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Tuesday, May 26, 2015

MTG Modern Masters 2015 Release Post-Mortem

The body count keeps piling up!  By request I'm continuing my series of articles looking back at large events and releases and recounting DSG's experience with them.

Modern Masters 2015 (MM15), the latest Magic: the Gathering release, was a story of high highs and low lows.  Extremely so.  The early spoilers made it clear there would be jackpot cards and foils in the set: Tarmogoyf, Karn Liberated, three of the mythic Eldrazi, and so on.  Modern Masters (2013) sold through a small print run and made many stores healthy.  Its successor seems likely to do the same.

This set is sold at an MSRP of $9.99, a sharp increase from the norm for booster releases of $3.99.  Setting aside that it's long since time for the booster MSRP to increase, the MM15 sticker price even represented a bump from Modern Masters 2013's $7.99 figure.  Combined with Wizards of the Coast's wholesale price increase from the beginning of the year, this meant stores would be paying close to six dollars per booster at wholesale.  It's just as well that the print run was limited, because I doubt many stores could have withstood the cost of an unlimited printing of this set, even on net terms.

Our customers opened far better than we did; both of the store's singles boxes contained Comet Storms and our only real hits were foil Ulamog and nonfoil Dark Confidant.  We opened into Fulminator Mage, All is Dust, Spellskite, Splinter Twin, and some other reasonable playstock in both boxes, but overall our value yield was low.  Meanwhile, one of our regulars got the Karn + foil Eldrazi pack, while another got foil Tarmogoyf in one box and foil Dark Confidant in another.  That's fine, of course.  Makes our people that much happier about doing business with us.

The negatives were of three species: the booster packaging, supply uncertainty, and "everything else."  Of those, supply uncertainty was pronounced in the early going but was resolved in the end when our primary distributor took good care of us and got us an allocation well in excess of the amount Wizards promised for Advanced Plus stores.  Our secondary distributor even provided some quantity, and Wizards Direct opened up three cases' worth to WPN accounts for shipment the week following.  With Phoenix Comicon on the horizon, this was a delightful development.  It was frustrating, however, to be forced to plan with uncertain fulfillment levels yet to come.

We can also dispose of the "everything else" category: the "MTG Finance(Tm)" community, binder-grinders and garage-dealers all, engaged in a concerted and sustained effort to devalue the set upon reveal of the full spoiler by talking it down relentlessly in any online forum where their voices could be heard.  This resulted in a few pre-order cancellations for us, but given sales velocity we were delighted to get those boxes back.  Interest-free short-term loans seem good.  The grinders hoped to browbeat the community into undervaluing the set so they could buy in low.  Fortunately, that does not appear to have happened to any widespread extent.  DSG is already considering raising the booster pack price to reflect rapidly diminishing supply.  Also, the booster boxes were the larger slanted-top type used for the previous Modern Masters and resembling those for Conspiracy, which are difficult to stack and to ship.  At the GAMA trade show this year, Wizards already apologized for this and promised never to do it again.  Good enough for me.

That brings us to the booster packaging.  In an attempt to be environmentally conscious, the booster packs for MM15 are made of cardboard and glued shut, with pull tabs to open.  As an Eagle Scout and proponent of scientifically-sound sustainability, I am happy to see progress toward reduction of pollution where it can be done without economic or ethical failure.  Unfortunately, in this case there was an economic and ethical failure.

A YouTube video purporting to demonstrate easy and recloseable access to the booster pack flaps appeared.  I suspected shenanigans and indeed upon examining a booster found that it was glued shut at the spot.  Moreover, any attempt to cut out or around the glue would have been visible upon buyer inspection.  While it was possible that a print run of boosters had desiccated glue or perhaps did not adhere properly, it seemed likely that this would not be a widespread problem.  However, it focused the community's attention on the booster wrapping.  Linus Torvalds famously stated that "given enough eyes, all bugs are shallow."  Well, it took about ten minutes for multiple sources to discover that heating the booster with a common heat gun melted the glue and allowed the pack to be opened and resealed in a manner that would appear pristine under any physical or visual inspection.  Any shady fraudster could replace the rare and/or foil card in a pack with a less valuable rare and/or foil, essentially surfing boxes for the cream at no risk and selling off the remainders.

At DSG, we don't compromise when it comes to customer protection.  For the first day of release, May 22nd, we did not sell any loose booster packs.  We only sold MM15 by the box or to full pods of booster draft players.  We wanted to be sure, and to be able to prove our products were absolutely unadulterated.  We strive for transparency to the degree that customers can trust DSG without having to take our word for it.  I cannot state strongly enough how frustrating it was to be in a position to have to sell a potentially deeply flawed product.

