Business For Sale – PDB Sales Inc.

Big news!

PDB Sales Inc. which includes Starlit Citadel, the Starlit Logistics (our Kickstarter fulfillment brand) and our other online websites is up for sale. After consideration, after over 11 years in this industry, I (Tao) desire to pursue some other projects. As such, rather than just shut down the business entirely, I’d like to see if there is anyone who is willing and able to purchase the business. I’d prefer to sell the entire business (i.e. PDB Sales Inc. corporation) rather than piecemeal, though dependingo n the offer, that might be viable.

What is included in the sale:

  • Websites and backend for online shipping
  • Over 200k of Inventory (book cost)
  • Youtube videos and other graphics
  • Well-trained staff who deal with 95% of everything
  • Documentation on the majority of processes for shipping, kickstarters and more
  • Current lease (expires February 2019 with renewal option for another 2 years)

I believe Starlit Citadel can continue to grow with a passionate owner. Unfortunately, that owner is no longer me. The Kickstarter logistics business continues to grow every year with 0 marketing effort, the retail store does extremely well even in its basement location.

 

Quick FAQs

Are you closing down?

No. The business is going to be open until Feb 2019 at the least. The business is overall profitable, so there’s no reason to shut it down.

What kind of owner is this suitable for?

Realistically, this is a business that works well for those who want to own and run it themselves. While it’s viable to have the professional manager (Paden who is doing a great job) manage it, there is still roughly 10-20 hours worth of backend work that is required a week. In addition, there’s a lot of work that can be done to expand into markets we don’t touch really well (Magic, etc.).

How much do you want?

… as much as possible? Realistically, I’d be happy to discuss with people directly but at a minimum I’d be looking at the cost of the inventory. Most of the inventory is ‘good’ stock and can be liquidated at either cost to customers and the remainder sent for slow resale with a 3rd party business.

If you are interested or know someone who is willing and able to purchase the business, please e-mail me directly at trwong @ starlitcitadel.com.

 

Space Confirmed – 185 East 11th Ave – Unit B!

After months of quiet work, we’ve finally confirmed and received our business license from the City of Vancouver.  We can now inform everyone that we’ll still be in the general vicinity of our current location but we will be operating as a full retail store. Here’s a map to our new location as of (tentatively) March 1st, 2017.

This new location is a basement location right under the existing Rollergirl.ca store.

The Plan

The current plan is to shut down operations late February and move and complete set-up before March 1st. At that point, we’ll host a soft opening while we iron out the details of running both a physical store and an online store.  The current expected hours of operation will be 10am to 9pm 7 days a week, with adjustments made as we work out traffic at the location.

We currently believe that there will be space for demo and gaming tables to be included in the store.   If that holds true, we have every intention of hosting regular game nights at the store.  However, we can’t promise this will happen until we finally move in and check how much space we will have used.

Photos of the location will show up once we actually move-in and potentially a longer post with pictures of the before & after.  Let me know if you have any questions!

Opportunities in the Board Game Industry

A recent post on a forum asking if it was a good idea to start an online game store had me thinking.  The simple answer is no (definitely not in America, not so great in Canada either really).  However, the fact stands that there are a significant number of opportunities in the industry currently which don’t involve direct retail of board games.  I figured I’d detail some of them here (at least from my view point).  Note that I don’t, in most cases, have direct experience so it’s an outsider perspective.

1.  Game Reviewer

Firstly, let’s start by saying that there are only a few reviewers out there who do this full-time.  This is a long-term play as you need to build up enough of a fanbase that they would be willing to pay for you to continue development & publication.  It took us nearly 4 years (over 100+ videos) before we ran our successful Patreon campaign and even then, at $400 per video which came out every 2 weeks, it wouldn’t really be enough for most people to live on.  However, we also only published a video every few weeks and focused on significantly higher production values than most game reviewers, so if you had the time, ability and funds to do this for a year (or two), it should be possible to make a full-time career from it.

The advantage of this is that you’d be playing games constantly unlike other parts of this business.  After all, part of your business is playing games  The negative is that it takes a lot of time to create a video review, so you’d be on a constant ‘mill’ of content development.

