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Distributor?

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Redcap
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So if one were to publish their own game would they go through a distributor or how would they package and ship the bought games?

InvisibleJon
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Depends on how you want to sell the games...

Short Version:
Getting carried by a wholesaler can be challenging and there's a lot of time-consuming paperwork involved. Consider setting up an account with a fulfillment house. It cuts into your profit margin, but the services of a good fulfillment house can be worth it.

Long Version:
Before I start: Note that I am not a publisher of tangible games. I did start and run a retail game store for 4+ years, so I'm not 100% clueless. That said...

You're wondering how you're going to get the games you make into the hands of paying customers. Whether you work with wholesalers depends on how you want to sell your games. Typically, wholesalers are part of a multi-tier distribution system that looks like this:

Publisher >>> Wholesaler >>> Retailer >>> Customer

In this model, retailers buy their inventory from one or more wholesalers, who buy their inventory from many publishers (of which you are one). It's tremendously important to note that a typical wholesaler makes their money off of just the top-selling product lines (Wizards of the Coast, White Wolf, what-have-you). They don't make money off of products from small publishers like you and me. In fact, the labor it takes to inventory our products, coupled with the space our product takes in their warehouse, often means that carrying our products *costs* the wholesaler money. Wholesalers carry product from smaller publishers as a way of distinguishing themselves from other wholesalers. This ties back to the retailer...

Remember I said that, "retailers buy their inventory from one or more wholesalers." Retailers like to keep the process of ordering as simple as possible. If you (as a retailer) can place just one order with one wholesaler and get all the inventory you need, that's really nice. When I ran a store, I had one primary wholesaler and one back-up if my primary was out of stock on something I needed. There were a few others for specialty products, but I didn't order from them often and it was inconvenient to do so. This is why you're not likely to succeed if your plan is to sell directly to retailers across the country. Ignoring the logistical nightmare you'd be getting yourself into, you'd find that retailers just wouldn't be interested in having yet another account to manage with yet another product supplier. This is the crux of the role – the service – that wholesalers provide in the publisher >>> wholesaler >>> retailer >>> customer chain.

Jumping back to wholesale costs of carrying small publisher inventory... Because it (often) costs a wholesaler money to carry products from a small publisher, it can be very challenging for you (as a small publisher) to get a wholesaler to agree to buy and carry your game. The fewer games you have, the harder it is. That's (partially) what industry trade shows (like GAMA's GTS) are for. You (as a publisher) want to convince wholesalers that your game is so awesome that retailers and customers will be clamoring for it (Some people call this "push" marketing.). You also want to convince retailers that your game is so awesome that customers will be clamoring for it – that they will lose business to other retailers if they do not stock your game (This push marketing will (ideally) result in retailers going to their wholesalers right there at the show to place orders for your game. That is a very powerful way to convince wholesalers to carry your game – especially if the retailer who's placing an order or your game is a big account. I've heard that kind of pressure called "pull" marketing.). This is also why it's useful to go to shows that are open to the public. It builds your credibility in the eyes of the retailers and wholesalers, and it pushes marketing to the consumers, which generates pull marketing with retailers (consumer asks retailer for the game), which generates pull marketing with the wholesalers (retailer asks wholesaler for the game), which (hopefully) results in wholesalers placing orders with you.

Getting a wholesaler to carry your products can be difficult. And once you do get one to carry your products, you have to deal with shipping, negotiate payment terms, and all sorts of other stuff. Since I haven't engaged in selling products to wholesalers, I can't offer any real insight into this. However, I'd like to mention that there's another way to get in the chain - Fulfillment Houses. They fit in the chain like this:

Publisher >>> Fulfillment House >>> Wholesaler >>> Retailer >>> Customer

A typical fulfillment house provides some or all of the following services:
* Warehousing: They keep the stuff you've published.
* Inventory: They keep track of how much stock you have in their warehouse.
* Shipping: They ship orders to wholesalers.
* Invoicing: They invoice wholesalers for what's been sold to them.

