A wiser man than myself once said, "In business, you don't have what you can't count." I have found this to be extremely true. A business may accrue some benefit from intangibles such as goodwill, but until you've captured the value of goodwill by an arrival and transaction, you don't actually have anything. As the saying goes, landlords are rather particular about being paid rent in the form of money dollars. They still won't accept goodwill as currency no matter how much I implore them to do so.
So, here at the DSGCW, we count virtually everything, and we count it regularly. We have to. It's the only way to know what we have. There are also those pesky tax laws that insist that we keep quasi-regular counts of everything the business possesses. I suspect most game or comic stores would utterly crater in the face of an audit, and valuation of inventory is one crucial reason why. Everyone counts the money; not everyone counts the things.
Roughly every month it's necessary to count certain inventory categories because otherwise the stock numbers become unwieldy. Errors due to prize payouts, frequency of turnover, and shrinkage become too evident. Trading card game booster packs, sleeves and accessories, and such items make up the bulk of what we count monthly. There are always corrections. One of the things I hope to see with our migration later this year to Microsoft RMS ComicSuite is for tournaments to deduct product used automatically through their "tag-along sale" feature. Right now if we conduct a booster draft, we have to go back afterward and remove 16 Dragons of Tarkir and 8 Fate Reforged boosters from inventory, under an add operation (for negative quantity) dated and tagged with the sanctioned event info. That's a needless step and it gets missed when we're busy and it's late. Customers and sales come first, after all. But in any case, every month that inventory needs to be re-counted.
Periodically throughout the year, usually when there are enough errors that it's bothering me -- a very technical metric, I know -- I will have the staff count up another category and make corrections. I had our Comic & Media Specialist do a fresh count of the trade paperbacks mid-cycle and he found many errors and also found some things on our re-order reports that were being generated by mistake due to Diamond changing out a barcode or product code. Another problem ComicSuite RMS will allow us to bypass. At the end of that quarter, I didn't have the staff re-count the trade paperbacks. They were still fairly freshly curated. The cost of labor to re-do it was unlikely to pay off in the form of the value of errors fixed.
This time, however, it wasn't just quarterly inventory, but semi-annual. Halfway through the year, and it has been at least two months since anything but boosters and sleeves got a count. Everything in the store gets a reconciliation at this point. We'll do it again just before the end of the year.
Once upon a time, we could do inventory during open hours in the course of a quiet couple of mornings, and not have so many sales in the meantime that the count is too far off to correct on the spot as I enter results. Not anymore. We're too busy, we have too much stuff, and we make sales constantly, all the time, every day. So for the first time ever, this inventory session started at 8:00am on Sunday morning. Three owners and some staff volunteers, and a lot of coffee and donuts.
How did it go? Better. We didn't quite get everything knocked out as quickly as I hoped, and bled into the day's business -- Sunday's hours are noon to five -- but overall I think this is as solid an inventory count as we've had since the beginning here at DSG. Our books will close for the month and quarter and will be about as rock-solid as we can make them, permitting us some authentic profit-and-loss metrics and figures that we can use to forecast the next half-year's worth of finances and operations.
If you're running a business and you haven't counted everything up lately... maybe it would be a good idea to set some time aside to do so. You never know what you might be able to do with all the stuff you'll probably discover that you didn't realize you had!
DSGCW: The Backstage Pass! Perspectives from behind the scenes!
Tuesday, June 30, 2015
Tuesday, June 9, 2015
When I'm the Customer
Last week, we got a visit from the executive VP of GTS Distribution, Lloyd Kee, and our GTS rep, Randy Sitz, here at the DSGCW. This is apparently usually an annual-ish thing, and since I took over operations last July, this was my first time being on hand for the visit.
It was a great meeting. See, I am their customer. I am the person walking in their door with money, demanding that they have everything I need at a great price and in perfect quality. I am the person placing pre-orders and expecting everything to land in beautiful boxes on Day Zero. I am the person demanding that they figure out all the fiddly things that I need when I place a ledger-sized order and need it pulled in the time it takes me to drive over to the warehouse. And when there comes an allocated product, like say, oh, Modern Masters 2015, I am the one looking for a strong quantity fulfilled based on the truly frightening amount of money I spend with them. And they deliver, consistently. I can't count from memory the number of times I needed ten of that thing like yesterday and Randy got it into my hands with the rapidness.
