The Distribution Chain

Interestingly enough, as much as I complain about the distribution chain in the game trade, developing Fortress Geek as also shown what an industry without a few major distributors is like – and let me tell you, it’s not pretty.

The Distribution Chain in Gaming

Let’s talk about what distributors do.  They are clearing houses for our favorite games, the places where publishers sell boxes / cartons / etc of games and who then consolidate and sell these games to us.  The major advantages for a retailer of a game distributor is the ability to consolidate their orders and for the distributors to ‘break’ cases, allowing gamers to buy smaller quantities of each game.  As I’ve written before, there are numerous other reasons but this consolidation and breaking of games makes a huge difference in how easy it is to run such a store.

Right now, in the US there are about 2 major distributors and another 3 to 4 medium sized distributors.  In Canada, there is 1 major distributor and another 3 or so smaller distributors.  To give a context of size, the major distributor in Canada is still smaller than most of the medium distributors in the US.

This is not a huge number of distributors, but it is enough to ensure that there is a decent amount of competition in the industry.

Now let’s take a look at another example in the general ‘Geek’ product world.

The Distribution Chain in the ‘Geek’ World

Let’s be clear here, when we say ‘geek’; it encompasses a lot – from figurines to collectibles to toys to t-shirts and apparel.  As such, in many ways; the entire concept of a single distributor who could cover all this is unlikely.  However, there are 2 major players in the market (Diamond who supply all the Comics being one of them).  These distributors however are pretty much oligopolies (and in Diamond’s case for comics a monopoly) and as such are able to dictate pricing, markup and quantities to a significant degree.  As such, they often do not break-up cases and if they do, margins are painfully low.

That is, if you can get the items you want.  A significant number of products can only be purchased direct from the suppliers themselves.  This of course creates a whole host of problems:

  • Minimum orders at each supplier
  • Lack of transparency of stock levels (many don’t have a method to view current stock levels)
  • Significantly increased number of supplier contacts and ensuing paperwork
  • Licensing & verification issues
  • Increased length of restocks

It’s no wonder that, if you look at the number of generic ‘geek’ stores in Canada; there just aren’t that many.  It’s extremely difficult to run such a store as we are finding out – its extremely difficult to go broad and deep as it requires a significant capital outlay.  In many cases, we have to stock multiple copies of an item even before we know if it’ll sell.

So while publishers and retailers might complain about the distribution chain (and yeah, there are issues); it’s at least better than the current system evidenced in the ‘geek’ world.

The Echo Chamber

When I used to go spelunking, if the cave was large enough / shaped right, you could get an echo chamber going.  It was very strange, just a couple of you talking could set off a series of echoes going back and forth, making it sound like an entire roomful of people were talking.  Due to the way the acoustics worked you even sounded different, which would make it seem even more bizarre.

In real-life, it’s harder to tell when you are in an echo chamber; hearing the reflected opinions of a few individuals.  It’s too easy to find yourself listening to the same opinions over and over and convince yourself (or others) that what you hear / say is the truth and the only truth.  It’s easy to take an opinion as gospel, as the unvarnished truth (or worst, fact).

Talk to publishers and you hear that game stores don’t do enough to promote games, that they are a ‘necessary evil’.  Talk to brick & mortar store owners and online stores are the bane of existence, providing little to the gaming community.  Talk to the BGG crowd and B&M stores are the enemy, over-charging for little to no service.

Sit in any one echo chamber long enough, and you’ll begin to believe what each side has to say.  Ignore their opinions though, and you’ll find yourself run-over when their angry tirades reach you.

If we ever want to reduce the volume of opinions and beliefs-masquerading-as-facts, we need to have real conversations.  Those conversations have to backed up by facts – but no one is willing to provide their data because the walls between each chamber has grown too thick.  And so everyone sits in their own chambers.

And somewhere along the way I’m sure my metaphor broke down. Heee.