Kickstarters in 2017

As many of you know, we help publishers ship items within Canada. Last year, we did a total of 45 Kickstarters in Canada, more than we’ve ever done. Here’s the list:

 

01.04.17 Santorini
01.19.17 BrilliAnts
01.24.17 Ghostel
01.28.17 Siege of Dragonspear(video Game)
02.2.17 Vampire Hunter D(Comic)
02.9.17 Battleborn Legacy
02.15.17 Dresden Files Card Game
02.16.17 Rare is Everything(Book)
03.02.17 Flying Pig Redux
03.02.17 Unfair
03.09.17 DVP -Shadows
03.14.17 Rare is Blah Redux
03.15.17 GameFolio
03.17.17 Too Many Bones
03.20.17 Gnomi
03.24.17 Betabotz
04.04.17 Pirate Nation
04.7.17 DicenStein
04.11.17 Scurry
05.02.17 Flying Tents
05.04.17 Dark Blades RPG
05.18.17 Cthulhu Wars
05.26.17 Dark Blades 2 RPG
06.1.17 Xia
06.5.17 Cthulhu Wars 2
06.29.17 7th Seas Theaoth
07.13.17 Summit
07.24.17 Star Traders
07.26.17 Shadows over Brimstone
07.27.17  Roswell 51
08.14.17 Brides and Bribes
08.18.17 RDI6
08.25.17 TMB2
09.10.17 GloomHaven!!!!
09.15.17 Stop Thief
09.29.17 Monsoon
10.13.17 Flying Pigs
10.20.19 Caledonia
11.10.17 Mistborn
11.24.17 Bluebeard
12.07.17 Watches
12.18.17 Bullets
12.19.17 BlueBeard
12.29.17 Destiny Aurora
12.29.17 Get off my lawn

Crowdfunding Fulfillment

As many of you know, we have been completing Crowdfunding (Kickstarter) Fulfillment for Canada and recently have branched out to doing fulfillment for the US as well.  In addition, we’ve been getting a lot of inquiries asking us for pricing and other details.  While we have been happy to answer those questions, I thought it might make more sense to create a singular website with all that information and the numerous questions we get asked. So, we did – Starlit Citadel Logistics.

Not particularly inspired in terms of naming, but I think it gets the point across.

The Business Case

I’ve mentioned before that in terms of actual business sense, crowdfunding fulfillment will never pay our bills.  A ‘big’ Kickstarter like Red Dragon Inn 5 which we just completed only had about 200 or so backers in Canada.  We charge $3 per order handled and that includes box cost.  So, on a ‘big’ Kickstarter, our revenue is $600! We’d have to do a lot of Kickstarter’s to cover the cost of the space in Canada.

On the other hand, the Kickstarter in the USA was significantly larger – over 10 times.  At those rates, you only need a few ‘big’ Kickstarters (or a lot of small – medium sized Kickstarters) before you are able to generate a decent revenue stream.  It’s part of the reason why we started offering the option down in the USA, and partly because we had quite a few questions from Kickstarter creators who wanted to know if we would do so.

This will still be a very much side-project, one that I’ll tackle (i.e. market) when I have a bit of free time and/or need a break from my current projects.  We seem to have generated some great word of mouth and I am content to let the business grow that way.

In the future, expect most of our posts on Kickstarter Fulfillment directed to the other site.

Oh, and I swear I’ll get back to writing more blog posts soon. Things have just been very busy on the backend and finding mental energy and time to write posts, especially posts that I can publicly post, has been in the premium.

Now Hiring – Logistics Assistant

Starlit Citadel / Fortress Geek is hiring again in Vancouver, BC!

This is a year-round part-time position that works in our warehouse and conventions as needed. We are an e-commerce business that sells directly to consumers and offers both shipping and in-person pickup of customer orders.

The Logistics Assistant’s main role will be shipping and receiving, and they will also be expected to assist with basic warehouse organization and customer service. In their primary role, they will be responsible for processing and invoicing customer orders, and picking and packing them in preparation for shipping. We receive new stock weekly, and they will be expected to assist with the restock process, unpacking, inspecting and shelving all new items, as well as confirming the accuracy of the received shipment and updating store inventory as needed.