Most of the time, a customer relationship at my store is somewhat more pro forma. The individual walks in, tells me what they wish to buy or pulls it off the rack, buys it, and leaves. Or, more often, they tell a staff member. I am not present for the overwhelming majority of DSG's sales transactions. I might be in the building a lot of the time, but I'm not engaging in that task specifically in most instances. So, in order to do my job of making sure we have the goods and that the store "works" mechanically, I study sales reports, inventory reports, metrics, that sort of thing. Customers don't often communicate to me. They don't often communicate with the staff. It is upon us to divine their happiness or frustration with various aspects of the experience by reading those aforementioned tea leaves. In observing their behavior, in what sells and what does not, we hope to learn where to fine-tune the behemoth mechanism.
Some customers, those who have an extensive relationship with the business and spend in higher volume generally, are somewhat more communicative. That is because in the course of doing more sales activity with them, we naturally interact with them more. Whether it's me, Patrick, or one of the staff Brand Ambassadors, we end up creating a relationship with this customer that is more than we might create with a one-time walk-in. (This is, by the way, one of the strengths of the comic category. There is a very low barrier to entry to subscribing in a pull box at the store, so we open up communicating relationships with customers whose buying volume might not otherwise get us talking to them to any meaningful extent.) It's not that we aren't willing to listen unless you spend $X. Nothing could be further from the truth. We'll listen to any customer at any time, and it takes a specific situation to get us politely to tune that customer out -- usually some indication that they are not, in fact, "our customer." (Such as, the entire discussion centers on whether we're going to match the bottom internet price on whatever product, or whether they can bring in a grocery bag full of snacks and soda for their D&D game.) But as a natural matter, we just happen to end up with more frequent and deeper communication with higher-volume regulars.
Now, imagine that you spend $200 or so per week at your Friendly Local Game Store. We have probably 15 to 17 people who do that at DSG, for real. They may go a week or two without a visit sometimes but then they come back and buy two boxes of Modern Masters or half a grand in Legacy foils or a pile of Warhammer models and paints as a gentleman did an hour ago. But, averaging $200 per week. If you were doing that, you would expect the store to be happy to find you special order stuff, happy to hold your new releases until you get off work, that kind of thing. If you told them a product sucked, you know they'd take you seriously. They might even discontinue it if nobody seems happy with it and your negative feedback is the lion's share of the word-of-mouth they've received. And you would be right to expect these things.
For perspective, DSGCW's average spend with GTS Distribution is... well, it's a cardinal rule that we store owners don't get too detailed on dollars in published articles, but our monthly outlay in months without a Magic: the Gathering release would be enough to buy a brand new Honda Civic, with options. In months with a Magic release? A new Honda Odyssey. Give or take. And that's just for now. That number is growing organically.
So, do you think Lloyd and Randy want to hear what I have to say? They do and they are extremely diligent at taking any good information I can get them and using it to optimize the process of exchanging a high volume of game and hobby products to me for money. The same as we at DSG are in spending our time and effort optimizing for the exchange of a lower volume of game and hobby products to our customers for money.
This brings with it a responsibility, a duty on my part. I won't waste Lloyd's and Randy's time with trivialities. You know the kind of thing I mean. I am not going to bother them about a booster box with a dented/crushed corner. I am not going to yell at Randy because the UPS truck was late. I am not going to jump from one distributor to another for Magic prereleases because somebody is offering fifty bucks more worth of promotional supplies. The relationship is on a higher level than that. I am a volume client and I need to behave like a professional who is one, if I expect them to give me that kind of priority. And I am a capitalist so I know they have to make a profit too.
(I have other distributor and manufacturer reps who do a great job of taking care of me as well and are the next ones down on the list of my substantial regular spends for DSG. I approach those relationships similarly.)
You may have noticed an underlying theme in this article that ties my behavior when I'm the retailer to my behavior when I'm the customer. And that is that the relationship is built so that there is mutual benefit. That relationship can break down when it's adversarial. Randy is a professional so I'm not going to suggest that he would ever short me on an order or anything, but how much priority is he going to give me if every interaction is a hassle? If I grind him for every dollar, if I complain about every hair-splitting problem? Or, perhaps more importantly, what if I don't communicate honestly at all, but attempt to do my buying procurement the way the "MTG Finance" speculators and binder grinders buy cards from me as customers, through misdirection? Do I have a leg to stand on in complaining about the outcome then, if it is not to my liking?
