GW's Retail Strategies?

[Priest]

So GW has changed their trade agreements in Canada.
He brings up a lot of good points, and its pretty interesting to see a bit of the inner workings of their retail strategy
www.youtube.com/watch?v=EnPpfs120DA

[robomummy]

a nice rational response and analysis to GW's new policies from someone who it actually effects.

[FTGTEvan]

I'm sad to hear that MWG is (partly) closing up shop, and I think Matt did a great job of breaking it down. That said, I am wondering if this is being a little overblown. As best I can tell, the major changes Matt discussed primarily affect Canadian retailers. Online sellers based in the US clearly have a way around these policies since they've been in place in the US since 2003. If anything, it's looking more and more like (another) terrible PR move by GW that will continue to drive experienced gamers (who they more or less admit not caring about) away from buying directly from GW or staying with the Warhammer games at all.

The only affect I see this having on me as a consumer of GW products is that I might have to wait a couple days longer to get new releases than if I ordered from GW's store. My local store sometimes has new releases (though, as Matt mentioned, maybe not all of them), and if it doesn't I will look through various online sellers who will not be affected to purchase the new product. As it is, I buy almost exclusively from eBay now, and would argue that to some degree, a strong second-hand market is extremely supportive of the hobby - it allows me to purchase for less, and it allows other gamers to recoup their expenses when either leaving the hobby or simply changing armies/renewing their collections.

[maugrim]

No, this is a change to all North American stores and distributors - so it will affect all FLGS and other Retailers of GW which get their stuff direct from GW at whatever discount they get it at. If they are purchasing it at retail, then they're not under this type of contract. If they aren't, they will be.

[coredump]

I am only 5min into this, and I can already tell that this guy is a complete idiot. He can't even keep his own whining straight...



edit: Argh! I made it more than halfway through, and my opinion of him has not really changed.

[t⊗theark]

I can sorta tell he's upset, he's not very coherent. Usually Matt doesn't do bad open letters but this seems sorta all over the place.

