Inventory – Breadth or Depth?

With the year coming to an end, I’ve been taking a look at our turn rates and our inventory.  Some parts of our inventory (clothing, media products) have been somewhat lackluster in terms of their turns. Others are running too hot (our general board game inventory probably could be beefed up, though I’m considering ‘splitting’ the category further to give us better insight).   It’s all the usual part of running a business, where you review your turns and sales and decide what to do.

The question that came to mind, more than anything else when dealing with our game inventory is whether we’d be better off increasing our breadth or depth.  It’s one thing to say ‘increase inventory dollars in board games’, and another to decide whether to do so by:

  • buying more unique products (increasing breadth)
  • buying more of our hot-sellers (increasing depth)

Increasing Breadth

When increasing breadth, we are looking to bring in more games than we have now.  This could be a return of older games that have been ‘cut’ due to low turn rates or by bringing in more new games, relaxing our normal restrictions on what we think should (or should not) be brought in to the store.

The advantage of bringing in older games is that many of those games were once good sellers.  While sales might have slowed, the demand was once there and because the games were once bought /are in people’s collections, there might be latent demand for these games (or slow trickling demand).

On the other hand, bringing in newer games allows sleeper hits to make their way into our portfolio.  Some of our better sellers have been games we’d never expect to sell and so, by bringing in more independent / small games, we might hit on more of these.  However, the disadvantage is that we might see a significant increase in games that we need to clearance.

In both cases though, we are able to have more stock and potentially increase the likelihood for customers to find eactly what they are looking for, particularly customers who have a specific idea of what they want.

Increasing Depth

pandemic_new_ed_Increasing depth on the other hand focuses on our ‘bestsellers’.  This is a hedge to ensure we never, ever run out of stock.  With many bestsellers already, we have started carrying 3 weeks worth of sales (i.e. if we expect to sell a copy a week, we’ll keep at least 3 copies on hand).  This is mostly due to the restock period for many games.

However, this doesn’t take into account stock-outs.  Scythe for example is currently out of stock again.  3 weeks of stock would (at our last week worth of sales when we had stock) be around 20 copies.  However, with the game out of stock right now, when we could have restocked it, perhaps we should have restocked at the 3 month level.

Of course, Scythe is rather unique (it is the hotness).  Let’s try Pandemic instead.  We sell around 4 copies of this game every week at least, so our regular stock level (or the stock level we try to keep) is 12 copies.  However, there are weeks when our ‘normal’ estimate is off, and like now, we are out of stock of this game (again!).  Perhaps instead of keeping 3 weeks, we should be at 2 months? That’d mean we’d have to stock 32 copies, but we’d never have to worry about the game running out of stock on a day-to-day basis and as importantly, stock-outs at the manufacturer level wouldn’t affect us either (well, for 3 months at least).

This tactic would give us the ability to continue to cater to our customers, but it does target more ‘new’ customers (i.e. customers looking for the ‘staples’ of our business like Pandemic, Dead of Winter, etc.).  It doesn’t cater to ‘alpha’ gamers who have a specific independent game that they really, really want.

It also has the disadvantage of being really expensive.  Even going from 3 weeks to 4 weeks for say our top 30 bestsellers (and assuming average cost of $30), we’re looking at $2700 ($30 x 30 SKUs x 3 copies a week) increase in capital cost.  If we decided to do 3 months, that’s a $27,000 increase in our inventory!

What Will We Do?

Well, firstly we’re going to pay all our Christmas bills off and ensure we are caught up on any bills.  After that, we’ll review to see how much additional funds we might have to put into play any of the above strategies.  It’s clear we need to increase our inventory value in our board game side and I’m personally leaning to a ‘mixed’ option, with a slightly heavier focus on increasing depth.  If we can shift some funds from our slower-selling categories, we probably will do that too.

Product List from Essen

Hi all;

While we wait for the shipping cost for all our games to arrive so that we can create and allow customers to start ordering products, I thought I’d update about what we did purchase and quantities. I’ll also put some notes on why we purchased these games and other general comments.

5 * Dragonscroll – limited edition release, the miniatures are so, so pretty. Heck, the gameplay is supposed to be pretty good too, but the minis sold it for us (and the limited edition).