2. Game Accessory Retailer / Manufacturer

An interesting area that has cropped up is the development and sale of game accessories.  Whether it’s sleeves, tokens or inserts, there does seem to be some demand for this.  My guess is that the actual margins on producing and selling multiple tokens is quite high once you get past the set-up cost.  The negative is that you are targeting a small portion of an already small market, so I’m not sure there’s enough of a market to generate a decent income.  On the other hand, if you can combine this with sales to publishers for their prototype designs, there could be a decent business here.

3. Publisher

This is probably one of the two areas that I’d certainly look into more significantly if I had the time and capital.  With Kickstarter available these days, capital requirements are actually significantly lower than previously (I’d guess between $3-5k per game for artwork, design and testing and prototypes to be sent to reviewers).  Risk is significantly lower as you are able to crowd-fund the cost of publication to start.  The major disadvantage (beyond the significant time investment to find and playtest games) is the time-lag.  It seems to take between 8 to 12 months to produce a game and most backers would prefer to see the delivery of their first game before you begin Kickstarting a second game.  As such, until you’ve developed a significant following (and/or have a decent hit for a game), your income is likely to be pretty low for the first few years.

4. Game Publishing Management (ala Game Salute)

Game publishing management is something I haven’t seen since tried since Game Salute.  Rather than being a full publisher (purchasing rights, developing the art, etc.), that there might be a space in the market for someone to work as a contractor to aid in the marketing, design & manufacturing and importing of the game.  Certainly it’d require quite a bit of knowledge in this area and and it’d be tricky to work out compensation.  If you charged an hourly rate, you might not be as attractive to a new publisher, but if you did it on a commission basis, you run the risk of a failed Kickstarter (or low funding Kickstarter) since you aren’t personally choosing / editing the games yourself.

5. Distributor

This is really only for those with a lot of money and probably not in the USA. I know at least in Canada, we could probably do with a well-funded West Coast distributor and I’m sure there are significant opportunities for distribution in other countries.  When I say a lot of capital though, I’m talking in the millions.

6. Game Cafes / Restaurants

The hottest trend in retail is game cafes & restaurants.  This seems to be quite profitable if you could can locate a good spot that is large enough and can be staffed regularly.  This is the other area I’d recommend putting money into if you had the desire to get involved with the game industry.  Unlike publishing though, this requires significantly more retail.   From my estimatation, you probably need at least CAD$30k to barebones launch a business and I’d really not want to get involved without at least $60k.  Comfortably, you’d be better of with $100k.

7. Rulebook reviewer / editor

If you’re reading this, you know how many bad rulebooks there are out there.  If you have the skillset to write good rules, this is probably a good market to get into.  This is however (like being a cover artist / board designer) something that is very skill dependent.

8. Game Designer

Unless you become a publisher yourself, most game designer’s aren’t able to make a living just designing board games.  On the other hand, you don’t have to put up a lot of money for this and who knows, maybe you’ll design the next Pandemic / Catan / Scythe and end up raking in royalties forever.

9. Comprehensive Board Game Website (competitor to BGG)

Everyone thinks the design on BGG is horrendous.  They’ve been working on a version 2 of the site forever.  So far, no one has come up with a serious competitor to the site but considering the sheer volume of advertising / marketplace sales and industry information there is, I would have to say there’s a significant revenue source here.  Of course, this requires specific skillsets, a decent capital bank and reliable servers, but I’m sure there’s a business case in here somewhere.

10. Kickstarter Fulfillment

We do this as Starlit Citadel Logistics.  There is certainly money in this business, but it is fast getting extremely competitive in Canada & the USA.  Outside of those countries, South America and Asia seems wide open and potentially Europe (or at least, there’s no leading player in Europe from what I understand).  The biggest barrier to entry in this area is shipping cost.  Many of the established players are able to get significant volume discounts from the courier companies and as such, unless you have an existing business that does a lot of shipping, this could be a major disadvantage.  Other things to watch out for in this business is that income is not predictable – you could do 3 Kickstarter’s in a week and then nothing for a month or 3.  Lastly, most Kickstarter’s break out (from what we’ve seen / been told) into the following volumes – 60% USA, 10% Canada, 20% Europe & 10% everywhere else.  If you assume most Kickstarter projects fund at the 1000 backer level, there’s only a small number of shipments everywhere but the USA which means you’d need to get a significant number of projects signed up to make a decent living.  Then again, there are always the mega projects (Kingdom Death anyone) that help pay the bills for months…

 

2016 in Review: 2 Steps Forward, 1 Step Back

2016 has been a mixed year for us, mostly with overall improvements in the business but with some setbacks as well.

