News, reviews, business articles and site updates for a board games store in Canada

On Sales and Margins

April 27th, 2011 Posted in business
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Occasionally, we get asked why we don’t run more sales.  The simple answer is because we like the margin we have – it’s what we need to continue to improve the business and grow our stock.

A more detailed explanation is below the fold.

Sales generally are a double-edged sword.  If you continually have a sale on the site, it no longer becomes a special event; instead its something that customers come to expect.  The event then loses all meaning.  It also consistently depresses your overall margins, and yet doesn’t do so in a consistent fashion across all your games.   Frankly, it seems to be the worst of both worlds.

Sales generally occur in two formats on the site:

– large, site wide sales

The large, site wide sales are generally the kind of sales that customers enquire about.  These are the Boxing Day and Anniversary Sales that we hold, and customers generally enquire about why we don’t host more of those since our discounts are generally quite aggressive during these sales.

The reason why we can be so aggressive, and can even discount board games that are in-demand is because those sales are only done twice a year.  These sales are used to reduce stock on items that are overbought (Boxing Day) or to get rid of slow-moving games.

The sales help free up our inventory, returning money to our cash flow and allow us to buy newer games and increase the depth (i.e. number of games) of in-demand items.  It is a given that many games will fall in demand as the years go by, their turn rates going from a respectable 4 to 3 to 1.

– individual game sales

We also have a category called ‘sale items‘ on the site.  We rotate a few games through this section.  These games generally appear for one of two reasons – we overbought a game that hasn’t moved and are attempting to reduce stock quickly or we have taken advantage of a sale from a distributor / publisher to get these games at a reduced price.  In either case, we’re attempting to keep our capital and margins consistent by only putting these games on sale.

In a perfect world, there would be no games in that category.   We and the publishers would judge the demand fora game exactly, and thus would never need to put a game on sale.  Of course, we don’t live in a perfect world so that category will continue to see use.

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