2. Reasons for Policy Prohibiting Online Retail Sales
As referenced above, online sales of GAMES WORKSHOP products by independent
Retailers can have an adverse commercial impact on GAMES WORKSHOP’S distribution and retail
network and its intellectual property portfolio. In light of this impact, and in careful consideration
of GAMES WORKSHOP’S vital interests in the promotion of its products and the hobby they serve,
GAMES WORKSHOP has concluded that the business is best served by: (a) encouraging the instore retail sale of its products by independent brick-and-mortar Retailers; and (b) reserving and
vesting all online retail sales of GAMES WORKSHOP products via GAMES WORKSHOP‘S corporate
website. Among the compelling business reasons supporting this decision are the following:
● In-Store Display and Sales Support: The in-store retail environment provides a
Consumer (whether a first-time customer or game enthusiast) with the ability to see,
touch, and feel GAMES WORKSHOP products before making a purchasing decision. Instore displays of product enhance the retail purchasing experience and help introduce
and grow the hobby.
● Community Support: The in-store retail environment further enhances the hobby by
providing a place for Consumers to interact with one another and the hobby they share.
The hobby is best supported by brick-and-mortar retail locations that allow hobbyists to
interact with each other through playing the games, sharing of painting and modeling
techniques and the formation of face-to-face interactive clubs. Brick-and-mortar Retailers
are the preferred, and in some geographic areas, the only method of such interaction to
sustain and grow the hobby.
● GAMES WORKSHOP’s Online Promotion of the Hobby: GAMES WORKSHOP’S
corporate website provides a number of features and links that serve to promote the
hobby, as well as the products. GAMES WORKSHOP’S corporate website provides an online complement to, not a substitution for, the in-store promotion of the hobby in a way
that is consistent with the company’s brand and Consumer expectations. By reserving
online sales to GAMES WORKSHOPS’ corporate website, GAMES WORKSHOP can present and offer the complete breadth and depth of its product line to online Consumers. The
GAMES WORKSHOP brand represents more than just one or two of its most popular items.
● Uniform Presentation of the Brand on the Internet: It is important that the GAMES
WORKSHOP brand be presented with a single, clear online focus. By reserving online
sales activity to GAMES WORKSHOP’S corporate website, the one site allows GAMES
WORKSHOP to present and develop a uniform online image for the brand that can be more
readily and easily changed as new products are added and the brand evolves.
● Enhance Online Consumer Tracking: By focusing all online Consumers on one sales
website, GAMES WORKSHOP is able to improve tracking and understanding of GAMES
WORKSHOPS’ customer base. Better Consumer information and feedback will enable us
to better predict trends and Consumer preferences, so that we can conform our product
lines to meet Consumer demand.
● Protection of GAMES WORKSHOP Intellectual Property: Online sales and marketing
of GAMES WORKSHOP products by independent Retailers can lead to increased instances
of misuse and infringement of GAMES WORKSHOP’S trademarks and copyrights. By
reserving online retail sales to itself, and providing the guidelines set forth below for online advertising of products available for sale in the retail stores of its Retailers, GAMES
WORKSHOP believes it can maintain better control over its marks and its brand.
● Prevention of Free-Riding: One of the central business considerations supporting
GAMES WORKSHOP’S decision to reserve online retail sales to its own corporate website is
to prevent free-riding by online retailers. Brick-and mortar Retailers committed to the
promotion of the hobby make significant investments including, among other things, a
physical location for Consumers to shop for the products, knowledgeable and well-trained
in-store staffing and, in certain instances, in-store gaming areas for game enthusiasts.
Internet retailers do not make the same investment in promoting the hobby, yet have the
ability to siphon off well-educated and serviced customers and potential customers by
selling the same products over the Internet. Besides the inherent unfairness of this freerider effect, GAMES WORKSHOP remains concerned that if this disparity were permitted to
exist, it would undermine the investment made by our in-store Retailers, discourage
future similar investments by new Retailers, and substantially impair the in-store retail
method of sale most effective for our products.
● Online Privacy: Consumers who are reluctant to purchase online often cite privacy as a
major reason for the reluctance to embrace e-commerce. Focusing Consumers to one
online site will allow GAMES WORKSHOP to have consistent information collection and use
practices that preserve consumer privacy, and communicate those practices, clearly and
persuasively to Consumers. GAMES WORKSHOP believes that this level of privacy
protection will encourage greater participation in the hobby.

Actual link to the documents:-
www.dropbox.com/sh/wn5gq2srlbvxs6l/XKdxhImAri/AMP%20Trade%20Accounts.pdf
www.dropbox.com/sh/wn5gq2srlbvxs6l/ZThiP0KMRn/Games%20Workshop%202013%20RETAILER%20POLICY.pdf
www.dropbox.com/sh/wn5gq2srlbvxs6l/YniY9qsFGd/GAMES%20WORKSHOP%20Conditions%20of%20Sale%20-%20U%20S%20Trade%20Accounts%20-%202013%20ONE%20PAGE.pdf
www.dropbox.com/sh/wn5gq2srlbvxs6l/QzxZwRx0Mj/Games%20Workshop%20Trade%20Account%20Letter%20March%202013.pdf

[DukeMantis]

GW have struck below the belt in my opinion. I feel the sting of this more as it directly affects me, being a resident of Ontario and buying most of my mini's from MWG's online store.

Ive tried to play devils advocate, no matter how i try to rationalize their stance or weigh it from their side it doesnt add up. My respect for them as a company has never been so low to be honest... not that there execs will lose any sleep over that!

The only relative positive i can find in this loss of MWG's GW online sales is that it could potentially bring a little more business to local game stores in areas where the indigenous gamers previously bought most of their stuff online. These people will now be obliged to go to their LGS (for GW stuff anyway). I wouldnt be surprised if any benefits to the LGS is short lived though as with the webstores crushed - GW can return to their past time of trolling the independent store owners with their retail policies.