By midday Friday, Wizards of the Coast issued this statement regarding pack security and integrity.  I would have liked something a bit more definitive, but even without more detail, this was Wizards vouching for the product, so there we were.  It was as much as we were going to get from them; they simul-posted a survey asking among other things whether respondents believed the packs were secure.  Reading between the lines is not difficult.

Given Wizards' public statement, and with demand for loose boosters from our buying community rising to overwhelming levels, we opted to sell them after all, but with safeguards in place.  Only one booster box at a time would ever be opened from its factory seal, the loose packs would remain in visible camera/public view at all times, we would break open a fresh box for all drafts of course, and we would not accept buyback or trade-in packs at all.  This satisfied enough buyers to drive us to a nice, strong revenue weekend with no evident integrity concerns.  However, some damage is already done.  Players and dealers know that Wizards released a product that cannot be proven pristine without additional corroborating evidence.  It's a problem that did not need to exist.  If Wizards wants to use cardboard wrappers again, we hope they find a non-meltable adhesive, assuming such a thing exists that would not cause more pollution than the switch from foil wrapping to cardboard would have eliminated.

In objective terms, MM15 overall has to be considered a runaway success.  More than half our allotment, limited as it was, sold on pre-order and provided us with strong cash flow.  Our Memorial Day Sealed Deck tournament for the set packed the joint with excited players.  At the end of the day, we made a bunch of money and will continue doing so for a week or two until it's all gone.  The booster packaging debacle exists as a stain on the, ah, "Legacy" of Modern Masters and will hopefully disappear and be forgotten, never to be used again.  It was a serious problem and I think they will be scrutinizing such changes far more exhaustively in the future.

Next up for us in Magic will be Magic Origins in July, our first prerelease in four months and a planeswalker-themed set that already looks splendid even with nothing for us to go on yet but one spoiled card and a bunch of key artwork!  I fully expect the set to be fantastic and to do abundant business for us.  The week after the prerelease will be our Preliminary Pro Tour Qualifier for the season, and its format will be sealed deck using Magic Origins product.  If that does not turn into our best revenue weekend in the history of the store, I will have failed in some way.

Join me next week for an article on our experience at Phoenix Comicon 2015, which runs from Thursday night through Sunday!  Have a great week!

Tuesday, May 19, 2015

Would I Buy This Product?

In the game and comic hobby industry, the buying is where the money is made.  With perfect precognition, procurement would be pro-forma for your preferred purveyor of Pandemic and Planar Chaos.  We would order up exactly what customers wanted, the products would sell, and lather rinse repeat.  No need to worry about such arcane matters as safety stock, hedge inventory, anticipation inventory, or what have you.  There would be zero waste in cash flow and turn rates would be immediate.

Alas, back here in the real world, store owners and managers have to make their best guess instead.  And we have to make these guesses every week, sometimes hundreds or even thousands of times.  We have software to help us, metrics, analytics, entire fulfillment systems designed to steer us toward particular purchases.  Though the publishers and distributors have bills to pay too and usually oversolicit as a general rule, they don’t push too hard.  After all, a store that chokes on overstock and fails is no help to their ledger.  So mostly the publishers and distributors keep us on the straight and narrow and give us ample warning about key releases we ought to be buying and when.  They can’t possibly tell us everything, however — there is simply too much product released every single week — so at the end of the day, on a lot of what is available, a store owner has to guess.

Some guesses are easy.  In some cases extremely so: filling a pre-order is back in pro-forma territory.  It is also easy for a store in our industry to intuit that every current Magic: the Gathering booster product, a wide variety of dice and sleeves, and concessions should be kept in perpetual stock.  It is easy on the negative side of the ledger to pass on a heavily Kickstartered product, knowing the “alpha gamer” early-adopter market will be saturated long before we ever receive stock.

Some guesses are surprisingly difficult.  Comic vendors get to spend anywhere from three to eight hours, once per month, placing their massive Diamond comic order for items that will be delivered two months later.  The time delay introduces natural error into the process, and on top of that there are just so many titles and products available.  The Diamond web initial order form typically runs several hundred pages.  What’s worse, many items ordered will arrive “whenever.”  First-run comic books typically do arrive during the month expected, but graphic novels and apparel often arrive much sooner, while toys, statues, and other paraphernalia are sometimes delayed many months.  I am still receiving statues that were ordered last summer.  We can’t control erratic supply, but we can mitigate erratic demand: To reduce guesswork, comic buyers use “cycle sheets” or similar mechanisms, in software or on paper, that track the exact sales behavior of given titles and title groups.  This helps reduce gross error considerably, but not entirely.  Past performance is simply no guarantee of future results.