Industry Consolidation & Restrictions

We continued to see industry consolidation including the purchase of F2Z by Asmodee creating a single company that now owns about 70% of all board game sales.  We’ve already seen (and expect to see) further increases in our base pricing (as it stands, Asmodee products direct from Asmodee Canada are marked at 40% discount with an exchange rate of 1.5!).  In addition, PSI is working to block the sale of games to online only stores, which has caused some issues for us (especially during Christmas) in terms of availability.

I expect we’ll see even more price increases / restrictions in the coming 6 months as Asmodee North America decides what they are going to do about Canada and other publishers follow suit in an attempt to reduce the price devaluation of their products online.  This has been a trend in the last few years and I don’t expect it to change.  It does however put us in an interesting position, which leads to…

Geek Product Explosion

Armored Batman Figurine!Most of you probably noticed the huge increase in geeky products including clothing, pop figurines, graphic novels and more.  I know it’s caused some difficulty in finding new board games, which is why we created a whole new category for listing new board games, but it’s not perfect as yet.  The goal is / has been to widen and diversify our categories such that we are not as dependent on board game sales.  We’ve now reached what I expect to be a stable inventory value / volume, and we’ll just be rotating product like our board games for the next year.

Backend & Stock Management

We mentioned last year we were looking at better ways to managing stock.  That meant trying to (again) implement an ERP system.  That did not go well, and after 6 months of struggling with the software, we put it to bed before the Christmas season started.  It was painful in many ways since it did make ordering simpler, but order processing more difficult.  Unfortunately, it also meant that our push towards using barcodes went haywire.

Our Location Move

We are extremely close to finalising our location move and once all the paperwork is complete, we’ll be able to provide further detail.  Expect a full blog post about this once it’s ready.  This has / will consume a ton of our time in Q4 2016 / Q1 2017 and probably Q2 2017.

Kickstarter Fulfillment

The other area of major growth for us has been Kickstarter Fulfillment.  From smaller projects like the 7th Seas RPGs to the giant Scythe fulfillment project, we’ve been busy with Kickstarter projects. It’s been fun to work with publishers directly and our current plans including actually going to GenCon & (potentially) BGGCon to meet more publishers in-person. It’s never (likely) going to be a huge business in Canada since our population is so small, but it does pay for the occasional nice meal :).  You, our regular online customers actually benefit on the backend as the more product we ship, the greater our ability to negotiate lower rates.  It’s probably something you might have noticed in mid-May as we dropped rates by over a $1 all across the board as we signed a new contract.

Conclusion

Overall, 2016 was a good year.  We saw overall decent growth in our main game sales with some good growth in our new product lines / areas of business.  With the big move, it’ll be time to consolidate further and trim product lines and selection to increase turn rates and provide a higher overall return from our investments.

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%

Charities & Budgets

Charity QuoteWe get a request for a charitable & promotional contribution of some form about once every 2 weeks. Most of these charities or groups are people who we’ve never even heard from before and many don’t really offer much in terms of marketing opportunities.  Many are also only tangentially related to our industry, so many of these e-mails are just ‘mass’ mailings to see what they can get.

Over the years, we’ve varied how much and under what conditions we’ll provide charitable contributions.  One hard and fast rule we’ve made though is not to support any charity / event that isn’t Canadian.  After all, most of our customers are Canadian and sending product across the border increases our cost so much, there’s really no point.

Currently, we don’t have a hard budget for our charitable contributions.  Part of that is due to the fact that we generally provide products as our contribution, which allows us to be a bit more flexible in what we can offer.  Thankfully, being in this industry, we can generally provide decent games that aren’t complete turkeys that don’t sell well for us.  Still,  even without a budget we need a way to guesstimate how much to send to each charity (unless said charity already has sponsorship levels).

That’s where we start assessing potential return and relevance.  If you are a gaming related event / charity, it makes more sense to provide more products to you.  If it’s for an event where we expect the games to be used regularly, we’ll provide more (examples including schools and libraries looking to expand their programming).  On the other hand, if it’s a charity for pet therapy for example, there’s not a lot of relevance for us.