The 'under-market' of ebay dealing for GW products will probably skyrocket in places like Canada and Australia where GW store prices are the highest, and therefore in the seller countries too like UK & US.

[FTGTEvan]

Mar 21, 2013 6:03:26 GMT DukeMantis said:

The only relative positive i can find in this loss of MWG's GW online sales is that it could potentially bring a little more business to local game stores in areas where the indigenous gamers previously bought most of their stuff online. These people will now be obliged to go to their LGS (for GW stuff anyway). I wouldnt be surprised if any benefits to the LGS is short lived though as with the webstores crushed - GW can return to their past time of trolling the independent store owners with their retail policies.

It's a nice thought that this will boost in-store retail sales, but I don't buy that GW believes it or that it will happen. I see this already as trolling retailers in that they're trying to monopolize the online market. I'm not sure why they think this move will help them do so, but to some degree I see this as the intent. They have to know, on some level, that online shoppers don't buy through a local store for a reason; they either don't have one, don't like it for whatever reason, or will always choose to buy online.

The preponderance of online retailers in the US clearly represents that there are loopholes to the online sales ban. The site I've been using recently (because it is tied to a friend's store which I really liked when I visited) has posted a couple blurbs about the policy changes that basically said it won't affect them in the least. I find it a shame that MWG will be closing its shop, mostly because it makes me nervous for the continued life of their videos, or at least the free ones.

[maugrim]

The other effect, especially if other stores close up like MWG, will be to limit the availability of alternative game systems. Because if there isn't a FLGS - where are you going to pick up/play Infinity, Warmachine/Hordes, etc?

[FTGTEvan]

Very good point. Matt mentions in the video (or maybe it was in the comments) that they might be able to keep the gaming club open. Maybe we're not giving GW enough credit and this is their real objective: stamp out gaming stores that offer competing products to make it harder for them to flourish and grow.

[coredump]

Mar 21, 2013 6:03:26 GMT DukeMantis said:

GW have struck below the belt in my opinion. I feel the sting of this more as it directly affects me, being a resident of Ontario and buying most of my mini's from MWG's online store.

Have you ever heard of a place called The War Store?? How about Frontline gaming? or Miniatures market? Somehow they've manage to stay in business...


I don't know Matt, but from his video he seems more whining than sensible

To be fair, in his message he said their store was not doing very well already.

Lets recap.
He can still generate sales through the website just like WarStore/Frontline gaming/etc etc do to great effect.
They never did any bitz sales, so that has no effect.
It was very hard for them to make sales to US customers, since their prices were higher, so losing US customers is not a problem.
They will now have *no competition* from US retailers, so they have more of a lock on the Canadian market

Yet, somehow.... this is causing them to close up shop....

The ironic thing is that the GW policies are to *help* companies like his... but he is bailing out anyway...

The 'under-market' of ebay dealing for GW products will probably skyrocket in places like Canada and Australia where GW store prices are the highest, and therefore in the seller countries too like UK & US.

that is the *point* of this. Right now, Canadian stores (and especially Australian ones) are getting reamed because folks can buy from WarStore and save a bunch of money. So the local vendors (ironically, ones like MWG) can't compete.
With the new policy, canadian vendors compete against canadian vendors, and Aussie vendors compete against Aussie vendors.

[coredump]

Mar 21, 2013 12:25:27 GMT maugrim said:

The other effect, especially if other stores close up like MWG, will be to limit the availability of alternative game systems. Because if there isn't a FLGS - where are you going to pick up/play Infinity, Warmachine/Hordes, etc?

I think this is the opposite of GW's intention. These policies seemed aimed at *helping* the FLGS stay in business.
First: Anything that makes it a bit harder to buy online makes it a little more likely you will buy at a store

Second: It cuts down on competition from retail outlets from out of country; making it more likely that you will buy from stores within your own country.

Think about it, who in their right mind would try and run a store in Australia, knowing that everyone is going to buy their minis from US online vendors??




