been out of the loop...have a ?

[Vanguard]

If Amazon buys the book from GGs for the same price that GGs sells it to a gaming store, how does this affect GG's profit? Amazon can sell it for whatever they want right? I mean if GGs sets the price they sell the game , so how can they "lose" money by selling to Amazon?

My undertanding was that retailers have to mark up the cost to make a profit because they have overhead costs of running a store, but Amazon can sell for a discount because they don't have a store. Are you guys claiming that GG has to sell for the price that Amazon sets? So Amazon is forcing GG to sell cheaper and losing profit? It doesn't make sense to me. . .

Yes. Large retailers like Amazon have actually reversed the traditional method of negotiating prices with a distributor. The likelihood that Amazon would purchase the books at the same price per unit as a small brick-and-mortar store is extremely unlikely. They can leverage the fact that they are the largest online retailer in the world, that they a buying in such bulk, etc as to justify a lower cost per unit.

While it may seem like they are only losing a little bit of money per book, the problem becomes increasingly exacerbated because the company starts losing direct sales to Amazon, as they offer a discount that GG does not.

These numbers are entirely fictitious, but still illustrate the point:

For the purposes of this equation, let's say the book costs $20 to produce and GG prints 100 copies in total. The cost of that print run is $2000.

The retail price is $40

If they sell it to a FLGS for $30 their margin of profit per book is $10.

A direct sale nets them a $20 profit.

If you split the sales evenly, after recouping costs, GG would net $1500 in profit.

Let's bring Amazon into the equation. Amazon doesn't want to pay $30 per copy, so they negotiate a price of $25 per book. That means each book only nets $5 in profit for GG. They also cut into sales at both FLGS and GG heavily.

Let's say half of all 100 copies sold go through Amazon. GG makes a profit of $250 from that channel.

Let's say another 25 copies get sold at the FLGS. That nets GG a profit of $250 as well.

Finally, the remaining 25 copies are direct sales. This nets GG a total profit of $500.

Their total profit would only be $1000, or 33% less than if they didn't allow Amazon to sell the book.

Does that clear things up?

But wouldn't selling the book through Amazon increase sales dramatically? hypothetically, this is why they negotiate a lower price right? Because, they will sell twice as many or even more. So the increased sales would increase profits.

Anyways, what your saying is that GG has refused to sell to Amazon at a reduced price, right? Couldn't GG tell Amazon, sure I'll sell it for $25 but you have to buy 2000 copies or whatever? ( or does Amazon have all the leverage?)

I've seen Amazon sell items for only 15% off instead of their normal higher discount. So, I think GG could sell to Amazon at their normal rate.

I think trying to protect B&M stores is a mistake. Where I live, I know all the game store owners within 50 miles and they will not sell more than 2-3 copies this month of DCCRPG.( At least they don't expect to sell more than that) RPG's are at the very bottom rung of percentage of sales for my FLGS. I know because I've asked them. Most stores will not stock RPG's and force you to special order them. WTH is the point then of having a B&M store where I can browse or whatever?

Pathfinder Core Rulebook from Paizo is 37% off but Traveller from Mongoose games is 0% off on Amazon. How is this possible? Amazon doesn't offer any discount for the Mongoose stuff. Why can't GG offer their games without a discount instead? Is GG really smaller than Mongoose and Paizo?

I think not offering on Amazon and trying to protect stores hurts more RPG players in the long run and to help stores that aren't pushing our hobby.

Paizo is much bigger than GG. Paizo competes with WotC in terms of sales. As to why Mongoose products aren't discounted, I don't know. I'm not sure about their operation. If you'd like I can provide links to articles which substantiate the negotiating process.

While Amazon may theoretically increase the volume of sales, it doesn't work that way. The majority of shoppers go for the lowest price. Let's say Amazon marked the books down a discount similar to the Pathfinder books. How many internet consumers are going to order from GG, or even NKG, over Amazon? Not too many. Furthermore, the increased volume isn't going to matter if Amazon has negotiated a better price per unit.

As far as game stores not pushing the hobby, I'm not sure what you're getting at. RPGs do not fly off the shelves. If your FLGS is only expecting to sell 2-3 copies, that has nothing to do with them not supporting the hobby and has everything to do with how many copies they reasonably expect to sell.

It also seems a little short-sighted to say they do nothing to push the hobby when most places offer space to game and host events. When's the last time you went to play an RPG at Amazon.com?

[Karaptis]

I would also like to add that the book is only 40 bucks. Not steep by any means, bad economy or not.

[Blustar]

Paizo is much bigger than GG. Paizo competes with WotC in terms of sales. As to why Mongoose products aren't discounted, I don't know. I'm not sure about their operation. If you'd like I can provide links to articles which substantiate the negotiating process.

While Amazon may theoretically increase the volume of sales, it doesn't work that way. The majority of shoppers go for the lowest price. Let's say Amazon marked the books down a discount similar to the Pathfinder books. How many internet consumers are going to order from GG, or even NKG, over Amazon? Not too many. Furthermore, the increased volume isn't going to matter if Amazon has negotiated a better price per unit.

As far as game stores not pushing the hobby, I'm not sure what you're getting at. RPGs do not fly off the shelves. If your FLGS is only expecting to sell 2-3 copies, that has nothing to do with them not supporting the hobby and has everything to do with how many copies they reasonably expect to sell.

It also seems a little short-sighted to say they do nothing to push the hobby when most places offer space to game and host events. When's the last time you went to play an RPG at Amazon.com?

How can increased volume not matter? If you sell enough you will make more money and your product will be in more hands and your brand will increase. That's why Sony and Nintendo intentionally take a hit on consoles with a price drop so that more people will buy into their product. They might lose a little in the beginning but they will reap rewards later.

If Mongoose can set their price on Amazon why can't GG?

I didn't realize Paizo was so much bigger than GG actually. They did the mags before but until Pathfinder were they really that large?

I'm more concerned about the footprint. Amazon is a huge website visited by millions internationally, why not take advantage of that?

As far as playing in stores it's really complicated. I'm actually running a game at a store right now. There are 10-12 Warhammer players, 7-8 Magic players and I can barely hear what I'm saying. When my gaming room gets finished we'll never play an RPG in the store again. It's a real PITA.

I've played RPG's for 3 decades and this is one of the few times I've actually played in a store and it's just because we syphoned some players from the local boardgame group. Eventually we see that the store is not a good place to play and we need to move to a better environment.

Most people I know played in their homes and the hobby grew by word of mouth and inviting people over and the like. Game stores were places you left messages on a cork board to recruit more players.

I think message boards and the internet is the new corkboard where potential new players can be recruited. I know that's where I've found local RPG groups and new gamers. Definitely not at any game stores. ( which I have left countless postings to no avail)

I feel it's a missed opportunity, especially for our international friends.

"If your FLGS is only expecting to sell 2-3 copies, that has nothing to do with them not supporting the hobby and has everything to do with how many copies they reasonably expect to sell. "

My point is that most RPG players don't buy their products at game stores. They will buy them online, whether from GG or other online retailers. Most RPG players play at home, go to Conventions and the like. . .

I guess it doesn't matter, I have my DCC RPG and I'm waiting for the 0-level module to get my game started. I hope this business model works out for GG.

[Karaptis]

I totally concur with Blustar on gaming at stores! Same experience with my stores locally.

[Vanguard]

The reason the increased volume does not matter is that GG makes a fraction of profit per sale. In the above example, GG would make the same profit from one direct sale that they would from four Amazon orders. Though those numbers fictional, the relationship is not.