Ultimately, the benefit I accrue as a customer depends on how I manage my interactions. Retailers are professionals who try to make this process easy and managed for our customers, but nothing is stopping you from stepping up your game and making the relationship a two-way street. You might be amazed at the results.
It was a great meeting. See, I am their customer. I am the person walking in their door with money, demanding that they have everything I need at a great price and in perfect quality. I am the person placing pre-orders and expecting everything to land in beautiful boxes on Day Zero. I am the person demanding that they figure out all the fiddly things that I need when I place a ledger-sized order and need it pulled in the time it takes me to drive over to the warehouse. And when there comes an allocated product, like say, oh, Modern Masters 2015, I am the one looking for a strong quantity fulfilled based on the truly frightening amount of money I spend with them. And they deliver, consistently. I can't count from memory the number of times I needed ten of that thing like yesterday and Randy got it into my hands with the rapidness.
Most of the time, a customer relationship at my store is somewhat more pro forma. The individual walks in, tells me what they wish to buy or pulls it off the rack, buys it, and leaves. Or, more often, they tell a staff member. I am not present for the overwhelming majority of DSG's sales transactions. I might be in the building a lot of the time, but I'm not engaging in that task specifically in most instances. So, in order to do my job of making sure we have the goods and that the store "works" mechanically, I study sales reports, inventory reports, metrics, that sort of thing. Customers don't often communicate to me. They don't often communicate with the staff. It is upon us to divine their happiness or frustration with various aspects of the experience by reading those aforementioned tea leaves. In observing their behavior, in what sells and what does not, we hope to learn where to fine-tune the behemoth mechanism.
Some customers, those who have an extensive relationship with the business and spend in higher volume generally, are somewhat more communicative. That is because in the course of doing more sales activity with them, we naturally interact with them more. Whether it's me, Patrick, or one of the staff Brand Ambassadors, we end up creating a relationship with this customer that is more than we might create with a one-time walk-in. (This is, by the way, one of the strengths of the comic category. There is a very low barrier to entry to subscribing in a pull box at the store, so we open up communicating relationships with customers whose buying volume might not otherwise get us talking to them to any meaningful extent.) It's not that we aren't willing to listen unless you spend $X. Nothing could be further from the truth. We'll listen to any customer at any time, and it takes a specific situation to get us politely to tune that customer out -- usually some indication that they are not, in fact, "our customer." (Such as, the entire discussion centers on whether we're going to match the bottom internet price on whatever product, or whether they can bring in a grocery bag full of snacks and soda for their D&D game.) But as a natural matter, we just happen to end up with more frequent and deeper communication with higher-volume regulars.
Now, imagine that you spend $200 or so per week at your Friendly Local Game Store. We have probably 15 to 17 people who do that at DSG, for real. They may go a week or two without a visit sometimes but then they come back and buy two boxes of Modern Masters or half a grand in Legacy foils or a pile of Warhammer models and paints as a gentleman did an hour ago. But, averaging $200 per week. If you were doing that, you would expect the store to be happy to find you special order stuff, happy to hold your new releases until you get off work, that kind of thing. If you told them a product sucked, you know they'd take you seriously. They might even discontinue it if nobody seems happy with it and your negative feedback is the lion's share of the word-of-mouth they've received. And you would be right to expect these things.
For perspective, DSGCW's average spend with GTS Distribution is... well, it's a cardinal rule that we store owners don't get too detailed on dollars in published articles, but our monthly outlay in months without a Magic: the Gathering release would be enough to buy a brand new Honda Civic, with options. In months with a Magic release? A new Honda Odyssey. Give or take. And that's just for now. That number is growing organically.
So, do you think Lloyd and Randy want to hear what I have to say? They do and they are extremely diligent at taking any good information I can get them and using it to optimize the process of exchanging a high volume of game and hobby products to me for money. The same as we at DSG are in spending our time and effort optimizing for the exchange of a lower volume of game and hobby products to our customers for money.