In addition to these regular duties, the Logistics Assistant will undertake general administrative tasks in the warehouse including cleaning, sorting and inventory counts. They will also be required to provide basic customer service to Local Pickup customers.  Work at conventions will be required from time-to-time which will require in-person selling. Additional projects and one-off tasks will also be assigned from time to time, according to the needs of the company.

The Logistics Assistant will be provided hands-on training and written procedure guides for all of the above tasks, and will be expected to follow them in order to reduce errors and ensure consistency of service in the company.  As a small, growing company; we are constantly changing our procedures as the business changes.

This job will be 12 to 18 hours of work during the majority of the year, with 30 – 40 hours worth of work during the Christmas rush period (mid-November to end-December generally).

Requirements:

  • Part-time availability on Weekdays
  • Occasionally on weekends
  • Familiarity and comfort with computers and data entry
  • Detail oriented and focused
  • Valid class 5 driver’s license

Nice to Haves:

  • Gaming knowledge (specifically board games) and general geek culture knowledge
  • Previous pick-and-pack and/or warehouse experience
  • Knowledge of Magento backend

If you are interested, please send your resume to trwong@starlitcitadel.com with your hours of availability. The starting wage is $10.50 per hour.

 

Balancing shipments through multiple parties

As many of you know, we’ve started using UPS as a shipping option for international shipments. Part of the reason for this is due to pricing – it’s actually cheaper (marginally) to ship to some countries with UPS with our discounted rates than with Canada Post. A side goal is to reduce our cost of shipping to the US to a more manageable level for large shipments.  While the Small Packets USA costs is extremely reasonable for shipping, it only works for packages up to 2kg.  That means that most of our US orders are for smaller products.

Currently, we are on a tiered discount level with UPS, with shipping costs reducing as we spend more on a rolling basis.  It’s a good system, especially at our current spend levels since it gives us specific goals to shoot for in terms of shipments.

However, to get the most out of it, we need to hit the next tier up. Unfortunately, it’s a chicken and egg scenario – we can’t provide good rates till we ship a lot, but customer’s won’t purchase from us till we get good rates.  So occasionally, we balance out shipments by contacting individual customers who are shipping outside of Canada to see if they’re okay with us shipping via UPS rather than Canada Post.  It’s more work, but the goal of course is to eventually move up the tiers and get a decent (and consistent) shipping rate.

The obvious question is why don’t we move to UPS in Canada? The simple answer is that it’s more expensive to use UPS for most shipments in Canada, even at the best discount rates UPS can provide us.  As such, it makes more sense to keep Canada consistent with Canada Post and move to cheaper rates with them.  Of course, we’re now at a size that moving from one tier to another requires a significantly higher number of shipments.

Kickstarter – Shipping Challenges

We just completed the second of our Kickstarter fulfilment contracts from SchilMil Games for their game Manifest. I’m not going to comment on the game itself – readers can look it up; since what I wanted to discuss was the actual fulfilment aspect.

As many of you know, we do this as a sideline and help for Kickstarter publishers. It’s not as if we do a lot of them (this is number 2 in nearly a year of offering this service) and we don’t make a lot at all. The goal for us is to help publishers get their games to Canadian backers at a cheaper rate, not really make oodles of money. Since we already have the facility and experience shipping, it’s not really a big thing to add this on. On the other hand, as many publishers know; Amazon Fulfilment can be extremely cheap and is often the better option to go to.

Anyway, for Manifest, what we found is that we probably have to adjust our quoting method. See when we quote an estimated shipping cost we use both the game weight provided to us and an estimate of where games will ship to. This is based off our own shipping patterns in Canada, so a weighting towards BC / AB is added in. In this case, the estimated pricing we provided was $10.50.

What we found was the actual average was $13.25. This came from shipments mostly being sent to Eastern Canada (Ontario / Quebec) and only 1 to Alberta. That caused the weighting and cost to go up substantially. In addition, game weight was a factor. The game itself weighed in at 1.8kg but due to volumetric adjustments, it came to 2.56kg in what was charged.

Overall, we saw a minor loss in the shipping of this Kickstarter; mostly in the processing / salary cost. Overall, it’s a good learning experience as we continue to offer this service. It’s in particular worth noting that we are now able to help with US shipping of Kickstarter games too.