There is really just no time in the day for a buyer to make a careful analysis of every single procurement decision.  A buyer will take shortcuts and save labor where possible, typically resulting in restocks where software makes most of the decisions, and the restocking criteria are revised at later intervals, generally when items are designated for clearance.  For evergreen stock and bread-and-butter stock, it isn’t a question of whether to order the item, but how many.  On the flip side, many items are solicited where it’s easy for me to shake my head and say, “That will probably never sell.”  This takes place rapidly, over and over, moments per item, as I parse the distributor solicitation emails.  If, as usual, I never hear hide nor hair of the product again, I was right.  If, on the other hand, the item becomes a hit, I’ll just jump on board for Wave Two, like with the Force of Will TCG that’s currently unobtainium.  The risk mitigation is worth stepping back from the cutting edge.  In this business, the early bird gets the worm, but the second mouse gets the cheese.

So when an item is a sure winner or a sure loser, my job is easy.  What about that middle ground?  The mark of experience is that the middle ground narrows, so naturally there becomes less and less of a bubble zone.  But even a small gray area will encompass huge numbers of products.  A buyer needs internal guidance, something more than a gut feeling.  Gut feelings were how my business partner in 1999 ordered a hundred Space Marine Land Raiders against anticipation and mired us in the Cash-Flow Choke of Y2K.

I use a decision tree based on trusting my perspective as a consumer.  The fundamental core question is, Would I Buy This Product?  The consequent spans a range.  At the lenient end, if I can understand the target customer for this product and I would find it appealing if I were so situated, I’ll buy.  At the stringent end, I won’t order that thing unless I can lay a skin wager that if I bring in this merchandise and nobody ponies up the funds within 90 days or so, I would be willing to dogfood the item, purchasing it for myself.  (Or sacrificing my free time to expedite the item’s clearance, etc.)

Here are a few “bubble” items that I have encountered so far in 2015, how I approached the buying decision, and how it turned out.  I chose items with varying typical stock depths to illustrate how quantity figures into the buying decision.

INGRESS Dice by Q-Workshop

The publisher Q-Workshop is a Polish manufacturer of stylish dice priced at the high end of the scale.  In general the manufacturing quality of their plastic dice is not quite as robust as Chessex, and they do not range into unusual shapes and sizes like Koplow.  Q-Workshop's solid metal dice offerings are about on par in design and manufacture with Iron Dice, and look better but are less clean and classic than those by Metallic Dice.  The strength of Q-Workshop is that the aesthetics are excellent.  They make dice with faces featuring Elvish script, Dwarven-style runes, Japanese kana and kanji characters, pirate and steampunk themes, dice that glow in the dark, and so on.  Their existing IP licenses include Pathfinder, Warmachine/Hordes, and Axis & Allies.  Even their dice bags look good enough that a hardcore roleplayer would consider them an immersion aid.

When Q-Workshop announced the Ingress dice, I was excited immediately.  Ingress is a massively multiplayer smartphone game that roughly blends geocaching with Capture the Flag.  I am on the good team, the Resistance Faction (blue), and I play Ingress with my children fairly regularly.  This product obviously passed the dogfood test: I would be delighted to own both the polyhedral and d6 Ingress sets for myself, regardless of the set price clocking in just under $20.  I had to decide whether this was a strong enough product to put on the shelf in quantity, and what its true likely market reach might be.  Dice are a stock-it-wide category, but expensive niche dice eat purchasing dollars and turn slowly.

I reasoned that the target market, "Ingress enthusiasts who also happen to play TCGs or RPGs and like high-end dice sets," was limited.  Based on normal product flow, I estimated a safe shelf fill level at 2 units each of the four SKUs.  (Enlightened and Resistance, polyhedral and d6 sets).  For new release products it’s normal for me to double or triple the shelf fill and allow the early demand to draw down my stock to regular levels.  This time, I hedged low and added my pre-order: Four each of the Enlightened sets, five each of Resistance.  So far only a few Resistance d6 sets have sold after my personal purchases.  This product is shaping up to be something of a dud, and it appears I overbought.  My overexposure is less than $50, which isn’t terrible, but that’s most of a Magic booster box.  In a week or two I will peel off the excess and sell it on eBay or Amazon, leaving two of each SKU in the store for shelf stock.


Citadels by Fantasy Flight Games

I saw a solicitation for what is apparently actually a reprint of this simple table game, which exists in the complexity gradient somewhere north of Love Letter and south of Catan.  That’s a decent enough space, but plenty of games are aiming for it, among them such evergreens as Guillotine and such strong new entries as Timeline.  Fantasy Flight, of course, acquired this game from elsewhere and added it to their agglomeration.  For such a game to earn a roster spot at DSG, I need a reasonable certainty it will move.