The idea is that you publish a product and have that product sent to your fulfillment house. The fulfillment house handles all the physical stuff, described above, leaving you free (or at least free-er) to focus on marketing your existing games, publishing more games, and developing new games. As you can imagine, these services will cost you. However, they're also tremendously useful. How much help you want determines how much you'll have to pay the fulfillment house. The fulfillment house may also offer other services, such as advertising, promotion, and sales of your product at conventions and through a catalog they produce and distribute to wholesalers (and possibly retailers).

My understanding is that wholesalers find fulfillment houses appealing because it enables them (the wholesaler) to place one order with one entity (the fulfillment house) and get a smattering of goods from many different publishers that they (the wholesaler) would otherwise not want to deal with on an individual basis. In some ways, it's like the retailer's motive for only dealing with one or two wholesalers.

Dealing with a dependable fulfillment house benefits wholesalers in other ways too, but I've gone on far longer than I meant to (I do actually have things to do this morning!). I expect that other forum members can provide additional insight. I hope everything goes well for you!

schtoom
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Wow!

That was pretty awesome. Perhaps it should be under a How-To heading or something similar. It's good reading for everyone with a passing interest, I think.

InvisibleJon
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A little more info:

Wikipedia: http://en.wikipedia.org/wiki/Fulfillment_house
"How to select a fulfillment house": http://www.wilsonweb.com/wmt6/fulfill-house.htm
Results of a simple Google search: http://www.google.com/search?aq=f&sourceid=chrome&ie=UTF-8&q=fulfillment...
Studio 2 - the fulfillment house that two friends of mine are using to get distribution for Shard, their RPG: http://studio2publishing.com/home/modules/sections/index.php?op=viewarti...

OPM
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Useful Thanks - but missing the financial bottom line

Interesting commentaries, however no real discussion of how the financials work. Who gets paid and when for instance. Does the Fullfillment house pay the cost to manufacturer, or does the manufacturer have to wait until the wholesaler pays (which in my experience can be upwards of three plus months, then three more months for the fulfillment house, etc).

Given the talk of hidden fees, manufacturer absorbing some costs, and shrinkage issues and the like is seems the manufacturer is lucky to get 10% of the suggested retail price of a unit. Fine for large producers. Death nell for small companies. Add in the costs of going to trade shows, and the expectation that most games sell less then a thousand copies then it all seems more like a lose-lose money pit situation to bother with.

I am more interested in how many manufacturers are having luck selling directly to consumers, and cut out all the BS in between.

scifiantihero
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OPM,

when you say manufacturer, are you talking about 'us--' the designer/owner?

OPM
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Yes

Yes as in us the small game producer/manufacturer.

Redcap
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That answers a lot of

That answers a lot of questions, but also brings up a whole new set of questions. Here is one of the many still floating around in my head. If you publish your own games, and you sell these games over the internet from your website, how do you distribute the game to the buyer?

Edit: The fullfillment house will take care of everything apparently!

gameprinter
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20-40-50-100

The underlying financials are pretty straightforward.

Manufacturers produce the game at 20% of retail. Then, they sell it to distributors at approx. 40% of wholesale (PSI asks 38%, which is probably worth it to get into the book trade). Retailers buy it for 50-57% of retail from the wholesaler and sell it to you and me at 100%.

Hidden costs: At every level, you need to figure out who pays freight. As a mfr, you will definitely pay freight to get your game from the printer/assembler to your warehouse. Distributors offer free freight for orders over $350 to $400. Mfrs usually offer free freight to distributors at a certain level as well. That one is subject to a bit more variation though, so I can't tell you at what qty or price level mfrs typically offer free freight.

As for selling direct without the above BS - It works if a) you are big or b) you don't expect much. Mass market sales are almost all direct to Target, TRU, etc. Amazon, however, will often use a fulfillment house. For most publishers though, retail sales are important, but not the only avenue. The Gamers (now owned by MMP) tried to go direct-to-consumer only. It didn't work well. When they went back into channel, they had to unshrinkwrap all their games and put a sell sheet on the box bottoms they'd left blank. I'm not sure of any game company that is doing direct-to-consumer only by choice.