From there, we also look at the size of the event.  If it’s an event with only 50 people arriving, it’s no use sending 20 games.  If it’s an event where there’s a few thousand, then a larger contribution makes sense since it ‘spreads’ the contribution around further.

One thing we don’t do, or haven’t done, is chosen to support / advocate for any specific cause.  Of course, we ran the Lower Mainland Christmas  Bureau’s  donation drive last year, but it’s not a ’cause’ if you will.  There’s a few reasons for that, mostly due to my belief that my personal views / feelings shouldn’t impact the way the business is run. Still, now that Christmas is coming, I’m wondering if we should look at running another charity drive.

 

The Summer Free Shipping Promotion

Free Shipping Promo of $100 cancelled As many of you know, the Summer Free Shipping Promotion has ended. As with any promotion or marketing tactic, one of our main goals is to evaluate the promotion to understand whether it actually hit it’s goal – that is, drove more sales and traffic. Normally, all we’d have to do is compare the previous period (i.e. same months last year) to this period and; adjusting for regular sales increase, figure out the difference in both revenue and number of sales. Unfortunately, as many of you know, we had a huge problem in the middle of the month – the Canada Post strike/lockout threat. This created a huge amount of uncertainty and we even had to turn off the promotion at some point as we switched to shipping via UPS.

How much difference did the threat of a Canada Post strike make in our sales? Well, we saw a 31% drop in total shipments and about 35% in total in June where the strike affected us most. That’s a huge drop, especially when you realise that the next month (August) we saw a full 40% increase. Now, you could say that the 40% increase was from the free shipping but there’s also an argument to be made that the increase is in part due to orders that were ‘held-off’ during the strike period.

On top of all this of course is the calculation needed to figure out the difference in profitability. It’s not enough to know how much more we made (if anything); it’s also important to know how much more we paid in shipping. There’s 2 main ways to do this of course – a line by line review (matching each free shipping order to it’s associated cost in our invoices) or we could go with averages. In this case, we work out the average cost of shipping each order and compare it against our previous year to work out the increase / change and compare it to our average revenue generated from shipping. This lets us know the difference that each order ‘cost’ us to ship, which then lets us work out the increased cost of shipping. Unfortunately, again; not that easy since we also have a bunch of Kickstarter shipments in our invoices. Which means we have to individually take it all out to actually work out our actual cost of shipping.

Overall, here’s what we figured out:

  • The lower free shipping threshold probably generated an increase in orders
  • This increase mainly came from existing customers, not new customers
  • Surprisingly, the average sale value saw only a small change (6.82%)
  • Profit margins per order dropped by about 16.98%

However, because of the strike our total number of orders actually dropped in comparison to last year (about 16%)  during the period in question.  It’s hard to draw any real conclusions because of the strike, though there is enough data to suggest that if the strike hadn’t happened we would have seen an overall increase in number of orders.  The question which we can’t answer is whether that increase would make up for the drop in our profit margins (we need about a 34% increase overall to breakeven on the loss in profits) since the two months we just don’t have enough data / time to make it clear.  My guess is that it probably a wash if a slight decrease in our overall profit, which is why we’ve moved back to the $175 free shipping option for now.

A Rental Game Library?

Our Game LibraryAs many of you know, we used to run open houses.  During the open houses, we allowed people to borrow games from our game library (mostly consisting of games from our reviews and some demo games) for play.  Since we had to stop the open houses, the game library has grown unused.  We’ve trimmed the library down somewhat, putting a few games up on the used game section since they weren’t getting much use anyway.

A recent thought has been to rent out the games from the library.  This probably only works for local customers since they would not have to deal with shipping costs of returning the games (which, let’s be truthful, can be significant), but it is certainly a service we could offer.

The main questions we’d have would be:

  • Is there a demand for this service?
  • What would you be willing to pay? The current options include a fixed amount (for a day (including weekends) or a week) or 10% of the price of the game.  The advantage of the above would be that the rental cost could be   The other option is to charge users an on-going monthly fee.
  • Is the preference for classic games or newer / hot games (with the note that if we did go after ‘hot’ games, the pricing for the program would likely be higher to cover the cost of bringing in new hot games constantly)
  • What would you consider a ‘good’ library size? 50 games? 100?

Let us know about your thoughts of us launching a program like this.  We’d love to hear from you guys, either in comments here or on Facebook

Fair Value – What is it?