The dogfood test left me lukewarm on Citadels.  Yeah, I suppose I wouldn’t mind owning this one, it does sound fun, but I own a lot of games I rarely have time to play.  I’d like to have something more.  I reasoned that the target customers would be "people playing socially who want a game at that complexity level and possibly who enjoy the building-scoring theme that’s of the same animal species as Carcassonne."  Board games are a mile-wide, inch-deep category.  Our customer profile still does not appear a strong indicator.

Experienced owners learn to avoid using “has a customer asked for it?” as a buying criterion; customers ask for all kinds of stuff, much of which they have no intention of buying or which they already own, except of course those times when they want a thing right now and by not having it you’ve already lost the sale to Amazon.  Oftentimes as well, a customer may not know what they want until they see it.  As the story goes, when Henry Ford asked people what they wanted, they said “faster horses.”  He came up with something a bit better.

This time, however, a customer recommendation provided me with just enough enthusiasm to bring in the game.  I’ll start at quantity one with the reprint release.  Our small-box board game gallery is rich and diverse, so it will not look lonely on the shelf.  If Citadels moves, I’ll restock for as long as it turns par.  If that first unit is still there ninety days later, I’ll take it home and not replenish.  It’s possible this is a turner and I’m understocked not having it already.


Avengers Omnibus vol 2: Earth’s Mightiest Heroes by Marvel Comics

Comic omnibus collections possess tremendous purchasing “pull,” and don’t think the publishers don’t know that.  Despite that these volumes typically clock in at over $100 MSRP and don’t sell with any significant frequency, it is difficult to find the comic fan who sees one and does not feel the pang of want.  This is not limited to Marvel and DC, with Image Comics offering Walking Dead omnibi in multiple configurations and price tiers, with or without autographs or limited slipcases or what have you, all in service to discerning collectors.  

Marvel tends to print to order and allow these books to be unavailable for long intervals, letting scarcity create urgency, while DC attempts to keep top sellers in stock.  Regardless of their production strategies, all publishers share common elements in their omnibus books, most noticeably a kitchen-sink approach that jams metric tons of content into these doorstoppers, and is then unapologetic about demanding a pound of flesh in exchange.

With Avengers: Age of Ultron on the slate for 2015 and this book appearing in a late 2014 initial order roster, I had a decision to make.  I had no intention of dogfooding this; though I do like comics and I like the Avengers, I haven't been reading this series and I have enough material pending already that I'm not looking to start another title or title group.  However, it was very easy to me to imagine the target customer for this item: an Avengers or Marvel comic reader!  Even more specifically, one who is affluent enough that this is a compelling purchase.

My methodology seems to have swung and missed this time.  The book sits on the shelf, still unpurchased after six months.  I'm not in a hurry to clear it because if you're going to have any Avengers omnibus in stock, this one is a perfectly good option.  All the same, I wouldn't mind recouping the spend on it and directing those dollars elsewhere.



Hatsune-Miku art playmat (and deck boxes and sleeves) by Ultra-Pro

Every store stocks an abundance of Ultra-Pro products, of course, but the evergreen lines are mostly solid-color sleeves, deck boxes, playmats, binders, and storage supplies.  Art sleeves and playmats are trickier.  They tend to be more expensive, varying by the potency of the license.  Magic: the Gathering art playmats are the most expensive of all, and thus sell slowly, relatively speaking, despite the high proximity of the branding to its origin products.  Other art playmats vary in sales, with most releases selling few or no units.  I could carpet the polished concrete floor of my store with playmats that I have had to clearance out at near or under cost.

Despite this somewhat alarming underperformance rate for art playmats, deck boxes, sleeves, and binders, etc, there are a number of reasons to consider carrying at least most of them in some quantity.  Sourcing is strong: Ultra-Pro is net-priced, which means you can always keystone their merchandise, and every distributor has tons of it.  Even with the port strike fiasco of the past year holding up some of Ultra-Pro’s replenishment stock, there was so much product in the channel already that stockouts were sporadic at worst.  The IP licenses for the art tend to be A-list material, at least by the standards of this industry.  The production quality is typically high.  And sometimes a given art piece is a bona fide hit and sells through, possibly even after restocks.  The black-outlined “Nicol Bolas” art sleeves and playmats from the Magic 2013 Core Set were big hits, so much so that when a distributor unearthed a few lingering cases of black Bolas sleeves last month, I couldn’t push the “order” button fast enough.  By contrast, Ultra-Pro made ten different SKUs of each product for Dragon’s Maze in 2013, and that was about ten more than the market demanded.