6 * Wir Sind das Volk
3 * Mythopia – A Martin Wallace game that generated a ton of great buzz at the convention.
4 * Onward venus – Okay, I’m a sucker for this kind of art and theme. It looks very solid as a game too.
4 * Doodle City – one of the most interesting games to come out, the easy gameplay and fun drawing on the pad made it a great seller at the event.
2 * Keyflower the Farmers Expansion
2 * Masilia
2 * Carson city Expansion
1 * Homesteaders
1 * American rails
3 * Golden ages
6 * CV – ’cause we have had huge demand for this so far
12 * CV expansion
9 * Greenland
10 * Steam Donkey – one of my personal favorites of the convention. Feels a bit like San Juan with the use of cards to ‘pay’ for your attractions, but the steampunk theme and the use of multiple colors in a compact box and good price makes this a great sale.
20 * Coup Guatamala 1954 – yeah, it’s Coup. With multiple role-cards to choose from. What more could we want?
12 * Melee – another from La Meme games, a compact wargame.
2 * Arkwright – gorgeous game. Really complex but it looks very good. Didn’t have a chance to play it, but we did get an explanation and it seems pretty solid.
1 * Colt Express – so pretty, wish we managed to get more copies before it sold out.
10 * Strife – the Kickstarter for North America is on-going but the Europe version is already out and comes in bigger cards!
2 * Urban Panic – plays like a simplified Suburbia but with some interesting scoring / balancing mechanics.
2 * Imperialism
4 * Waggle Dance – worker placement with bees. You’ll need to grow your hive and bees while collecting enough pollen to actually make honey. Definitely plays well with 4.
2 * 2019 the arctic
9 * Outcast Hero’s – Traitor mechanic like Coup, but with missions that have to be beaten using the various abilities of the characters. Set in Poland during WW 2.
2 * First to Fight – a really interesting wargame that has players ‘sharing’ the soldiers who must be positioned to complete missions before time is up. Fail too many missions and the game becomes impossible for everyone, but you do want to come out the top general. Very interesting use of the various soldier cards which gives this game a nice mix of Euro & Wargaming elements.
2 * 7 Ronin – so pretty. 2 player assymetric, hidden action game. Wish we could have gotten more but this was all there was left at the end of Essen.
2 * Cargo train
12 * Alchemists – Probably the hit (outside of perhaps Deus) of the Con. Such an interesting game with the use of the app to make potions. It’s a bit of a puzzler and at the end of Sunday, might not have been the best game to learn but it sure was interesting. Seems to have some good balance mechanics and a definite brain-burner. Expect to play at least 1 game to get your head around it all.
1 * Haru Ichiban – We have 1 copy, but it’s so pretty. From the limited edition set.

Most of our other stock should be arriving in a week plus we hope and games will be up on the site as soon as we get final cost worked out.

Some other notes on requests:
Gaia – not available for retailers to purchase there, but we’ll be picking it up from distributors direct in a few weeks.
E-Raptor- we are looking at getting it from a distributor once it’s avialable.
Manila – entering main distribution. Was not available for purchase at retail prices at the fair.
Patchwork – should be available via mass distribution in a few weeks too.

Running a lean inventory business

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.

 

November 2011 Newsletter

Video Reviews

We’ve got a new video review page up on the site.

New RPGs

As we announced last month, there’s a new category – Role-Playing Games. We’ve added even more stock and systems to the category including fleshing out our Pathfinder core rulebooks.  Do let us know if we’re missing a few books or systems that you’d like to see.

Extended Local Pickup Hours

Our Local Pickup Hours have now been extended to Noon to 6pm Mondays to Fridays.  In addition, customers no longer have to book appointments for pick-ups but can drop by anytime in our Local Pickup Hours once they have received a shipment confirmation from us.  You can read more about it on the blog.

Updated Checkout Page

We’ve updated our Checkout page to be slightly more intuitive in use.  In addition, your shopping cart will be shown at the checkout.  Let us know if you find any bugs with this program, we believe we’ve dealt with them all already though.

Upcoming Games

The much awaited Pandemic reprint should arrive this week and the Game of Thrones board game is expected either end of the month or early December. In addition, the Manhattan Project should be arriving soon along with the Quarriors : Rise of the Demons expansion, Urban Sprawl and Dungeon Petz.