives

I doubt I have to expand on this much.  The major issue about such exclusives is the perception that it creates that we aren’t ‘real’ stores because we don’t carry X.  When the question becomes ‘Why don’t you have X’, and our answer is ‘because they won’t sell it to us’, it rarely ends up being a good conversation.

 

Over the years, we’ve grown the number of distributors we’ve had to work with from a small 4 distributors to now, over 12+ major distributors who we order from once a quarter.  That’s not including the occasionally publishers who we order a single game from.  This business has grown in complexity significantly it seems and I sometimes wonder how someone who is new to the business keeps up.  At least we’ve had a few years worth of experience to help us.

New Board Games: October 21st, 2016

Betrayal at House on the Hill: Widow’s Walk
Drinking Quest: Journey into Draught
Lord of the Rings LCG Nightmare Deck: Escape from Mount Gram Nightmare Deck
Pathfinder Adventure Card Game: Summoner Class Deck
Pathfinder Adventure Card Game: Mummy’s Mask – Character Add-On Deck
Pathfinder Adventure Card Game: Mummy’s Mask Base Set
Roll Player
The Lord of the Rings LCG: Treason of Saruman Nightmare Deck
The Lord of the Rings LCG: The Waste of Eriador Nightmare Deck
roll-player

Bestselling Games of 2015

Ugh. Just realised we’ve never updated the site with the bestsellers for 2015.

bestsellers-2015

 

 

 

N SKU Product Name Percent
1 PHGDOW01 Dead of Winter: A Crossroads Game 24%
2 GMW249 Sushi Go! 10%
3 AWGDTE01SN Sheriff of Nottingham 9%
4 GiftCardWeb Electronic Gift Cards 9%
5 ZMG71170 Pandemic: Legacy 9%
6 CGE00031 Codenames 8%
7 FFGSWM01 Star Wars: Armada Core Set 8%
8 ASUSMYST01 Mysterium (English Version) 8%
9 ZMG71100 Pandemic (2013 Edition) 8%
10 CGE00027 Alchemists 7%
Total

Bestsellers since 2010

We decided to look at (dollar value wise) which board games since Jan 1, 2010 were our bestsellers.  Surprisingly, even across almost 6 years that we looked at, some of the bestsellers we’ve ever seen have continued to do well even over 6 years.
Top Ten Games List

 

 

Click on the image to get it bigger.

Note that with the way our software works, things like PandemicSettlers of Catan and Descent core set which have been updated don’t necessarily reflect the total sales.  Anyway, here’s the data in table format.

ZMG7021 Pandemic 14%
ASMSEVUS01 7 Wonders 11%
PHGDOW01 Dead of Winter: A Crossroads Game 10%
RIO370 Dominion 10%
ASMECL01 Eclipse 10%
DOW7201 Ticket to Ride 10%
DOW7202 Ticket to Ride Europe 9%
MFG3061 Settlers of Catan 4th Edition 9%
ZMG7026 Agricola 9%
FFGVA11 Descent : Journeys in the Dark 9%

New Board Games: October 13th, 2016

Android: Netrunner LCG – Escalation Data Pack
A Game of Thrones LCG: For Family Honor Chapter Pack (2nd Edition)
Banner Saga: Warbands
Clank!: A Deck Building Game
Dicey Goblins
Dominion (2nd Edition)
Dominion: Intrigue (2nd Edition)
Ice Cool
Magic the Gathering: Kaladesh Planeswalker Deck – Nissa
Magic the Gathering: Kaladesh Planeswalker Deck – Chandra
Magic the Gathering: Kaladesh Deckbuilder’s Toolkit
Magic the Gathering: Kaladesh Bundle
Magic the Gathering: Kaladesh Boosters
Midnight Legion – Box Set
Oceanos
Savage Worlds: The Sixth Gun RPG Limited Edition
The Gallerist Kickstarter Stretch Goal Pack #1
The Gallerist Kickstarter Stretch Goal Pack #2
Warhammer 40,000: Conquest LCG – The Warp Unleashed War Pack
forfamilyhonor

New Board Games: October 7th, 2016

3 Wishes
AssassinCON – Limited Edition
Codex: Core Set
Covalence
Darkrock Ventures
Exceed: Red Horizon: Gabrek & Ulrik vs. Alice & Zoey
Epic Roll
Fantahzee: Hordes and Heroes
Nantucket
New Bedford
New Bedford: Rising Tide
Munchkin: Marked for Death
Mythos Tales
Order of The Gilded Compass
Quests of Doom 2 (5E)
Sentinels of the Multiverse: 5th Anniversary Foil Hero Collection
Wizard’s Academy
newbdeofrd

What to do with your Used Board Games

unnamedAs gamers, we  have a tendency to hoard games.  However, after a certain point, it’s easy to realise that you’ve just run out of space or that game that you loved when you purchased it hasn’t been played in over 2 years.  Or perhaps you never really liked the game and it’s just sitting on your shelf.  Thankfully, there’s a lot of ways to deal with your overflow of used games.

Trade Them

Obviously you can trade games with your local friends but one of the most efficient ways to trade games is to use the BGG Math Trade.  A Math Trade is a multi-person trade that uses your preferred wants to set-up the most efficient trade percentage. Rather than doing a direct trade between person A and person B, you might trade give your game to person C to get a game from person B who is getting a game from person D who is receiving a game from person E, etc.  It’s extremely efficient and local math trades allow you to trade without shipping while country / continent specific trades give you a wider range of games and people.

One interesting aspect of Math Trades is that you might even find a gift card or two available for trading. The biggest hurdle is setting up your games for trading and then learning the software / system.  Also, unless you are careful in making your decisions, you might get less than stellar trades (or none at all if you are too picky!) The other major disadvantage is that math trades (especially local one’s) only happen once in a while, so you must be willing to be patient.  It’s also worth noting that if you are taking part in a shipping trade (i.e. country / continent / international trade); shipping costs can be high as you are shipping to multiple locations.

Sell Them

If it’s cash or a cash equivalent that you are looking for, then selling your games would be the way to go.  There are a few major options, especially in Canada:

  • used items sites like Craigslist and Kijiji allow you to reach your local marketplace
  • bigger sites like eBay and Amazon require more set-up and knowledge to use but reach a wider audience (normally country wide).  They take a larger % of your sales though (minimum 15% plus with eBay listing fees)
  • at local conventions (if they have a used game auction table)
  • direct to game stores like us.  You’ll likely receive the lowest price compared to the other methods but you can sell in bulk and ‘ship’ in bulk, reducing your own overhead

Donate Them

Lastly, if none of the above methods work, you could always donate your games.  Obviously stores like the Salvation Army & Value Village will be happy to take your games, but some other options include:

  • Local conventions to increase their game library
  • Your local library might run / be starting to run local board gaming nights and need a more robust library
  • Homeless shelters, the Boys & Girls Club, local daycares and the like often would grateful for a few good games