I saw the solicitation for these sometime in late 2014 and didn't know I would be waiting until April 2015 to receive them.  I am not particular about playmats, and I already have my "preferred sleeves" for personal use, so I did not feel great about dogfooding this product line.  And in any case an order for a product line like this is going to be multiples of each art style, making the dogfood analysis a mismatch.  I had to decide whether I understood the target customer for this and whether I would have bought it if I were that target customer.  I've liked anime for many years, though I don't watch it much anymore for lack of time.  As Penny Arcade put it, who doesn't dig robots and nurses?   I did observe that quite a few customers seemed to enjoy the genre as well.  I thought about my perspective during the height of my anime fandom, my "otaku years" of 1987-1993 or thereabouts, and realized that if that were now, you couldn't keep me away from these.  Even today, if the license were for Robotech/Macross/Southern Cross/Mospeada, Akira, Bubblegum Crisis, Ranma 1/2, or something Miyazaki, I think I'd have to pony up.

This time, the "if I were so situated" branch of the Would I Buy This Product? analysis worked.  I brought in three each of the playmats and deck boxes and a dozen each of the sleeves in the four or five art SKUs that were offered.  I expected a shelf stock of three of each playmat to draw down to two for replenishment, and the deck boxes and sleeves would be treated like periodicals unless they sold very quickly.  As it happens, almost all of it did.  Four of the five playmat styles sold out within two weeks.  The fifth sold one of three and is at the proper stock level.  I replenished the others to two units per.  The sleeves and deck boxes sold in various amounts but enough that I'm restocking them.  I don't know much about Hatsune-Miku, but whoever she is, my customers seem to like playmats bearing her likeness.




Metroid: Samus Aran poseable figurine by Figma

There was some added degree of difficulty on this one.  Figma makes collectible figures that straddle the line between statue and action figure.  The $50-$120 figures are highly articulated and well-manufactured, resulting in a beautiful showpiece that can be posed very precisely and will remain in place.  The problem, as with many figure and statue manufacturers that sell through Diamond, is that you cannot be sure when the hell you will ever get the item.  What seems hot now may seem passe tomorrow.  Ask anyone who got in early on any movie tie-in Green Lantern figures or statues a couple of summers ago.  Also, these items typically cannot be restocked.

Fortunately, Metroid is a video game classic, and Samus Aran is the defining female video game protagonist and among the best player avatars of any gender.  Super Metroid might be, depending whom you ask, the best console video game ever made.  Knowing this, even if it took a year or more for a Samus figure to arrive — and in fact I have been waiting that long for First 4 Figures’s $370 Samus Light Suit Statue first solicited in mid-2014 — there is no likelihood that the interested buyer pool will diminish.

So, knowing this, our buyer pool can reasonably be defined as “Collectors who like Metroid and are spendy enough to buy a Samus statue pretty much no matter when it shows up.”  Bit of a tall order.  I am completely in the tank for Metroid, so this figure passed the dogfood test in spirit before they even announced it, but as a practical matter I would face an uphill battle persuading my wife that it was a reasonable purchase.  Accordingly, I had to make a buying decision on the basis that I would totally buy this thing, but I really needed that not to become necessary.

As it happens, the Samus Figma sold within hours of its arrival, and of course Diamond was already out of stock on it forever.  I kicked myself knowing I probably could have sold ten of them if I had pre-ordered that many.  As Yoda once said, it is the way of things.

Conclusion

The Would I Buy This Product? analysis is an imperfect tool for an imperfect purpose.  However, properly honed, it can provide significantly better guidance than the mental dartboard that serves too often as a buyer's default method.  If you find a better method, by all means follow that, but just so you are doing it systematically and not by chance and a shrug.

Next week I'll stay topical, with Modern Masters 2015 and Phoenix Comicon on the horizon likely providing me with some manner of inspiration.  Have a great week!

Tuesday, May 12, 2015

Industriousness, Duplication, and Oversight

A motivated business owner working the trenches him- or herself can be an absolute force of nature.  Not that owners are the Energizer Bunnies of the business world all the time; everyone has their sluggish days.  However, pound for pound and day for day, I would measure up small business owners against any comers and expect them to impress.

Recent events make this an ideal time for me to reflect on my brief tenure as front-of-house store manager at Desert Sky Games and Comics, a position I have held in tandem with my administrator role for the past half-year or so.  We haven't made the Facebook announcement yet, but one of DSG's other LLC partners, Patrick Hug, is taking over as store manager.  Patrick's previous gig ran its course and he was at a good juncture to opt out, and he asked me what sort of needs DSG had that might let him take a greater role in the business.  By an astonishing coincidence, I have been hitting the practical limits of what I can accomplish in my multiple-hats role and I have been exploring structural changes to address that problem.  Patrick's arrival creates for DSG a much more straightforward answer.

Last November, my previous store manager resigned on good terms to go on to fortune and glory in a better-paying job.  This is sort of an in-app victory condition for store owners in our industry, knowing that one of our charges made good and moved up in the world.  However, his departure left me with a dilemma.  While I have a great staff and there are some management prospects on that roster, none were in a position to advance at that time (and still none are ready yet).