Shipping more, making less

One of the dangers of this business is doing more for less. Unfortunately, it’s an easy thing to do when you are working on thin margins and/or changing how your processes work. Unfortunately, in this case, we made a few mistakes and ended up doing the above – the worst case scenario possible for a business like ours. It’s why we moved Free Shipping to $175 from $150.

The Setting

In January we managed to request a lower rate on our Canada Post shipping.  This was predicated on a certain volume of items shipped, which we expected to hit with a minor increase in our shipments.  At the same time, we noticed a decrease in our shipments to the East Coast due to the increasing competition we saw.  So, to hit both the increased number of shipments we needed and to pass on the savings, we decided to lower our Free Shipping threshold to $150 from the original $175.

What Happened

Well, unfortunately we didn’t hit the shipment numbers that we required, which meant that our rates bumped back up to our old rates.  That meant that for each free shipping order that went out, we were losing more than we were previously.  Combine that with the fact that we did see an increase in free shipping orders, our total losses had increased.

Now, this would have been fine if we saw a significant bump in shipments (thus generating more total revenue even if we made less per order); however this wasn’t the case.  We saw more shipments certainly, but not enough to cover the increased cost of shipping all the free shipping orders.

If you are having trouble imagining it, look at it this way – if we free shipped 10 orders previously and it cost us $15, we lost $150 for the 10 shipments.  Now, if we free shipped 12 orders now at $15, our total loss is now $180.  However, our revenue numbers are $1,750 to $1,800 – a $50 revenue increase.  That’s a net loss in profit, not a net gain.

Thus – more work, less money.  It’s why we shifted back to the $175 free shipping level.  Will we ship less? Probably.  We might even lose a few customers because of this – but the gain in profitability should balance this out.

 

US Shipping – New, Lower Rates

We have worked out a way to ship items to US customers at a reduced rate which ranges from about CAD$9.50 to CAD$21. What we will be doing is exporting the products to the US and then putting the pre-packed orders into the US mail system (FedEx or USPS); which will reduce the overall cost. However, there’s a base cost to doing this (the export fee); so we are going to be limiting exporting to once a week (or more, if we get enough orders flowing in from the USA).

Due to the cost of the export fee; we will not be offering free shipping of any form. If this experiment actually works out well and we get a decent volume of orders, we might revisit our decision, though in the short-term we would prefer to increase our exporting from one to two – three times a week. That means customers get their orders faster and we aren’t sitting on packed boxes for long periods of time.

Ordering will be pretty simple – customers just need to input their address and zip code in the USA and the system will calculate the cheapest shipping option for them. A Canada Post shipping option will also show-up, so that customers who aren’t willing to wait can order direct.

We do reserve the right, if we do not hit the minimum volumes that we need to just change the shipping method to good old Canada Post (again, see minimum charge for exporting). Any questions, feel free to ask below

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.

Allocations, Pre-Orders & Purchasing

One of the most common questions we get currently is ‘Will you have enough copies to ship to everyone’.

That’s an interesting  question because our best answer is usually ‘Probably’.

See, here’s how pre-orders work.  We often get an e-mail from our distributor(s) anywhere from a week to a month before they need to place their pre-order with their publisher.  At that time, we guess at the quantity we need.  Often this is before we have the game on the site.

In the  interim period, if we have time; we get the game up on the site and hopefully receive a few pre-orders.  If we have time, we update the distributor on the new quantity.

The distributor then inform the publisher of the quantity he requires with an added amount for over-stock and last minute orders.

When the publisher finally receives their orders and games, they must then decide how to ship their orders out.  In most cases, they have more than sufficient games on-hand to fulfill all orders.

Allocation

The tricky part is when the total number of orders the publisher receives is greater than their total number of copies printed.  They must then decide how to allocate their orders.  At this point, I’m not going to speculate on how they do so – I’m not a publisher and I’m sure there are as many ‘fair’ methods as there are publishers.

What it does mean is that they ship fewer quantities (e.g. 80 copies instead of a 100) to the distributor.