Flash-SaleWe are running a flash sale on our clearance / used games right now, attempting to discard some extra stock that we really don’t need clogging up our warehouse space.  Once more, it’s gotten me thinking about ‘value’ and how we all perceive it differently.  As a store, we discount our games regularly.  Generally between 20-30% off the normal retail price, sometimes a bit more.  So, most games are already sold as a discount and that’s a ‘good’ or ‘fair’ value for most of our customers.  However, not all games will be sold at that price.  Eventually, games that aren’t sold at our ‘normal’ price end up in our clearance section.  Those get discount further by another 20%, bringing most items close to our cost of bringing them in.  Quite often, we see more of those games sold when they end up on clearance.

However, there’s always games that aren’t sold even at that discount.  We come to our flash sales then or our other regular sales.  Games during those period start going down by another 40-50%, meaning that we are selling at below cost often when that happens (at least in the Clearance section).   Yet, we have games that have been discounted to 20-25% of their MSRP (or half of their cost!) and we still haven’t sold them.

At each stage, a customer could potentially buy a game.  If he bought a game at full price, and then the game drops in price, is that fair? Did he get a good value?

I don’t know.

The problem / answer of course is that it’s up to the individual.  A transaction / purchase isn’t just made up of the price but everything that happens around the transaction – from customer service (or lack of it) to shipping to the general appearance of the store. Everyone values things differently which what makes life so interesting.  I A box can be dinged and I’m perfectly fine with it because the game contents / gameplay is what I value.  Yet, for others that’s a major issue.  A transaction at the counter that takes 30 minutes to purchase a single gamebox can be very frustrating.  Or maybe it’s not because you spent the 30 minutes chatting with the bored clerk about the latest Star Wars movie.

It’s a reason why some people proclaim the death of B&M stores and others point out that those stores are the linchpin of gaming.  Each store and the items they sell provide different value where price is just one portion of the equation.  It’s true that you ‘remove’ a certain number of people who would never purchase a game at full price, but at the same time, there’s others whom price is of little or low value.  At the end of the day, the value of an item is what people choose to assign it, but it’s ‘value’ changes from person to person and for the same person, by time and circumstance.  As retailers, all we can do is try to meet those values when it makes sense for us.

Business Misconceptions

This is a more random post than normal, just a few business misconceptions I’ve come across recently.

Revenue = Profit / Make it up in volume!

This is probably one of my favourite one’s. When a customer sees that they have paid you $200, they figure you just ‘made’ $200. The add-on idea to that is that the more you sell then, the better off you are.  That’s not entirely true of course, as revenue does not equal profit.  Profit is what you have after you take away all your expenses including the cost of the goods you just sold, your payroll, rent, taxes, etc.

So, yes, I’m not going to sell this product to you at (or below!) my cost of acquisition (COGs). I am not making a profit from this, I’m just making a loss and making my revenue numbers look pretty.

Taxes are Profit

I really don’t know how many people believe this, but I’ve come across this one more than once.  Customers are somehow angry / upset that we charge tax (especially at conventions), somehow believing we are making money from the taxes.  Taxes are actually a cost.   If I take your payment in credit card, I’m actually being charged a % of the taxes in credit card fees but the government want their full amount.  So I end up ponying up a little extra.  Never mind the added cost of doing the paperwork and making the payments.  Taxes aren’t a profit center for us, they are a cost.

Why won’t X store sell Y item to me at a discount / more of a discount

There are a few reasons, here’s some:

  • Opportunity Cost. Most stores only have limited amounts of products and  have anywhere between 2 days to 2 weeks (or more!) before they can restock, especially depending on the product.  If they sell a product to you for $10 and can’t restock it for 2 weeks, they might easily have sold same said product a day later to someone else for their full $40.  Why risk it on a good moving product? (If it’s a slow moving product, theoretically it should be on the clearance shelf already).
  • Differing pricing structures.  Stores get different pricing structures depending on how much they buy.  So for one store, an $80 MSRP game might actually cost them $44, not $40 like another store might get.

All Businesses are the Same

This is another assumption where customers feel that each business should be ‘equal’ and be exactly the same as another business. We get this from customers who wonder why we don’t get games as fast as some of our East Coast competitors (games arriving in the East first before they get all the way to the West!) or why we don’t have policies like Amazon or why, as an online business, we aren’t open the hours of a retail store.