This brings with it a responsibility, a duty on my part. I won't waste Lloyd's and Randy's time with trivialities. You know the kind of thing I mean. I am not going to bother them about a booster box with a dented/crushed corner. I am not going to yell at Randy because the UPS truck was late. I am not going to jump from one distributor to another for Magic prereleases because somebody is offering fifty bucks more worth of promotional supplies. The relationship is on a higher level than that. I am a volume client and I need to behave like a professional who is one, if I expect them to give me that kind of priority. And I am a capitalist so I know they have to make a profit too.
(I have other distributor and manufacturer reps who do a great job of taking care of me as well and are the next ones down on the list of my substantial regular spends for DSG. I approach those relationships similarly.)
You may have noticed an underlying theme in this article that ties my behavior when I'm the retailer to my behavior when I'm the customer. And that is that the relationship is built so that there is mutual benefit. That relationship can break down when it's adversarial. Randy is a professional so I'm not going to suggest that he would ever short me on an order or anything, but how much priority is he going to give me if every interaction is a hassle? If I grind him for every dollar, if I complain about every hair-splitting problem? Or, perhaps more importantly, what if I don't communicate honestly at all, but attempt to do my buying procurement the way the "MTG Finance" speculators and binder grinders buy cards from me as customers, through misdirection? Do I have a leg to stand on in complaining about the outcome then, if it is not to my liking?
Ultimately, the benefit I accrue as a customer depends on how I manage my interactions. Retailers are professionals who try to make this process easy and managed for our customers, but nothing is stopping you from stepping up your game and making the relationship a two-way street. You might be amazed at the results.
Tuesday, June 2, 2015
Phoenix Comicon 2015 Observations
I need a break from the mortuary business, so rather than a "post-mortem" as I've been terming these articles, here are some general observations I made while exhibiting at Phoenix Comicon 2015!
First, of course, the money. Our single booth made roughly as much money during the weekend as our store did, which is saying something. It was like having double the store for four days. So as you might imagine, I am very happy about that. Because we were local, we had the luxury of replenishing convention stock every night based on what sold and what we still had at the DSGCW in Gilbert. Some things sold out and there was nothing for it. In most other cases we were able to keep availability high.
We built a simple booth with plastic take-apart shelving behind us, tables in front of us, and that's about it. It was utilitarian to the extreme. In retrospect I would like to have run some tall piping with a more impressive vinyl sign hanging from it, but aside from that, I think we mostly did what we could with what we knew.
Of course, we learned new things. One thing I realized very quickly in was that our convention business has already grown to the point that we can justify a second space and thus a double-sized booth. If we are offered that for 2016, we are buying it. Many multi-spot booths we saw had elaborate "inside stores" constructed of gridwall and zip-ties, as I am fond of doing to build fixtures here in the shop. However, I think the best and most functional booths I saw from a sales perspective were ones like our neighbor Samurai Comics built: Gridwall pillars at the corners, tables running the perimeter, and shelving behind the staff to display higher-priced items. It's light, airy, open, and approachable. It requires no additional staff to watch an exterior wall to deter shoplifting.
Here are some product mix observations I had. Naturally, anyone reading this will now gain some advantage by having the freedom to do the same things. However, I'm not concerned about that. I learn a lot from the freely given advice of more experienced store owners. I am happy to pay it forward. When we all get better, we all learn to compete at an even higher level.
I dropped the ball on top-loaders. Yes, top-loaders of various sizes. They were the hit of the show from what we saw, since a double booth right around the corner from us sold nothing else, at something like an 85% markup from wholesale, and was slammed. We have perfect sourcing on that kind of thing and could easily have killed that category, assuming of course that we had room in the booth to feature such wares, which next year we certainly will.
I did NOT drop the ball on coin-op. Our CardZillion quarter-operated card dispensers, one loaded with Pokemon and one loaded with Magic common foils, both did so much business they jammed with quarters and had to be emptied multiple times. We could have made a killing with our coin-op candy machine, but we were not permitted to bring it in, as the food vendor for the con was granted an exclusive on concessions. Another local store, Gotham City Comics & Coffee, had a coin-operated acorn dropper full of neat toys and trinkets, and we speculate they also saw good business from it.
