First up – we’re going to be hazy with numbers. That’s partly because we sign an agreement with suppliers that we won’t distribute sensitive price information, and partly out of respect for the rest of the industry who wouldn’t thank us for it.
But there’s a controversial Friendly Local Gaming Store (FLGS) v Online store debate that keeps popping up – and it gets quite heated. It partly gets fraught because it becomes framed as a moral issue (I guess where we choose to spend or donate our money is a moral issue). It’s often presented as ‘cheapest prices’ v ‘helping the community’. Of course, this is simplistic. We all know that nearly everyone is between the extremes of ‘online bargains only’ and ‘FLGS only’ – but it is fair to say, generally speaking, your money is usually helping more people in an FLGS. But it is taking more out of your hard-earned wage, and that extra saving could be put to good use somewhere else.
We’re a very small business. You can see from our running total of games sold, we’ve dispatched barely 1500 items in 2021. By way of comparison, Dice and Decks said they sold 2000 in one weekend when they put there entire board game stock on sale, much of which was below cost-price. So when we slashed our prices to a bare-minimum, we didn’t expect anyone to feel threatened – but I think some people did. We just want to take this opportunity to explain why we’ve cut our prices, how we can afford to do so, and why (from our experience) it isn’t fair to expect everyone to do this.
A quick recap of where our business is:
At the end of 2020, our shop shut. It was a blow to us, but it was definitely the right choice. A pandemic wasn’t the time to sign a new lease on a building we didn’t like anyway.
We spent January just recovering from that, personally.
By Feb we decided ‘let’s give this another go’. We had no actual cash to do that with – but we did have some stock. Not much, we were mainly a cafe, our shop was very small and we’d sold a lot off as we closed, but we had something to begin with.
Our local, loyal, and much-loved customers kept buying from us. But that wasn’t going to be enough to raise what we needed. We considered crowd funding for about 30 seconds, before we realised there would be some of our regular customers who would dig far deeper than they could really afford. This model works well for many people, for us it felt it could become exploitative.
So we thought ‘how do we increase sales online?’.
I don’t speak in absolutes often, but I choose my words carefully here: The only way to get noticed online is price. We do all kinds of things that set us apart from the top online stores – we offer no quibble replacements for damaged boxes; biodegradable packaging; subscription services; ‘plastic free’ options for some games, preorders with payment on dispatch, rather than upfront…. but we find none of that cuts through the noise of online shops clamouring for your attention, at least, not as much as being the cheapest.
So, we set about doing that. Basically, like a bored toddler in Tesco, we began undercutting everyone just for the attention. We didn’t feel we needed to be the absolute cheapest in every situation – but we aim to be close to the top of boardgameprices.co.uk without making a loss.
It’s worth mentioning too, our overheads are tiny and we don’t take a wage. So all we’re trying to do is slowly fundraise, a game at a time, a few pounds at a time, until we can afford the running costs for our first couple of months so we have the confidence to reopen. And to buy Kallax. And maybe replace some of our games library, that we sold off to pay our Asmodee debts (side note – what we didn’t do, that some businesses do, is cease trading and owe other businesses money, and restart with a new company – we paid all our debts when we closed).
So what are we learning from deep-discounting?
Well first of all, I don’t really have a definition of ‘deep-discounting’. There’s one online shop that regularly sells games at 20% below RRP, I see that they’re referred to as a ‘deep discounter’, so we’ll go with that as a threshold. As most of our games are at least 20% off at the moment, we fit in here too. Although I think, though, it might actually be to do with marketing (giving the impression they are cheap) rather than the reality (they’re not the cheapest). I think there’s plenty of FLGS offering a similar percentage off.
Anyway… we’ve learnt:
1) Not every sale makes money. The ‘wrong’ combination of heavy games that push the order above free postage can make a small loss. As in: ‘purchase price – cost of games – cost of shipping’ is a negative number. Around 5% of orders end up like this.
