Saturday, April 30, 2022

My Problem with Ultra Pro

This is a case study of a problem product line from a purchasing perspective. Whether Ultra Pro is a good product or not is irrelevant to me as a buyer, at least until it effects sales. When we have it, we sell it. We've been approached by marketing folks who I believe represent Ultra Pro, trying to figure out the role of the brand in my store. I've been thinking about it ever since. Here are my issues with Ultra Pro:

Market Leader: Ultra Pro is the CCG supply market leader in the game trade, and my top selling brand of CCG supplies at 40% of my sales. It should be higher in a mature market, but I believe they've slipped and allowed others opportunity. This is my single store perspective, of course.

Their position has eroded over time. We've been able to easily source and sell Dragon Shields by Arcane Tinmen. In fact, we've spent thousands of dollars buying pusher shelves for Dragon Shield boxes. We've invested in Dragon Shields because the brand is strong, available and consistently priced. I believe the success of Dragon Shields is primarily availability

Going forward, I wouldn't be surprised if Arcane Tinmen took our top position. This is not to say anything about product quality, customer preference, or other subjective factors. I can get Dragon Shields from everyone, at a consistent price, with consistent availability, even during the supply chain crisis.

Out of Stock. Whatever you want to say about Ultra Pro, I can't sell it if I don't have it. Basic items are regularly out of stock. Most themed items are "splash" on release, meaning it's unlikely I'll ever see them again. This lack of availability wears on you, especially when I can easily get other brands of supplies without the hassle. I have long lists of products I check on regularly, and it drags down the purchasing experience overall for the store. 

Splash Releases. It might just be me, but the number of themed releases, like this quarters Magic themed play mats, sell very thinly. Perhaps other stores can't get enough of this product, but I've done something I swore I would never do, I've stopped inventorying individual items. Ultra Pro Mat: Kandahar: Various, might describe twelve new play mats from a new Magic set. I can't be bothered to create individual items, or find photos -- often on the Ultra Pro site because distribution can't be bothered either. It's a splash item for them too. The indifference comes through the screen. This means they don't appear in my online store, which hurts their sales. They never get re-ordered, even if available. This is a recent thing for me, but while comparing notes, I learned other stores do this too. I should really stop selling them.

Erratic Pricing. Ultra Pro is probably, maybe, sometimes net priced now. Do they have an MSRP? Who knows. Let's look at that for a moment with a ubiquitous item: 

Deck Protector Pack: Green Solid 50ct (82671)

Ultra Pro website to consumers: MSRP: $3.99. This is the de-facto MSRP, since it's on the UP site. 

PHD:  $1.85 with a different MSRP listed of $3.49 (in stock)

Alliance: $1.89 net priced (in stock)

GTS: $2.10 net priced (in stock)

ACD: $2.23 net priced (OOS)

There is price confusion. Normally I like price confusion, but this level of chaos is unusual in the game trade. Are they net priced? Is there an MSRP? What is that MSRP? Why isn't there agreement on this? The most shocking thing about this is three out of four of my distributors have these in stock. It must be Magic release time! Ultra Pro stock might be described as seasonal.

Too Broad a Line: There are simply too many SKUs for too few sales and they're simply not available often enough. If I had to give some advice it would be go back to basics. I can't keep track of the 136 Ultra Pro deck boxes, 228 sleeve packs, 176 play mats, and 148 binders, and Ultra Pro can't product them consistently. 

A CEO once told the game trade if you can't keep it in stock, order deeper. That might be true if you're the only producer of the Arkham Horror board game, but I've got six other viable manufacturers making roughly the same products as you. We've established the licensed stuff is garbage, so that's not your unique value proposition. What is the Ultra Pro Unique Value Proposition? Anyway, if you could actually keep your line in stock, I might carry all that product. Because you can't, I throw up my hands and order from the other six.

Anyway, that's far too much thought for what should be a turn key, easy to understand product line. The bottom line is if enough product is produced, everything else is details. 

Thursday, April 28, 2022

Pull the Lever

Working from home turned me into a professional buyer.

As a store owner, I wear many hats, none of them more than 10% of anything I do. However, my hat collection shrank dramatically when I handed my manager most of my operational responsibilities. I did not intend to be become a professional buyer, it's what happens when you only have a couple of levers to pull. I can attempt to clearance items online, since I have no active sales role in-store, or I can be a better buyer. Those are my two levers.

Buying while working in the store was always an interruption. Yes, you can say the key to a stores success is in the buying, but you wouldn't tell a customer to wait while you placed an order. Buying might be the most important thing, but it's rarely the most important thing right now. Being a buyer at home, without interruption from staff and customers, meant I could focus all my energy on my main job. Normally, I would be constrained by budget, represented by my "open to buy" worksheet. It might tell me by Tuesday that I've bought quite enough, cool it.