We had better than expected sales of X-Wing, Attack Wing, Armada, and Imperial Assault, selling through multiple core sets and many expansions. I suspect this was due to the Phoenix game groups for those titles offering demos and such at the show. I am tremendously grateful for those guys not only growing the player community by teaching, but also sending those newly minted players to us to gear up. I do believe I will be lining those gentlemen up with some special goodies next chance I get, in gratitude for their efforts.
Magic: the Gathering and Pokemon packs sold very well, especially out-of-print Magic, which I hadn't really expected. We sold out of Innistrad packs multiple times at $15 per pack. We thought people might want Conspiracy to draft, but didn't see much movement on it even with a box discount in effect. Maybe next year. Patrick wheeled and dealt in singles all day long and ended the con with a decimated remnant of a singles binder that had started the event bulging with value. All we had to show for it was, you know, thousands of dollars in cash.
Our Comic and Media Specialist, Dustin, hit it out of the park for us. This was not his first rodeo. He avoided all the bad practices we saw at multiple tables at the con: ultra-high priced books with little hope of selling, dense stacks of back-issues that aren't approachable or browseable, books spread across tables in a horrible use of space as far as dollars per square foot of merch, and so on. Dustin instead brought a small group of longboxes and some special bundles he built himself. The bundles were such like: Convergence #1-#8. Serenity Leaves on the Wind #1-#6 (complete run). Avengers Axis complete run. Joker Endgame #X-#Y, ending with the issue right before Convergence. Variant batches of the Marvel Star Wars titles. And so on. His longboxes were batches of recent issues of hot and accessible titles, and then he had a couple of discount boxes of things we had overstocked. Finally, he had a stack of modest chase titles, books in the $50-$90 range, including a 3-D Deadpool variant. Anyone interested in our comics had a very easy shopping experience and could get pointers or guidance right from the expert. And for people who wanted to get entire story arcs in one shot, we were ready. We sell those bundles in-store too, of course, but I was not expecting them to be so perfect for convention offerings.
We stayed away from bringing in cumbersome merchandise that we thought might already be abundantly represented at the show, such as apparel, trade paperbacks, toys and statues, and the like. You can't prove a negative so I have no idea whether we lost sales on that compared to the burden of featuring those wares, but I did note that many, many other vendors at the show had that stuff available in great quantities. There were far more sellers of Harley Quinn tees than there were sellers of Dragons of Tarkir fat packs. And I suspect that's why we had such an easy time selling what we did bring -- it fed demand against a limited overall supply.
Our "portable kit" -- the traveling gear we have for the pure purpose of setting up shop remotely -- performed reasonably, but it became clear that we have more items to gather, in particular electrical equipment and a better cash box. This is something we will have many chances to refine before the Game Expo in August, Saboten Con in September, the PCC Fan Fest in December (assuming we're actually invited this year -- last year we were excluded because they thought we were not a comic store but only a game store) and then Amazing Arizona Comic Con in January, before wrapping right back around to PCC again. We also tend to show up lately for small school festivals and the like, which further justifies investment in a robust traveling kit. When you have the booth setup, operations, and teardown nailed cold, you get to spend the time connecting with customers, which is the point of being there in the first place.
First, of course, the money. Our single booth made roughly as much money during the weekend as our store did, which is saying something. It was like having double the store for four days. So as you might imagine, I am very happy about that. Because we were local, we had the luxury of replenishing convention stock every night based on what sold and what we still had at the DSGCW in Gilbert. Some things sold out and there was nothing for it. In most other cases we were able to keep availability high.
We built a simple booth with plastic take-apart shelving behind us, tables in front of us, and that's about it. It was utilitarian to the extreme. In retrospect I would like to have run some tall piping with a more impressive vinyl sign hanging from it, but aside from that, I think we mostly did what we could with what we knew.
Of course, we learned new things. One thing I realized very quickly in was that our convention business has already grown to the point that we can justify a second space and thus a double-sized booth. If we are offered that for 2016, we are buying it. Many multi-spot booths we saw had elaborate "inside stores" constructed of gridwall and zip-ties, as I am fond of doing to build fixtures here in the shop. However, I think the best and most functional booths I saw from a sales perspective were ones like our neighbor Samurai Comics built: Gridwall pillars at the corners, tables running the perimeter, and shelving behind the staff to display higher-priced items. It's light, airy, open, and approachable. It requires no additional staff to watch an exterior wall to deter shoplifting.
