I’m a big proponent of retailers venturing into vertical integration by producing their own product. Each side of this equation–the retail division and the production division–brings a component necessary to the success of the other for a fantastic synergy. Stores make communities; publishers need an audience. Stores want margins; if you are the publisher and retailer, you can earn great margins. For a broader (and higher-volume) discussion about vertical integration, read this Harvard Review article.
If you’re a an existing retailer who has been successful and want to leverage that success to improve your store further, watch this Kickstarter campaign I’m conducting right now. It doesn’t tell the whole story, but it is illustrative.
(While there are retailer pledge levels, and I certainly wouldn’t turn down your contributions, this article is about how you can use this technique to increase your own revenue).
Expenses
- Total development cost (art, layout, etc.): $600
- Production cost for 500 copies (printing cost & shipping): $2,400. I had lower quotes, but I went with the company with an excellent reputation. They produced Tokkaido and other games you’ve heard of. I had a printing quote as low as $1,440
- Fundraising cost: marketing & advertising, host fees, card processing fees, shipping costs): $620
- Total: $3,620
Income
- Net from pre-launch funding (that is, from Kickstarter) $3,000 (expected)
- In-store and convention sales of remaining inventory: $15,400
- Total: $18,400.
That’s a pretty good return on investment–but it gets better. If you go into a second production run, you don’t have to pay the development cost again. You don’t pay the fundraising costs. You only pay for the actual production. Also, my order of 500 copies is paltry, and production benefits from economy of scale. My quote for 1,000 copies is only $635 more than the first 500, or only $1.27 per game that I sell for $35.
If you have the existing infrastructure to sell 1,000 copies of a game, you need to be doing this. It provides a higher GMROI than adding most new product lines. I can show you how.
Selling digital products, of course, offers improved margin, but they don’t take advantage of the infrastructure you’ve created as well. You know as well as I do the difference between a game you promote, and a game you stock.
I promoted the Dune CCG long after it went out of print because I’m a huge Dune fan. For 6 weeks a dead CCG outsold Magic: the Gathering. Then I ran out. Consistency and excitement sell games.
Here’s are some examples of how you can make that giant retail engine you’ve created work for you:
- You can set up a demo table to teach it to your entire community.
- Teach your crew how to play so they can better sell it.
- Merchandise it prominently in the store.
- Post signage in your window, at checkout, or elsewhere.
- Create a popup on your point-of-sale system to recommend the game to people buying similar games.
- Mention it prominently on your social media.
- Make an announcement via text/SMS.
- Feature the game in your newsletter.
All of these things are free, cost quarters in materials, or cost only labor. By spending money, you can increase the list considerably:
- Give away copies as raffle prizes for store events
- Give copies or promo material for events like Free RPG Day (if it’s an RPG, of course)
- Host tournaments in the store
- Create a unique card or other component for the game that is only playable in the store.
You can extend this list considerably with a brief brainstorm session.
But I Don’t Know How to Do X
I don’t either. I can’t draw a straight line with a ruler. You know what I can do? I can hire an artist and tell them what I want. Contract out
- Art
- Layout
- Editing
- Logo design
- Writing/game design
I did not create this.
Conclusion
It takes effort to build your store to the point where you can take advantage of this opportunity. Consider this vertical integration the payoff for all that work.