I am more patient than most at this; I spent over seven years in my senior position at the state and passed on both opportunities I encountered to jump to higher-grade positions at other agencies.  In both cases, despite my boundless confidence, I knew I needed more polish before I'd be ready for the upgrades.  Years of getting old and decrepit have given me a keener sense for when an undercooked meal simply must simmer longer, never mind how hungry I might be.

Based on this wisdom, while I knew my guys were full of vigor and confidence that they could have taken the reins and got the job done, I also knew the limits of their expertise.  I would have been setting them up to fail.  Rather than do that, I assumed the store manager duties myself, in addition to my responsibilities as owner/administrator.

The good news is that the store performed decently under my expanded oversight.  Our metrics paint a clear enough picture.  Our inventory has grown from subsistence levels of Magic and little else to the full stock of most major product lines in the industry.  We just posted four of the best six months we've ever had.  And, at long last, we're seeing cost stabilization and containment.  Patrick and I were just griping about a Thursday revenue figure that we would have gladly accepted on any weeknight less than a year ago.  In fact, we need to slam on the brakes a bit on our inventory growth and build up our spending money again -- a lot of stores are going to get themselves into trouble with Modern Masters 2015, and we plan to be in a position to vulture in on that.

The bad news was that the more we grew and the more we scaled up, the worse my oversight became.  There literally were not enough hours in the day in recent months for me to give the same level of attention to all aspects of operations that I did before.  Small things stopped getting done, then medium-sized things.  It has been all I could do to keep up with the big things.  I have had something like three days off in the Year of Our Lord Two Thousand Fifteen.  Sure, I could have simply stayed home a bunch of times... but not if I wanted DSG as a business to get where I needed it to go.

I am worse than some managers, but better than others, at delegation.  I successfully delegated the inventory management and some degree of inventory curation to my fulfillment staff.  In general my front-counter staff has done very well running events and helping customers day-to-day.  They are at their best when customer traffic is at its busiest, which is an indicator that they give an authentic effort.  It also contrasts disappointingly with their reduced productivity during the small hours.  Some "staging" got done, some did not, some got moderate attention.  I consider it a management failure on my part that I was never able to delegate the underlying task daemon effectively.  In essence, I was able to cultivate a good squadron of role-players, but I failed to duplicate my own impact.

It will certainly take time for Patrick to ramp up to full performance, and indeed in the early going he will lean on his own subordinates to bring him up to speed on how they've been doing their jobs.  I have a long itinerary of process instruction I am going to have to convey to him.  But as an owner, Patrick is more likely to have an inner motor that fights the ticking clock, as owners do, rather than riding its course.  If this is indeed the case, once he is dialed in, DSG should hit a new acceleration level on performance and efficiency.  During the small hours, as owner, he is going to have the roving eye that looks for the next process to improve, the next piece of cost savings we can seize, the next hour of staging work that can be front-loaded to ensure that we don't miss the capture of additional revenue when it's prime time and the public arrives in greater numbers.

I'm excited for what might happen during this next step, and I'm also relieved to step away from the pole position of business continuity.  I need a break!  My way clear to that break is going to be an extremely busy month of transitioning Patrick into his role.  But sometime in June, oh man, my family is absolutely going to take a mid-week beach trip (when the hotels are cheap, natch) and watch the waves roll quietly in.  And that's something I wasn't sure I'd get to do this summer, just due to the sheer scope of operations and how they've grown.

There are enough interesting things happening in the next few weeks that I'll probably stay topical for a while, and then I'll do the Arizona Gamer story.  I'll have to break that one up into seasons or something because it did last a couple of years in its heyday.  My experiences and the people from there still continued to touch my life for years to come, in some cases all the way to the present.

Tuesday, May 5, 2015

The Business Investment in Free Comic Book Day

DSGCW opens at 10:00 a.m. on Saturdays.  At opening on May 2nd, there was a line of customers outside the front door stretching all the way to the Copper Still restaurant.  By 2:00 p.m., we had completely run out of Free Comic Book Day giveaway books, despite my having ordered more than double our book load from the previous year.

Moreover, the day was a smashing success as far as the number of new faces I saw in our building.  Despite cost, which I will discuss in this article, the ROI for the resources I allocated to Free Comic Book Day created results now and should continue to create results well into the future.  From a business perspective, FCBD is an investment that paid off on multiple levels.

