Saturday, April 27, 2013

Selling Out

Selling out is only a virtual when the supply of your product is limited. Selling out of hand made cupcakes, a product that will be obsolete tomorrow, is a great thing. That last hotel room for the night should be sold, as it won't have any value tomorrow, as is a seat on a departing airplane. Print runs of magazines are in a similar category. Yes, perhaps you should have printed more, but an old magazine is about as popular as yesterdays hotel room. You should do whatever it takes to sell out of these products, short of free.

It's not a virtue to sell out of your everyday product. When demand exceeds supply of a board game, card game release, or role playing book, you have failed to gauge the marketplace. You have left  money on the table, you've under performed. You've treated your product like that hotel room from yesterday, like the hot potato of last months magazine. You're not making cupcakes, cupcake.

If this is a strategy, your company is under capitalized and your marketing budget is going to waste, promoting items that may or may not exist as you carefully turn people into potential customers through repeated exposure. They say it takes nine impressions before a prospect becomes a customer. Do you really want your product gone as the counter ticks over to nine? What a tremendous waste. Of course this assumes you're trying to be a profitable company, that you have a marketing budget. The game trade is peculiarly resistant to these arcane concepts.

The rest of the game trade is not amused. You may have trained your customers to snap up your product when it's released, but you've trained everyone else in the supply chain not to value it, not to promote or support it. Why should they when the supply won't exceed demand?  Do you think Ferrari ever puts a car on sale? Do you think the salesmen puts effort into actually selling the car? The car sells itself. Eff you if you don't want a Ferrari; go buy an Audi, plebe. Demand for a Ferrari is never lower than the supply. You will likely wait for one. The same is true for your high demand, low volume product. As a retailer, I'll bring it in and often not bother reading the box. I'm busy doing activities with value.

Super low volume releases, like special Magic sets, fall into this category. It's a widget to me when there's zero effort required to sell out upon release. However, certain low volume Kickstarter derived products are in the same boat. If you plan for your product to be in my store for half the year, I'll give it a half assed promotion. Why? Demand will exceed the supply, so why bother? Congratulations on building a Ferrari, I hope you're making a living off it, but I doubt it as it's an ordinary product with a premium supply.

How about events? Selling out of an event is a good thing, it's like the hotel room or the airplane seat, with limited supply. However, if we hit capacity on all of our events, all the time, we have a problem. We're in the midst of a Magic pre-release today. For the last few pre-releases, we've had four events over the weekend. Our midnight pre-release is well attended, the Saturday morning one turns people away as it hits capacity, and the Saturday night and the Sunday morning events are well attended but under capacity. This is a good kind of selling out that can be managed.

However, when staff started tracking weekly events this year, we found we're hitting capacity all the time. Sure, it's nice to be popular, but we're experiencing the Yogi Berra Effect, that it has gotten so crowded, nobody comes here anymore. Our last store had a parking problem, and after we moved, customers would comment that they would drive by, and if the parking lot was full, they would keep going. That's a terrible thing to hear as a business owner.

Capacity for our game center isn't about filling it to 100%. There's a point where it becomes uncomfortable. For me, personally, it's at around 50%, but for most people, I think, there's a perception of too many people at around 70%. As you can see from the chart below, all of our events are well over 70%, and customers tell me they're avoiding it well before we hit capacity. My guess is if we had more space, more people would be willing to attend up to that theoretical limit.


Selling out of event space is a virtue of sorts, as it's nice to be popular, but if my business, any business, can find the capital to fix this sort of problem, they will get to the next growth level. For us, it's about an expensive construction project, but for others, including the ones I criticize, it might be a much bigger leap. It might mean running their business as their day job, a massive capital expenditure in equipment, hiring of new employees that may or may not be sustainable in one of those nasty catch-22 growth curves, or maybe just more risk. However, for many it might just be a change in perspective, accepting that their shortcomings and clever promotions are not virtues.

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