With loan money both from the government and shareholder reinvestment (I refinanced my house), I suddenly had a huge budget for buying, near limitless at the time. This money was to rebuild sales and customer confidence, through any means necessary. If you had all the money in the world AND all the time in the world, what kind of buyer would you be? That was my situation in 2021. I added new distributors and a couple dozen new vendors, about ten of which are core to our business now. Our inventory doubled and sales supported it. It wasn't about shoving product down customers throats, it was meeting demand, both pent up and new demand. 

A lot of this spending was hampered by shortages, and to some extent, still is. There was no amount of money that could acquire the product I wanted. I had to create new demand, find new product for my customers. Thankfully I have peers who have gone before me who could turn me on to new vendors. They didn't always work for me, but they mostly did. 

In 2022, we still have shortages, games I would buy by the case if I could get them. I no longer have unlimited funds as before. There is a lot of money in the bank, but I'm planning to pay back my EIDL loan completely before its due next year. We are on a budget. If I had to go back to work in store, my guess is I would let some of my vendors go. Some of these folks are an enormous pain in the ass, taking far too much time to place orders with far too little shipping when they do. As long as I'm at home, I'll continue my new role as professional buyer, looking for new vendors and coddling the ones I have now. 

COVID brought us challenges. We were forced to reinvest in the business, to go in debt for the business. We were also forced to innovate and expand for what appeared to be a perhaps permanent shrunken market. Maybe doubling inventory was what was necessary if you've lost half your customers? We didn't know. We had money and one lever left to pull.

Monday, April 25, 2022

Just Because You Can

When you start a store, you're looking for any angle to make a buck. Any extra income will keep the lights on or preserve your savings. This is a good attitude to have, but eventually you begin to see the outlines of your business, a view of what belongs. A sculptor, I've read, has a vision for what their piece will eventually look like and they remove everything not that. A business is also like this, although customers will help form that vision.

Not taking every opportunity sounds like heresy. It sounds like you're giving money back, the most hated thing in retail. What you're doing is honing your vision, crafting your art. A well focused store with a clear vision will make more money than a looney tunes, anything goes store. A counter intuitive analogy is crowded shelves. If you can highlight one thing on a crowded shelf, and you pick the right thing, that item will likely sell better. You may need to have less stock on that shelf. That's right, less inventory will make more money in some circumstances. A store is like this overall. A store needs coherency, flow.

It's not just inventory, you need to set a tone. If you're going to have an upmarket store, you don't need downmarket product and services. I used to sell used video games. It made me some money, but it harmed the up market tone of the store with a lot of muggles who could care less about my offerings, other than their ability to dump the latest Madden game. It was gross. 

My tone is set by my staff primarily, then the surroundings like furniture, fixtures, and even flooring. Music sets or ruins a tone. The inventory is a tone setter, including what I carry, where I place it, the depth and breadth of stock. The walls are decorated, in a perfect world I have nice displays and demo tables. I agonized over our unfinished ceilings. Oh, it's all the rage in Portland! I am not from Portland. In the end, I took a few months of free rent, in exchange for unfinished ceilings, and decided not to look up for a while until it grew on me.

I can't tell you what your tone is, or what's good or what's bad for you. You'll have to figure that out. You might name your store after a farm animal and sell at a deep discount, making it up in volume through desperate marketing and attention seeking. You do you. You might also need every angle to survive, especially in a small market. The smaller your market, the more angles you'll need or want. 

Imagine a store in a market so huge you could specialize in something tiny, like only selling role playing games. I dream of a megalopolis where I can have a corner store only selling the games I care about. That will never happen, you're thinking, but I can point to a lot of things I don't do, that you might consider essential, because it's simply an unnecessary pain in my ass. Maybe my competitor will notice and start doing it (this has already happened). Such is business.

Have a vision of your sculpture in your mind. Remove everything that is not that. "Consider Yes" is a great RPG mantra to enhance player agency, but "Ponder No" may be appropriate for a maturing store with a clear focus. As you sculpt your store into existence, move slowly enough so you don't lop off an ear or make the lips too thin. It's hard to go back. Accentuate what's working. Don't look at the other artists with envy because they're sculpting something cool that's not part of your vision. I do this all the time. If you don't have a vision, why did you even start? Maybe spend some time in contemplation, thinking about what you really want to be doing with your store. The customers have spoken, have you? Remove everything not your vision.

