Friday, February 22, 2008

Creaky Distributors

I thought it was the time of year at first. My various smaller distributors were out of core product. Then the problems persisted, for weeks. Entire product lines were out-of-stock and still are. From what I've heard, many game distributors are on the ropes, especially East Coast ones, due to the economy in the northeast and poor weather. The national distributors are more diversified and aren't feeling as much pain, but there is pain. This is not the national economy effecting the game industry, or a possible recession. I still think this industry is somewhat immune to that, provided people still have jobs. I'm told the problems are caused by creaky regional, rust-belt economies pulling down regional suppliers. We should expect distributor closures and more consolidation soon, I'm told.

Everything should work out fine as long as the manufacturers don't get spooked and stop pumping product into the system. The "doomsday scenario" is a collapse of the distribution system, but even that wouldn't be the end of the world. The most likely scenario would be a a comic industry like centralization of power between one or two major distributors. We even know their names. Many publishers and manufacturers have been working to set up direct accounts with retailers for several years now, and savvy retailers have learned to take advantage of this. It's inconvenient right now, but if problems persist, it may be the only way to get product.


  1. This may be the time to consider becoming a retailer/wholesaler for a few companies.

    You buy direct from them - in large enough quantities to make it worth your while - and then sell/trade off some of the product to other local stores.

    This means that you could make a 6 (or 12) copy case order, and sell/trade the ones you don't want to other stores - preferably local stores, to keep down sipping costs.

    I know that this business model is followed by several stores with an online presence (it was the business model of retail stores with a mail order presence in the past). Perhaps you should reconsider the idea of having a regular e-store. Perhaps this would be a venture that an entrepreneur would like to start in partnership with your store, because running it would be a full time task.

  2. It is definitely a full time endeavor and one that can't be "tacked on" to a regular store. In fact, the only advantage for an online store to have a brick & mortar presence is to sell things that can only be bought by B&M, skirting the rules.

    Other than that, you don't want your online store to be even remotely associated the B&M store. This is because the only way to sell online is at a discount, which is antithetical to B&M stores.

    We've done bulk purchasing with other stores before. We did this with Columbia Games because of their high order requirement (they've backed off a bit on this since). We've considered it with Hasbro.

    For Black Diamond, right now there is a LOT of product we can obtain from various distributors that I would love to bring in for diversity.

  3. I'm thinking of hybrid retailer/etailer/distributors - places like Brookhurst - who are a full service B&M, and a limited service online store (only selling some products). They are the American importer/wholesaler of Peter Pig minis.

  4. And their retail store has the worst reputation of any in the country because of some of their questionable online actions. The most successful hybrids you probably don't know about, like Game Castle/

  5. Game Castle in Santa Clara (not the one in Fullerton).