I have to assume MWG was looking for an excuse to stop selling GW products, and now found it. They already said it was barely worth the time they were spending.
From what I see, this change should be a big boost to their sales.
The hardest part (IMO) of 'phone orders' is having to get all the contact info over the phone, but they have a built-in database of info due to their Vault. So call up, give your Vault ID, and bam; they have all the info they need. Could probably even handle the transaction via email or similar for members.
*AND* they get rid of all that US competition.....

[Jpogfreak886]

I think the 500 dollar limit on direct sales (when they were normally spending 5000) is a major factor too, since MWG will not be able to stock
nearly as much as they could before. Also, Matt mentions that lots of their customers would purchase from them based on the variety of benefits they offer like the points system or the daily deal and discount for Gold Vault members; these are customers which may not be exclusively a Canadian market.

I think one thing that bothered me most about the video and letter was the reasoning GW gave for the changes. It seemed that although they have the right to increase direct profits to their stores and online site, at least state that as the reasoning, not wordy explanations which don't hold much water.

Is it possible for MWG to survive off a Canadian market with reduced stock and phone-orders? Possible, companies in the States can do it but Canadian market is smaller. Is it worth the extended effort for reduced gain? Matt would say no. All I can say is I hope Dark Potential continues the early success it is experiencing and i will surely continue to support the MWG community; maybe even consider getting a vault membership to help support it through this change.

[Nightmare20]

I completely understand where Matt is coming from. The hobby stores at my location have opened and closed repeatedly for the last decade and when your supplier understocks and undercuts you it is time to make a change. I purchased a vault membership for the year and made some last purchases from their store and wish the best for them.

[coredump]

Mar 21, 2013 16:17:41 GMT Jpogfreak886 said:

I think the 500 dollar limit on direct sales (when they were normally spending 5000) is a major factor too, since MWG will not be able to stock
nearly as much as they could before.

I have not commented on that because it was not part of the trade agreement and thus I can't read what is actually in place. Considering how poorly Matt represented the Trade Agreement, I no longer consider him a reliable source.
But two things don't make sense
1) $500 a month is a pittance, it doesn't make any sense to me for GW to refuse to sell more than that to their retailers. So I would really like to see the actual policy in writing
2) These are the 'low volume' items, and MWG was still doing 5K a month; so how much of the 'high volume' items were they selling?? And they say they were barely making a profit??

I am not saying I know what is going on, just that something doesn't sound right.

Also, Matt mentions that lots of their customers would purchase from them based on the variety of benefits they offer like the points system or the daily deal and discount for Gold Vault members;

Yes, and they could *still* do those things. (The daily deal is the only one that may be a bit harder, assuming it changes every day. But a weekly deal is easy)

these are customers which may not be exclusively a Canadian market.

Maybe, but lets think about this. His prices are higher than many US places, because he is starting from the higher prices. Do you think there are more US people buying from him, or more Canadians buying from US places?? I am betting he would gain more customers than he would lose.

It seemed that although they have the right to increase direct profits to their stores and online site, at least state that as the reasoning, not wordy explanations which don't hold much water.

And what makes you think this has anything to do with increasing their store profits and online sales??
To me it looks a lot more like trying to protect all the FLGS's out there.

My LGS, for example, is an old time gaming store. Has lots of different miniatures games, including historicals. Does Magic, role playing nights, board games... the whole thing. They set aside a lot of space for gaming of all sorts, including several 40K tables.
What they don't do is internet sales. And for every MWG or War Store, there are probably dozens of these types of stores trying to keep their doors open.

We need these stores to keep the hobby growing and alive. But he has a lot more overhead than a simple internet store would, so he can't afford to give a straight 20% discount, so he is losing money to War Store all the time.

Now, think of a store like that in Ontario. He is losing a *lot* of sales to warstore, because now there is a 20% discount *and* a cheaper starting price.

So, by making it a little bit harder to do online sales, and by making it much harder to do over the border sales, it may marginally help these local stores.