A few days ago forum member Jack Burton asked me a question I've seen come up from time to time in the past.
Jack Burton wrote:What method of sales helps Palladium out more? In other words, would the company rather we purchase directly from the website, from DTRPG, FLGSs, bookstores selling new product on Amazon, etc?
This question refers to the concept of Sales Channels. What is a sales channel you ask? What a great question!
www.businessdictionary.com wrote:Sales Channel - a way of bringing products or services to market so that they can be purchased by consumers. A sales channel can be direct if it involves a business selling directly to its customers, or it can be indirect if an intermediary such as a retailer or dealer is involved in selling the product to customers.
Palladium has six sales channels, three direct and three indirect.
Direct Sales Channels
Sales at Palladium's headquarters
Sales through our internet store
Sales at conventions
Indirect Sales Channels
FLGS that orders direct from us
Internet Sales through Online Retailers (like Amazon, DriveThruRPG, etc.)
FLGS that orders our books through a Distributor
So which channel is the best? Which one helps Palladium the most? That depends...
In my second Murmur I talked about business smalls and how having a variety of products helps a business succeed. In a similar manner, having a variety of sales channels is necessary for Palladium's success. Each has its own unique advantages and disadvantages. Some examples:
Sales directly to customers who have a chance to come by our headquarters are, from a strictly monetary viewpoint, our most profitable - we get the full retail price of the book while not having to pay for labor to pack the order nor shipping fees to send it out.
However, this type of sale is relatively rare. Most of the customers who come by don't live in the area but are instead passing through on their way from somewhere else. Unfortunately we don't get enough traffic through our headquarters to sustain the company by this channel alone. (These sales do invariably boost our spirits when they happen though!)
Internet sales through our website are great because fans get the chance to browse our full inventory and order exactly what they want. Such sales are highly profitable for us, as we get the full retail price of the items, and the cost of shipping the orders is largely covered by the shipping fee charged at checkout.
The downside to sales through our website is that they are not quite as profitable as the direct sales to customers who come by - the shipping fee is eaten up by UPS or the Post Office (or whichever other method we have to use to get you your products), and there are small costs to us for shipping supplies (boxes, tape, labels) and labor. An individual order is minor in its costs, but they do add up and eat a few percentages from the profit margin.
A more profound disadvantage of internet sales through our website is that, in general, purchasing something online is an individual activity. Rarely do people have others around when they buy something online, and because there in a built-in delay between ordering and receiving your purchase, there isn't the same level of instant excitement and impulse to share your good fortune with others. Think about it - when you're in a FLGS with a gaming friend and you see the book on the shelf that you've been dying to get, you grab it and talk about it on the way to the register, then you and your friend put your heads together paging through it and talking about all the cool new stuff inside. Others in the store can see your excitement, which can then lead them to investigate and discover our games. Online purchases rarely have that type of impact (though this can be somewhat mitigated by going onto social media to talk about your purchases <hint, hint>
).Sales through your Friendly Local Game Store (where the store orders directly from us) have some obvious disadvantages for Palladium - we don't get the full retail price of the book, the store only carries part of our huge offering of games, and even when a sale is made there is usually a delay between when you the fan fork over your money and when we here at Palladium get it. Ah, but there is a magic that happens at your FLGS, a magic that performs better there than just about anywhere else, a magic with the mysterious name of marketing.
When it comes to the long term growth of Palladium Books, the FLGS is our second best ally (you, dear fan, are our number one!). As I said in my last Murmur, an FLGS is a nexus point for gaming. They not only provide a place for gamers to buy their supplies, but also act as a catalyst for gaming. Many have tables where gamers can get together to play. Most have some means, like a posting board, for gamers to contact one another. And the staff isn't doing its job if they aren't talking to potential customers about their wares, i.e. - our games.
With a solid presence of our games on their shelves, FLGS's become one of the very best ways for Palladium to grow our fan-base. This more than makes up for losing part of the money from the sale of each book.
To be brief with the other three sales channels:
Convention Sales: Profitable and we make a few new fans at each event, but we don't go to many cons, and there are costs in travel, lodging and convention fees.
Online Retailers: A world-wide market and somewhat profitable sales. If they sell hard copies of the books we still encounter shipping and packing costs, and we don't get the full retail price of the book. If they sell electronic copies, it is at a reduced price and the retailer takes a cut of that, but we don't have costs associated with hard copies.
FLGS that get their books from Distributors: All the advantages and disadvantages of the FLGS that orders straight from us. On the downside, we get a smaller amount of each sale (the distributor also has to make money), but the advantage is that distributors can - and do - get our books into more stores than we'd ever be able to find on our own.
So Scott, which one is the best???
They all are!
Okay, before you start throwing stuff, let me explain.
Direct sales get us the most money the fastest. This is great as it helps to, among other things, meet our day-to-day operating costs. Thus you keep the lights on and the computers running. However, direct sales alone generally do very little to grow awareness of Palladium Books in the minds of the gaming market. This downside, if not counteracted, leads to a slow and steady decline in our fan-base.
On the other hand, indirect sales reach a larger audience, exposing Palladium to people who have never heard about us or our fun and exciting games. It is an investment in time, as the money from indirect sales is slower in coming and of a smaller amount (on a book-for-book basis). Like all investments though, if you give it time it usually brings dividends that are well worth it. In our case that means an expanded fan base and greater demand for our games, which in turn drives more sales, both indirect and direct.
So in the end, the answer to the question of which sales channel is best really comes down to which way you feel you should spend your money. Do you want to help Palladium keep the lights on right now, or do you want to invest in our future? Both are great options, and we appreciate you very much for choosing to support us either way.
To wrap up:
No, I didn't really answer the question -
- I didn't tell you how to spend your money (then again, it is your money). I do hope though that I've given you food for thought and allowed you to make a more informed choice. 