The distributor, who now has 20 fewer copies than they ordered must decide how to allocate their orders. Again, how allocation happens is a blackbox for the most part.  If they are lucky, they might only have 70 orders from retailers (i.e. the other 30 were meant to be held in their warehouse for over orders).  Often, they 80 – 90 copies ordered.

Pre-Order Rush

In the meantime, our pre-order  numbers start creeping up for the hot game. This might be because buzz has continued to grow.  It often happens when a game has finally been announced to have reached the publisher.  Suddenly, our pre-orders go from 2 copies to 6 copies, at the same time we might get allocated from our order of say 10 copies down.

And that’s where the entire question becomes interesting.  The quantities and likelihood of this happening for us often occurs when the game is truly hot – so our pre-order with our distributor is often double to triple our (at that time) pre-order.  So, we might ask them for 10 copies because we say a total of 5 pre-orders.  Not a bad number, it gives us at least 5 more copies with an expected 2 to 3 more pre-orders at the last minute.  However, if we get allocated; then the last customer might not get it.

This is why we say ‘probably’.  Allocations happen at both the publisher and distributor level and there’s just no way for us to tell how many copies will finally arrive with us for a truly hot game.  More often than not, it’s sufficient but on occasions for a truly hot game – it’s just not.

Moral of the Story

Pre-order early.  I know I’ve said it before, and I’ll say it again. Remember, we don’t charge pre-orders immediately anyway, and it puts you in-line immediately.  It helps us, it helps the distributor and eventually it helps the publisher.

 

Board Game Release Cycle

Or perhaps I should say sales / inventory cycle for board games.  This is roughly an idea about the board game release cycle (and other game products not including CCGs cycle for the most part) in terms of our inventory and sales.

 

Sales Overview Inventory Focus Inventory Budget Cashflow
January Flowover of Grandmother money means sales stays high Restock month from December. Items that missed December release or ran out of stock often arrive now, some of which are good sellers Great  – lots of money from Boxing Day Sales
February Sales doldrums. Everyone is receiving their credit card bills Keep stock tight, reduce stock levels time. Try to get rid of extra stock Great – so long as you keep a tight hold, you should have extra funds
March Sales picking up a bit, tax refunds coming in Continue trimming ‘extra’ stock.  More Essen releases often arrive around now. Good – might have to reduce available funds a bit to bring in more Essen products.
April Tax refunds for most everyone has come in now  Anniversary Sales generally drives revenue Trim stock further via Anniversary Sale, pick up Essen releases and interesting new items but low level inventory increase. Great – all Anniversary Sale items hopefully increased budget
May Sales lower as purchases ‘pulled’ from this month to April. Not much movement, bring in new items to keep stock fresh but don’t expect many hits. Some reprints of ‘hit’ items start arriving now too. Good generally – again, purchasing for ‘reprint’ hits now.
June Summer doldrums. Lower sales, few  interesting products released generally. Treading water. Just waiting. Good – on downcurve as we restock products and bring in okay sellers.
July Summer doldrums. Lower sales, few  interesting products released generally. Treading water. Just waiting. Good – on downcurve as we restock products and bring in okay sellers.
August Summer doldrums. Lower sales, lots of buzz from GenCon releases though Pre-order time.  Keep track of the buzz, add lots of pre-orders  based off buzz in GenCon. Good – no outlay just yet as only pre-orders.
September GenCon releases begin to hit shelves, sales are ramping up in Fall. Stock starts arriving, shelves start filling up really, really fast. Okay – money is starting to flow out to new stock that is arriving in torrents now, as new stock from GenCon starts arriving
October Lots of hit games start arriving, people are back purchasing. Stock starts arriving, shelves start filling up really, really fast. Okay to Bad – Inventory is piling up in large doses.
November Lots of purchasing.  Early bird XMas shoppers, GenCon hits and Winter game buying is happening now in droves. Add extra stock for XMas, make sure there’s enough for increase in sales. Bad – pre-purchasing extra stock pushes cashflow down before sales starts streaming in.
December XMas is here. 40 – 50% increase in ‘normal’ monthly revenue. Add extra stock in early parts of December, start cutting back and getting ready for sale. Bad to Ok – funds start flowing in, and towards the end of the month we start reducing the amount of stock so cashflow starts getting good