FCBD 2014 had been our first; we added comics as a category in late 2013.  For that first FCBD we ordered a book count that fit within our budget.  We did not end up giving them all out.  It wasn't even close.  We had entire longboxes left.  Despite that, with the growth of our comics trade and with some advertising budget opening up thanks to discontinuing an advert that wasn't working -- more on that in a moment -- I went in heavy for 2015 to ensure we would be on the Diamond Locator as a Gold Sponsored location or whatever they called it.  We had a very healthy load of books this year to give away, and it was nowhere even close to enough.  By midday I was gathering any giveaway goods I could lay my hands on and putting them on the tables for people to take.  Free intro Magic decks from Wizards of the Coast, free magazines and posters, overflow regular comics, anything not nailed down that had some conceivable promotional value.

We had engaged in a Register Tapes advert from November through April.  This placed our logo and coupon redeemable for 10% off any item onto the back of grocery store receipts in the immediate vicinity.  This seemed like a promising advertising channel -- it was simple, moms would see it and could direct their children accordingly, it was family friendly -- and it did not work in the slightest.  We redeemed a single-digit number of coupons in half a year.

The entire point of an advert like the Register Tapes coupon is to generate arrivals.

Generating arrivals is really what "advertising and promotion" is for.  It's true that some amount of promotion is intended to keep existing customers excited and happy, but a business cannot rely on that effect alone.  One can only get dollars out of the same customers so many times before attrition occurs.  We have some extremely dedicated regulars, but I do not expect a given "spending level" out of them, even though that is what ends up happening.  I expect to have to earn their business every time.  But even if I'm running perfect on customer service -- and that's a tall order -- life happens and sometimes a regular moves away, or loses interest, or has financial hardship, or what have you.  And even still an advert can generate an arrival from an existing or lapsed customer.  But the best outcome of an advert is one that generates arrivals from people who have never visited before.  That source of new blood is how a business replenishes its customer base and keeps it healthy.

So, to generate an arrival is a positive thing in most cases.

An inviting storefront can entice a passerby to walk in.  Location, lights and signs, et cetera.  It's possible that person is perfectly normal but has no interest in what we do, in which case it's a neutral outcome and you have a chance to be friendly to a visitor and maybe exchange a smile.  And you never know who that person might encounter and pass on a good word about the store.  Such an accidental arrival can also be a negative if some bum or meth-head comes in and is disruptive or potentially threatening.  Even if they are being harmless, your typical affluent mother is not going to want to let her teenaged children hang out at a place that attracts transient loiterers.  So stores have to monitor for that.  But those arrivals, when they happen, are typically accidental and are generated, at most, by the storefront being there.

Advertising and promotion hopes to go a step further.  There are two branches that interest us the most.  The first is generating an arrival from a person who is already interested in the hobby -- an existing comic collector, for example, newly moved to the area, or perhaps a Magic: the Gathering player whose previous watering hole has gone downhill.  This is excellent because the person is already acclimated to spending money on the very goods and services we have on offer.  The second is generating an arrival from a person who is experiencing their initial exposure to the hobby, or almost so -- they are new overall, or perhaps this is their crossover from a related hobby, like when a kid who enjoys Marvel super hero toys gets her first read of Marvel comics based on those characters.  This is the best possible arrival from a business point of view: truly "new blood."

New blood is crucial on several fronts.

A collector or player involved in the hobby will always have a "first store" beyond casual contact at Target or Wal-Mart or what have you.  A "first store" that is an industry comic or game store.  Their experiences at that store set the metric for what they consider "acceptable" from other stores they will eventually visit.  They have no preconceived notion beyond perhaps seeing the comic store on Big Bang Theory or elsewhere in fiction.  It is a chance for a welcoming atmosphere, a clean facility, a smiling staff, a great inventory, and a positive experience to lock in an expectation for that customer that will make your store naturally resilient to competition.  If you are a "gamer pit," it won't take much for another store to wow your new-blood customer away. If you are a gorgeous boutique where it is fun to shop, it is much more difficult for the brand-new Magic closet down the block to attract and keep your customer.  Beyond having to generate the arrival themselves, once one of your first-store customers walks in the door of that closet, the customer will think, "This place is a joke.  Why would I ever come here and not go to DSG?"  And that is precisely the reaction you want them to have.

Beyond the first-impression effect, new blood is great because they don't already own all the games and comics yet.  They do need copies of Catan, Ticket to Ride, and Dominion.  They do need the trade paperbacks that cover the past issues of their comic book of choice.  They do need dice and sleeves, even more so than your typical grinder needs dice and sleeves.  Your entire Magic inventory is "live" to them.  They do need comic storage boxes, bags and boards, and by golly depending what titles they like, they may quickly branch out into multiple ongoing series.  A strong proportion of my comic box subscribers right now have exactly four titles in their pull: Marvel Star Wars, Marvel Darth Vader, Marvel Princess Leia, and Marvel Kanan the Last Padawan.  As Leia ends in June, they'll likely move to Lando and whichever others come over the horizon.  Many of those customers were new to comics and new to DSG when they arrived.  Those were outstanding arrivals for us to generate.

