Thursday, July 14, 2011

The Problem with Yugioh

Yugioh is a special case. This hugely popular collectible card game has a problem with consistency. I speak entirely as a store owner, not a player, so when I write of consistency, I refer to customer demand for the product. Demand for Yugioh is horribly uneven due to the varying quality of each release. While Magic sets might vary in quality, they still maintain a certain baseline standard of usefulness that creates a steady demand. Indeed, Magic sales have been steady, according to Wizards of the Coast, since the game first came out. Yugioh has very hot sets and very, very cold sets.

Because of this hot and cold problem, distributors, our main source of product, want little to do with Yugioh. A hot set will sell out quickly, but a cold set could take years to sell through. So distributors treat Yugioh like a one-shot, fire and forget trading card game. It's a hot potato and they want out before the kids make up their minds. Get what you want from them now, because next week (or even today, if you were too slow) it will be gone from their shelves. So what do you do if you're a store owner?

You can try to predict sales, which works to some degree, but more than likely, if you're intent on catering to your Yugioh crowd, you're going to stock up and sit on it for the long term. This is very expensive. Yugioh doesn't have the "anything Magic" sales patterns, in which there is little risk because it will always sell. Once a set, deck, tin, mat, or card sleeve starts to peter out, it's a long slog until that set is out of stock in the store. Worse, some customers want and expect older product to be on store shelves. Why? Because we're all stuck with this old crap on our shelves. There's a perception by customers that this is normal. It is not.

I want to stress that this is very unusual in the game trade. For the most part, our store uses just-in-time inventory management. What you see on the shelves is 99% of what we carry in the store, because anything we want can be brought in tomorrow ... except Yugioh. Stocking Yugioh deep, therefore, adds an extra cost to doing business. For example, if I have an extra $3500 at cost in Yugioh that I'm constantly hording, that's $30,000/year in lost revenue ($3500 at cost equals roughly $7500 at retail, times four turns equals $30k). Comparing this number to our actual sales of Yugioh explains why many stores want nothing to do with it or stock it lightly. It's deadly.

This lost revenue due to sunk inventory costs is a huge problem for us, exacerbated by all the other problems with carrying the game: difficult customers, low margin, difficult customers, extra staffing for events, difficult customers, and of course, difficult customers. I see it as a cost of doing business, but I believe Konami could make their game more popular than Magic if they addressed this issue.

I don't think Konami can make a release suck less, because that would be nothing short of a freakin' miracle, but I do believe they could stock their own product broader, deeper and easier. I don't need a case of last years release (12 boxes), but if I could mix and match a few older boxes at a time, the distribution problem would be solved. If they believe in their own product, they should be willing to sit on it like I do.

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