2) Some sales wouldn’t cover staff and packaging costs. Even at minimum wage, if a member of staff packed, labelled and sent 10 games per hour – and then add the cost of a box and packaging – it would move another 10% of our orders into the ‘no profit’ area (no one is paid to pack games at the moment – so this isn’t an issue for us).
3) We have a target amount of money that we’re trying to make from each game we sell, and most games make us that amount. This isn’t a lot of money! This is the few pounds we need for our target of 3000 games to get us the capital we need to reopen. However – if we only sold games (no other kind of income), and we had the same costs as our last shop (which we won’t), we would need to sell nearly 2300 games per month, at this level of profit (spoiler alert: we don’t sell 2300 games per month).
4) A small number of sales makes us a decent profit. Things that are in short supply. We don’t go over RRP, but we will sometimes sell an in-demand item at RRP. We have to – these are the games that make up the losses we take in the first category. Around 5% of our sales are in this category. We’d love to offer the cheapest prices all the time, but then we’d never be able to reopen our shop.
We also learnt, there isn’t the volume required for these tiny margins to be sustainable using this model with board games. We’re pretty sure about this, because we not only checked out other online prices – we also took to stalking other websites with deep discounts. Older games on other websites – even large shops – don’t sell much faster than ours. We have the same stock that sells slowly that they do. Some companies occasionally cut their losses and sell below cost. Selling board games online, it appears, is more about being a ‘loss leader’ and gaining market share than making a profit. I think many people assumes that a large company can sell Ticket to Ride super-cheap at £27, because they sell 1000 of it and so they only need to £1 profit on each to become loaded. From what we can tell, no one is selling 1000 copies of Ticket to Ride.
Of course, bigger companies will have cheaper courier costs than us, and more efficient packaging systems may be able to make a slightly higher profit – but the difference is likely to be small.
It does beg the question – why are companies investing their capital in something that is so unlikely to make money? Perhaps the very biggest can make it pay – but, basically, if it isn’t Amazon or Zatu, deep-discounting board games seems like a poor investment choice. Like, if you have a spare £20,000, and you want to see a return on your investment, deep discounting board games is a terrible, terrible idea. I have a feeling there are people out there who had a chunk of cash and thought ‘Zatu can do it; we’ll compete with them’.
Heads up; you can’t.
Of course, we’re doing this now! Isn’t that a terrible choice? Maybe – but I guess we’re not trying to use our capital to get rich or supplement an income. We have other purposes that motivate us – and while selling other things may make more money and we could open sooner, we know nothing about other industries. And we don’t care about other products. We do enjoy researching, ordering, and wishing we could open games.
What about Gamers@Hart? Will you always sell games so cheaply?
For now, we have very small overheads, so this plan is working well! We’re seeing month on month increases in turnover of around 20%. We’re seeing large numbers of repeat customers (thank you!). We’re enjoying the banter via email and messenger. We like to be creative, and this has helped us innovate what we offer.
But what about the future? If we get a physical shop we’ll definitely still offer fantastic value for money. We’ll definitely still support online retail – the pandemic has shown us we should have been doing this all along. But can we afford to out-price Zatu all the time? It’s looking unlikely. When we have the overheads of a bricks and mortar shop we may need to rebalance it a little. Partly, because we can’t fluctuate prices in a physical shop as easily – and we wouldn’t want to have a two-tier pricing system.
So to keep our new online customers happy when we reopen, I think the question will be ‘Can we make a little more money from games, but make that feel like an insurance for outstanding customer service, especially when things go wrong?’. The emphasis here is ‘little’ – we’re situated in a part of the world with very cheap property prices, and we’re looking to rebuild one step at a time. We won’t be moving to an expensive, town-centre location straight away – there’s going to have to be a middle-step.
If we do need to increase prices when we reopen, hopefully everyone will recognise the choice isn’t between selling Ticket to Ride for £27 or £29, it’s the difference between selling Ticket to Ride or not. In the meantime, enjoy knowing that the small profits we make are genuinely making a difference!