Wednesday, April 20, 2022

Employee Performance Vs. Trust

The video below highlights the balance of performance and trust in business, and puts its finger on my thoughts about management. It basically says we have two critical metrics for business, performance and trust. We measure performance endlessly, but we have few trust measurements. Corporations are concerned almost entirely with performance over trusts. As an owner of a small business, concerned primarily with long term goals and stability, I value the high trust individual more than high performance.

High performance would be great, but medium performance is more likely when combined with high trust. A high trust, medium performing individual is a win for small business, while many corporations work to weed them out. 

Trust is more important because small business is playing the long game. We are not concerned with impressing shareholders with quarterly profits. We are not trying to juice sales so we can sell the business. I have big publishers that betray my trust on a regular basis. I don't trust them. I try not to speak with them, if I can help it. I will be there, in my business, longer than any person I speak with at a corporate level, all the way to the CEO, who as a customer, is probably high performance, low trust.

Performance is the key component in a corporate environment, unlike small business. In a corporation, you provide your high performance for high compensation, with both sides wary, since trust is in short supply. Corporations, in my experience, are a devils bargain of compensation for agreed upon exploitation. 

Corporations are the parable of the scorpion and the frog. They don't exploit out of spite, they do it because it's their nature. They think with their wallets in a short term fashion. So you take a job in an untrustworthy corporation, build your eff you fund, and always put a percentage of your effort towards the time when the scorpion will bite your back. Some corporations have a facade, a corporate culture of trust, but cultures come and go in corporations. 

Because I can't trust a corporation as a small business owner, I'm always looking over my shoulder, checking my margins, and hedging. So much hedging. I'm dividing my efforts, diversifying my inventory, questioning whether I should put effort into the latest initiative I know will be abandoned next year. This is the drag corporations experience from partners because of lack of trust. 30 companies have 80% of my business, yet I'm always looking at hundreds of others, mostly because once a company becomes a market leader, they become low trust.

Small business values trustworthiness over performance in its employees. Margins are thin, it's a high theft environment, and every employee is the face of the business. We can't afford to break trust with customers, but it all starts with the employee. The down side to low performance, high trust, is it emphases the "steadies." It brings in those who are great at keeping the status quo. 

In a corporate environment, you need the high performers, but the foundation of a department is often the steadies. In a small business, you have trouble attracting the high performers, because you lack high performance compensation. As an owner, because you have difficulty finding the high performance employees, you end up relying on yourself for this. You are the high performance, risk oriented individual you need. That's generally your contribution and it's a bit of a problem when you disengage.

Small business has the time to build trust without the performance pressure of a corporate environment. I've had people compare my business to Burger King, as in Burger King is paying more than you. Would you want to work in the corporate pressure cooker of a Burger King franchise? Do you want to work for a low trust employer who demands high performance, for an extra fifty cents an hour? Perhaps. Maybe you need that pressure cooker to feel good at the end of the day and you expect all work to be in a low trust environment. For most people, I think that may be their entire experience of work. Expectations of low trust, high performance.

Now as for measuring trust, it's mostly a factor of responsibility and time. Perhaps there are no easy metrics for measuring trust. Maybe measuring trust is a big of a Shrodinger's Cat, where the act of measuring trust is a distrustful act that effects the experiment. It wouldn't be the only soft thing I measure by knowing it when I see it. I'm no navy SEAL, but my paramount need as a small business owner, with my livelihood in their hands, is being able to trust my people.

Monday, April 4, 2022

Death of the Hold

 I can't hold that thing for you. One of the lovely ways we provide support to customers is we tell them about something cool we have and they ask us to hold it for them. In a "single stream" store environment, where there is no online store, the hold is to remove the item from existence in the store. It's one reason why if a customer calls and we look something up in our POS system, we want to touch it before confirming its existence. 

With an online store, we have Shrodinger's Items, items that can both exist and not exist. Held objects are not available on the sales floor, but they are available online. To hold an item is to remove it from the sales floor and mark it as invisible in the online store. That's a recipe for disaster, although you can certainly do that and with a single person store, it might even be feasible. It's just you and your memory. 

I've also become overly cautious about promoting anything that is currently in stock with a limited supply. I tend to promote pre-orders rather than things that exist now. I've had customers swear they would never shop with us again after we oversold an item. We had four, I created a rush, we sold some in store and some online and there was an inevitable error in reconciling these things. There is a delay between selling something online and when it's actually picked from the sales floor. The solution is to have deeper stock or separate stock. Both solutions are not feasible.

One solution we had for about 10 minutes before I flipped out was reducing the count of every online item by one, making single items on the shelf invisible online. Something like 30-40% of our items are just one copy (it used to be higher). If you've got a solution to the venerable held item, let me know.