So, while most arrivals you can generate are good, and some are great, a subset of those arrivals are the best possible arrivals of all.  New blood is the key.  Advertising and promotion has to address all those audiences, but in particular a business hopes to attract new blood.

Facebook is a revelation in how it does this, because of targeting.  Some adverts are best targeted to "people who Like your page and their friends," because you know the advert is for things they will be excited about.  However, the reach toward new blood in that subset is limited.  Friends of your page Likers is a good audience, but not the widest possible net to cast.  To reach new blood, you have to target people with given interest subsets, without spamming interest tags too thinly.  This takes some practice and finesse and is beyond the scope of this article, but the tools are there.  Facebook's Scrooge-McDuck-Vault-of-Money did not come into their possession by accident, folks.

What about reaching people beyond Facebook?  Well, a proven winner is movie theater screen adverts, which is why theaters charge so much for those impressions.  Down the road we will take that approach also.  Television is also a proven winner for our industry, even if the advert is rudimentary.  The exposure is there and people do watch TV.  Beyond that the options dwindle.  Options like EDDM (direct mail and direct placement of paper materials) are touted as effective, but observational experience indicates otherwise, and besides that our mostly young, mostly tech savvy, mostly progressive customer base strongly dislikes needless pollution of the environment by slaying generations of trees to generate advertising paper.  As we saw, the Register Tapes route did not bear fruit.  Radio and web banner advertising is of extremely limited efficacy.  Convention appearances and vendor tables can be extremely good if it's the right convention for the audience, but that takes resources and labor above and beyond most advertising and promotion, so it's not as automatic as it may appear.

You know what really, really works to generate new arrivals chock full of potential new blood?  Industrywide store-tied promotions.  You know, like Free Comic Book Day!  There are others, of course:

  • International Tabletop Day in April does reasonably well, as I wrote a couple of weeks ago.
  • Magic: the Gathering Prerelease Events have some reach and Wizards of the Coast does a lot of promotional heavy lifting to drive customers to game stores, but that is of course limited to people who already know about Magic, though many may be neophyte players.  (This is still an excellent addressable audience overall).  
  • Free RPG Day in June can be great if your store is deep in the category.  DSGCW is not -- we carry D&D, Pathfinder, the Star Wars RPGs, and the Warhammer RPGs, and that's it.  At this stage in the game we're not rooted deeply enough to go broader than that in RPGs, so our neighbor stores in the metro area like Imperial Outpost Games in Glendale capture that audience extremely well.  
  • American Express's Small Business Saturday in late November can be a great source of new arrivals, in particular potential new blood that also has money to spend, since your typical AMEX cardholder is affluent and has good credit.

But Free Comic Book Day, for sure, is about the strongest of these.

So, knowing that Free Comic Book Day hits all the marks for generating arrivals of mostly new blood and overall an extremely optimal audience -- and that this is proven year after year in observational practice by stores in the industry -- obviously, a store will want to order a lot of giveaway books for FCBD.  Why not just order far, far more?

The limiting factor is that stores do have to pay for the giveaway books.  It's not full wholesale, but is instead on the level of 25 to 50 cents per book.  However, multiply by quantity in the thousands and you can see how it would add up quickly, and that keeps us from ordering gargantuan amounts of giveaway books every year.  Ultimately it has to come from the advertising and promotion budget.  In fact, this year I let our cash flow get pinched because I didn't realize we would get charged for FCBD several weeks in advance.  I thought I had until my usual Diamond terms window after arrival to take care of it.  Whoops!  So that made April much more stressful than it needed to be, but fortunately we were able to absorb that cost in the normal flow of business.

Nevertheless, for 2016 I am going to order more than double again our 2015 order, depending on what qualification tiers exist at Diamond and what we might be able to reach by stretching a book quantity here or there.  I will know when to expect the bills to arrive and prepare accordingly.  With a second FCBD under my belt, my first while having full operations of the store personally, I will be able to prepare better in many ways.  Next time around I hope to attract some industry special guests, an option I deliberately left aside this time out of concern that if I spread my preparation resources and attention too thin, I would do a poor job of everything rather than a good job of core things and omitting the rest.  Depending on a number of variables, FCBD 2016 might also be our last at our current facility, or our first at our next facility, or some transitional combination of the two.  We shall see.

What I do know is that, regardless of exactly what I do with it, Free Comic Book Day 2016 will generate new arrivals thick with new blood.  And I really, really want to see those people and make a positive impression on them when they visit the store.  It is up to me to determine what I can do to ensure that Desert Sky Games and Comics becomes the first store, or the new watering hole, for as many of those arriving visitors as possible.  For that outcome, the business investment I make will absolutely be worth it.