Thursday, January 22, 2009

Used Game Dilemma

Lets say I have $200 to buy games for the store. First, how did I come about this $200? Inventory is a zero sum game, meaning I can't buy a new game until I sell an old game. That "old game" sale means I won't be buying it again, as the sales for the item have slowed or I brought in a bunch of them when they were hot and now sales are back to normal. It's a recovered cost from "dead" inventory.

So do I want to spend $200 on the new, hot thing that just came out? Or do I want to buy used games? What are used games? For the most part, they are those games that I just mentioned that I'm not re-ordering. They may be "dead," but they are generally older games with a long tail, meaning their sales potential are extremely limited but have a solid, long term, low level of demand. We get around this by selling them for less money, and thus buying them for less. But do I want to spend my $200 on hot new games or long tail used games? Do I want a quick return on my investment or a slow one?

I don't have a choice. By declaring that I'll be buying used games, I'm obligated to take them when they arrive, whether I can afford it or not. At times I'll say no, such as if we've hit our used game capacity (maybe once a year) or if I'm truly without the funds to buy them, but I almost always take them. That's what it means to be a successful seller of used games. You're always willing to take them in. It's all or nothing or people learn not to bring them. Repeat sellers is the key to used games for me. I don't even know most of the buyers.

So what happens to those used games? Let's say we bought 66 role-playing books for that $200. That's based on our average buy price of about $3. Of those 66 books, perhaps three are somewhat rare or collectible and will go for $15-20 each. These will sit on the shelves for six to eighteen months waiting for their next buyer. About forty of those books will be moderately priced for around $10 and will also sit on the shelf for six to eighteen months waiting for a buyer. The last twenty or so books will never be purchased, ever, no matter what, at any price. They'll find their way into a $1 bucket eventually, possibly given away, or as a last resort carted out to the recycling. If I identify the dud when buying from the customer, I'll try to buy them for less, but it's hard since it requires data on every role playing book ever printed. Oh yeah, and then train staff in that knowledge.

What makes it worth the hassle to do this? With multiple venues to sell used books, such as conventions, auctions and online sales, I can reach a larger audience and drastically increase my likelihood of selling them. When this happens, the economics of the situation are greatly improved. I'm then making far more than keystone (50%) on a sale, and I can often find a buyer for some of those last "20 books." That said, the convention market has tanked over the last two years and there are fewer and fewer buyers. Online venues like eBay rarely sell for more than my original buy price, unless the book is rare.

This means used books often end up in the category where all stores like to hide their disappointments, a merchandising expense. This includes things like mass market games sold at low margins, decorations in the store that happen to be for sale, and other incidentally sellable stuff, like tape measures with your name on them. In the case of role-playing books, the merchandising expense brings in customers from across the region that wouldn't normally visit your store. Some will buy new things too, but most tend to stick exclusively with used games. Despite all this, I still I think it's financially worth the trouble.


  1. There is a very simple solution. Pay less for the items you buy used and sell them for a little less once you put them on the shelves. You invest less and move more items faster. I also would suggest being realistic about your prices too. You currently have some out of print D&D items on your used shelf for between $50 and $100 each when they aren't worth anywhere near that much money, especially given their condition. They will likely sit there and languish for years until you finally reduce the price, so why not reduce the price from the get-go? You can't go online and check ebay prices for something and then sell a used game in store that has been well played for the same or more. It won't sell that way.

    You may also want to consider consignment. It allows people to bring in more used games, provides for a larger used area, and you incur no real costs and make money on them when they sell.

  2. I'm not saying I'm having problems, only that the situation is complicated. As for our rarer items, a few are overpriced after months of shelfwear, but we sell LOTS of them at the marked prices you've seen. In fact we're running low after selling about 75% of them over the last few months. We price the rare stuff based on a low eBay price.

    As for shelfwear, I made a calculated decision to put the collectible stuff out, rather than in a display case. Sales skyrocketed, not surprisingly. The down side is shelfwear on already fragile books. Good point on adjusting prices accordingly.

  3. In response to Anonymous, there's also a point at which paying less isn't an option. I used to work at a used book store and if you don't offer enough money people will simply walk back out of the store with their books, and this was before the days of eBay when the only viable alternatives to a used book store was another used book store or a garage sale!

    In today's world where there are alternatives, I'd say that about $3 per book is probably about as low as you can go before you start seeing your buying opportunities dry up.

  4. I'm just glad to see all these used game crusaders (or is it just one, who posts a lot?) on the blog.

    I guess this means that they will be bringing things in for the Auction in February, as well as attending to get some used games.

  5. I certainly have a few lots for the auction. One of them is even out-of-print, but still complete... at least according to the checklist in the instructions!

  6. I've been posting on this subject and I've certainly attended or tried to attend every auction so far. I wouldn't miss a local game auction unless I was absolutely unable to attend.