Here are some product mix observations I had. Naturally, anyone reading this will now gain some advantage by having the freedom to do the same things. However, I'm not concerned about that. I learn a lot from the freely given advice of more experienced store owners. I am happy to pay it forward. When we all get better, we all learn to compete at an even higher level.
I dropped the ball on top-loaders. Yes, top-loaders of various sizes. They were the hit of the show from what we saw, since a double booth right around the corner from us sold nothing else, at something like an 85% markup from wholesale, and was slammed. We have perfect sourcing on that kind of thing and could easily have killed that category, assuming of course that we had room in the booth to feature such wares, which next year we certainly will.
I did NOT drop the ball on coin-op. Our CardZillion quarter-operated card dispensers, one loaded with Pokemon and one loaded with Magic common foils, both did so much business they jammed with quarters and had to be emptied multiple times. We could have made a killing with our coin-op candy machine, but we were not permitted to bring it in, as the food vendor for the con was granted an exclusive on concessions. Another local store, Gotham City Comics & Coffee, had a coin-operated acorn dropper full of neat toys and trinkets, and we speculate they also saw good business from it.
We had better than expected sales of X-Wing, Attack Wing, Armada, and Imperial Assault, selling through multiple core sets and many expansions. I suspect this was due to the Phoenix game groups for those titles offering demos and such at the show. I am tremendously grateful for those guys not only growing the player community by teaching, but also sending those newly minted players to us to gear up. I do believe I will be lining those gentlemen up with some special goodies next chance I get, in gratitude for their efforts.
Magic: the Gathering and Pokemon packs sold very well, especially out-of-print Magic, which I hadn't really expected. We sold out of Innistrad packs multiple times at $15 per pack. We thought people might want Conspiracy to draft, but didn't see much movement on it even with a box discount in effect. Maybe next year. Patrick wheeled and dealt in singles all day long and ended the con with a decimated remnant of a singles binder that had started the event bulging with value. All we had to show for it was, you know, thousands of dollars in cash.
Our Comic and Media Specialist, Dustin, hit it out of the park for us. This was not his first rodeo. He avoided all the bad practices we saw at multiple tables at the con: ultra-high priced books with little hope of selling, dense stacks of back-issues that aren't approachable or browseable, books spread across tables in a horrible use of space as far as dollars per square foot of merch, and so on. Dustin instead brought a small group of longboxes and some special bundles he built himself. The bundles were such like: Convergence #1-#8. Serenity Leaves on the Wind #1-#6 (complete run). Avengers Axis complete run. Joker Endgame #X-#Y, ending with the issue right before Convergence. Variant batches of the Marvel Star Wars titles. And so on. His longboxes were batches of recent issues of hot and accessible titles, and then he had a couple of discount boxes of things we had overstocked. Finally, he had a stack of modest chase titles, books in the $50-$90 range, including a 3-D Deadpool variant. Anyone interested in our comics had a very easy shopping experience and could get pointers or guidance right from the expert. And for people who wanted to get entire story arcs in one shot, we were ready. We sell those bundles in-store too, of course, but I was not expecting them to be so perfect for convention offerings.
We stayed away from bringing in cumbersome merchandise that we thought might already be abundantly represented at the show, such as apparel, trade paperbacks, toys and statues, and the like. You can't prove a negative so I have no idea whether we lost sales on that compared to the burden of featuring those wares, but I did note that many, many other vendors at the show had that stuff available in great quantities. There were far more sellers of Harley Quinn tees than there were sellers of Dragons of Tarkir fat packs. And I suspect that's why we had such an easy time selling what we did bring -- it fed demand against a limited overall supply.
Our "portable kit" -- the traveling gear we have for the pure purpose of setting up shop remotely -- performed reasonably, but it became clear that we have more items to gather, in particular electrical equipment and a better cash box. This is something we will have many chances to refine before the Game Expo in August, Saboten Con in September, the PCC Fan Fest in December (assuming we're actually invited this year -- last year we were excluded because they thought we were not a comic store but only a game store) and then Amazing Arizona Comic Con in January, before wrapping right back around to PCC again. We also tend to show up lately for small school festivals and the like, which further justifies investment in a robust traveling kit. When you have the booth setup, operations, and teardown nailed cold, you get to spend the time connecting with customers, which is the point of being there in the first place.
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