The best direct-to-consumer program I've seen is GMT's P500, but GMT is also well established in regular distribution. It's just too vital an avenue to not deal with it. I get emails from Alliance Distribution every day soliciting one product or another. Preorders, short notices, restocks - sales efforts that you probably couldn't/wouldn't do on your own. And I read them, as I'm sure others do.

In short, the channel ain't so bad! It mostly works. :)

dobnarr
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Good info

Thanks for the good information on this thread. It sounds like regular distribution is a good way to go, if you can convince a distributor to pick up your game, which is apparently a challenge for start-up companies.

Another question I have is: I understand the ratios above, but there's an unconstrained variable - how do you set a retail price, on which all those other numbers are based? Obviously, you can just pick a number based on knowledge of the marketplace (what similar games cost), or you could pick something based on your production costs, but is there a better way (or an industry standard) to tell what the retail price should be? Your choice of price affects not only your eventual income but also the willingness of distributors and shops to pick up your game, but there seems to be not too much to go on to pick one.

Thanks,
Dave

Dralius
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An MSRP of 5 or 6 times the

Dave

An MSRP of 5 or 6 times the cost of production is common but there is no easy answer for this. Different business models may allow you to get by with less.

It’s going to be a matter of what your expenses are; wages, warehousing, overhead, advertising, etc… Vs. what the market will allow.

For example the production of one of my games is being held up because the publisher is trying to find a cheaper way to produce it. The difference in MSRP would only be $5 but they feel that extra $5 will be detrimental to sales so we wait for yet another quote to come in to see if it can be done just a little bit cheaper.

I would do a comparison of you game components and audience with others on the market to get a base line and then see if your expenses make it feasible.

gameprinter
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Double Double

The old rule was "double double" - double your production cost to get your wholesale. Double it again to get retail. That, however, puts you at about 25% for production, which is a little high these days. For a short run (1000 games or less) game this will still result in a fairly high retail price.

BTW, Dralius is right about fighting for that last $1. $1 production = $5 at retail and $5 is a HUGE difference at retail on any game below $50.

yeoxl
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OPM wrote:Interesting

OPM wrote:
Interesting commentaries, however no real discussion of how the financials work. Who gets paid and when for instance. Does the Fullfillment house pay the cost to manufacturer, or does the manufacturer have to wait until the wholesaler pays (which in my experience can be upwards of three plus months, then three more months for the fulfillment house, etc).

Given the talk of hidden fees, manufacturer absorbing some costs, and shrinkage issues and the like is seems the manufacturer is lucky to get 10% of the suggested retail price of a unit. Fine for large producers. Death nell for small companies. Add in the costs of going to trade shows, and the expectation that most games sell less then a thousand copies then it all seems more like a lose-lose money pit situation to bother with.

I am more interested in how many manufacturers are having luck selling directly to consumers, and cut out all the BS in between.

I've always wondered how the financial work if I were to approach a fulfillment company. Am I right to say they will pay you (small publisher) after distributors/retailers purchase your boardgames? And they will charge for warehousing per month with the remaining games in their warehouse? Thanks for clarifying =)

Black Oak Games
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When you get paid

Yes, you would get paid after the fulfillment company sells copies of your game. The warehousing charge is different depending on the fulfillment company - some don't charge anything as long as your game is selling, but if it really slows down they start charging. Some charge warehousing regardless.

A question I have is whether you (as a publisher) can go ahead and set aside some # of copies of the game and keep them locally, or at the fulfillment house, and sell them at full MSRP+shipping online from your web site. You wouldn't want to do sales, since that would compete with retailers. I also think that fulfillment houses generally don't do individual shipping to consumers, so you probably couldn't ask them to ship something someone buys from you - so you'd probably have to keep however many copies you wanted to sell this way. Fulfillment houses just do large shipments to distributors (and some retailers?). But would anyone in the supply chain be annoyed if you did this?

BubbleChucks
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Using an order fulfillment

Using an order fulfillment service also has other advantages.

If you publish games you will have to pay for shipping and transport costs. These costs can be multiple. If you order a game from an overseas manufacturer, in bulk, the games will arrive at a local port. You will then have to pay another transport cost to get the goods to your home base.

If you select a fulfillment house next to a port you can avoid the second transport cost. A fulfillment house near to a port may also be able to help with customs which could save you time.

Secondly, if you have games in stock (at your home base) you will have to pay for storing those games. You will also have to carry additional costs for rent, rates, heat, and staffing – and you will pay those costs each day regardless of order levels. In relation to staff you will also have to fund things like holidays and deal with all the expensive and time consuming bureaucracy that goes with employing people.

Using a fulfillment service you only pay when the service is used. So if no games go out that day you will just pay for the storage (which is generally cheaper because the fulfillment house isn’t just storing your goods, they are storing lots of goods and benefitting from economies of scale). Labour costs are also lower because you only pay when an order is received and somebody makes a physical move to distribute your goods.

You can set up distribution direct to retailers and many fulfillment houses can support a direct link to a website which will ease publisher to consumer transfers. The consumer places the order on your website, the order passes from the website to the fulfillment house and they dispatch the order.

Some fulfillment houses also offer customer support services, whether its simply returns or a more focused customer service – such as inbound call handling with customer queries or email response.

They also offer picking and packing services. So you could order parts from various suppliers, have them shipped to the fulfillment house where they are assembled into the complete game and then stored in a finished state ready for sale; easing the burden of employing labour directly, while providing publishers with the opportunity to multi source components for the best price and quality from various suppliers.

BubbleChucks
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Oops, yes - some fulfillment

Oops, yes - some fulfillment houses will do small deliveries to individual customers, but the relative cost will be greater. Somebody has to go and sort the single order instead of a large order which equates to a greater expense for the fulfillment house than addressing a pallet delivery.

Retailers are being hit by online sales so any self selling on a website - or through a linked medium like amazon - will hurt retailers.

Its an ethical dilema, do I sustain a profit hit by supporting retailers and not offering direct sales, or do I offer direct sales and hurt retailers by doing so.

Ideally, you want both avenues open to you. The solution that occurs to me is to employ product diversification. Promos and specials are an established part of game design offerings.

Direct sales could feature a "stock offering" while the games sent to retailers could feature extra content that is only available in copies bought from retailers.

By doing this a publisher could offer direct sales while still providing retailers with product exclusivity - if you want the extra content then its only available if you buy from a retailer. So if your game was called "Product Distribution" you would have Product Distribution (stock) and then Product Distribution - cuddly cat edition (the limited tag referencing the added content)

You would simply have to add some more cards, tiles or components to make it attractive and distinct. Naturally , this will raise the cost of producing the retailer copies, but the added production expense would be a small price to pay for access to both sales streams.

yeoxl
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Thanks Black Oak Games &

Thanks Black Oak Games & BubbleChucks, those post are rather informative!

Holly Verssen
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Shipping

If you are new to game production, you probably will not be printing more than 1000 to 2000 games.

Game cases coming in from a printer will usually hold 6 to 10 copies of the game (usually closer to 10). A normal case of games can stack 6 cases high without doing damage to the bottom case.

When the games arrive, you will have a very busy "ship out" day, packing games for personal orders (gotten through your website, kickstarter, etc.) and distributor orders (if you have negotiated to work with any).

Hopefully, after the first day you should be several cases lighter. That being said, storage is often done at your own facility (office, home, etc.).

From then on, any direct sales orders for individuals or case orders for distributors can be done on a day by day bases. With a new company, you will not be shipping hundreds of games per day, so you really don't need to hire anyone extra to package and ship them.

In fact, it is a little jolt of happy success each time an order comes in.
You'll hear the little "cha ching" in your head and feel a well deserved, imaginary pat on your back, each time someone in the world has picked up your game and decided they can't live without it. :)

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