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This discussion is flawed by so much bad information. Plus, what the the OP is really saying is "I don't know anything" and "I want my models cheaper"

 Ailaros wrote:
I don't know.

I just know that when I looked at the land raider on amazon and saw that it cost $55 and then looked at the land raider on GW's site and saw it cost $110 I thought "huh, half off".

Not everything is that cheap, relatively speaking, but still...

You know, and we're not even into holiday sale prices yet. I bet it gets even cheaper soon.

Maybe if you looked at the price in US dollars to compare, it wouldn't look so bad. Landraiders aren't 110.


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 MrMoustaffa wrote:
If GW caught any store selling at that low a markdown, their supply would be cut off immediately. GW doesn't want anybody undercutting them, even if the retailer itself isn't making any more than they would normally.

We have a GW opening up in Lexington soon, and both the local stores are wondering if it'll have any affect on them, and sadly, it probably will. My main store I played at knew about it a month in advance before the GW regional rep finally mentioned in a roundabout way that there kinda sorta may be one popping up.

He was not pleased.

GW working with online discounters sounds even crazier. I'm suprised they haven't cracked down on Amazon yet to be honest.

GW can't tell a brick and mortar store not to discount. They are a vertically integrated company with retail, distribution and manufacturing. They have to be a tad careful about that.


Automatically Appended Next Post:

 WarMill wrote:
Typical cost from a manufacturer to retailer is 40 -45% off retail, but to a distributor it's 60% off retail, so if Amazon are buying as a distributor even selling at 50% off they are still making a profit. I don't know whether there's a requirement from GW that a distributor services retailers, or whether it's as simple as placing huge orders, but either way it's probably safe to assume Amazon are big enough to get things at that 60% off.

Amazon are not buying as a distributor. The GW kits you see on amazon are sold by 3rd party amazon affiliates. GW is not taking on any new distributors. Distributors in the US recieve either 45% or 47% off. Which is why many of them only sell to retailers at 30-40% off of retail, not the full 45% you can recieve from GW direct.


Automatically Appended Next Post:

 Ailaros wrote:

H.B.M.C. wrote:To give up their own network and let third parties sell all their models through their own independent stores would cause them to lose this power.

But... they already do this. The US has a few GW stores and tens of thousands of third party brick-and-mortar independent retailer. In order for me to go to a GW store, I've got to travel some 200 miles away, while there are several non-GW general gaming stores that sell 40k and WHFB stuff, along with having gaming nights.

I mean, if GW already works with independent retailers, then why not also work with ones who are online?

cormadepanda wrote:You raise a good point, but then brick stores would fail around.

Sure, and I'm all about supporting local hobby retailers. They give me a place to play and people to play it with.

That said, if GW's distribution system is really that crappy, then my FLGS should just start buying stuff from amazon and then charging a small markup. The local retailer's cut might well be even larger, despite a lower retail price, if they cut out the crazy inefficient middle-man of GW distributors.

You know, I might just suggest that next time I'm in the store.

I have no idea where you get all of your misinformation.
-There are not 'tens of thousands' of hobby or game stores carrying GW in the US. GW has about 1200 trade accounts. Maybe another 1000 go through distirbution. There aren't 10,000 Game Stores in the US, even using the widest of definitions.

 mikhaila wrote:

This discussion is flawed by so much bad information. Plus, what the the OP is really saying is "I don't know anything" and "I want my models cheaper"

 Shadowseer_Kim wrote:
Here is what I do not understand. Average cost for a brick and mortar to get GW is 60% of retail.

So if they sold it for 50% off, they would literally be losing money.

Who are these people that sell it new for less, and how do they get this amazing wholesale deal?

No, you're dead wrong.

The best discount from GW is 45%. It has never been 60%.

If you read what he had written, he was saying that the average price paid was 60% "of" retail, i.e. a 40% discount, hence why selling at 50% would lead to them losing money.

 Dawnbringer wrote:

 mikhaila wrote:

This discussion is flawed by so much bad information. Plus, what the the OP is really saying is "I don't know anything" and "I want my models cheaper"

 Shadowseer_Kim wrote:
Here is what I do not understand. Average cost for a brick and mortar to get GW is 60% of retail.

So if they sold it for 50% off, they would literally be losing money.

Who are these people that sell it new for less, and how do they get this amazing wholesale deal?

No, you're dead wrong.

The best discount from GW is 45%. It has never been 60%.

If you read what he had written, he was saying that the average price paid was 60% "of" retail, i.e. a 40% discount, hence why selling at 50% would lead to them losing money.

Yep, my bad for skimming the thread.

The reason stuff is so cheap sometimes on amazon, is third party affiliates are dumping stuff. or they bought it a couple of years ago, and the yearly price increase hit that product, driving up it's retail price quite a bit.

It's probably been metioned, but in the event it hasn't:

think about this. However much amazon buys it for, and still makes a profit, that's how much stores buy it from GW for. Now, GW earns a profit off of selling the box to a store (internet or B&M). So, let's say a $100 kit costs GW $15 to make, and they sell it off to the store for $30. That store then sells it to the customer, and gets $70. Why would GW maintain their own chain of stores? Well, they want those other $70. Granted, the running of the operation is costing them, so that they're probably really only making, oh, let's guess $50 off of the box, but that said, their cost for the kit is $35, and selling it themselves, they earn $65. That's $50 more that they are stuffing their pockets with than if they had simply sold to a retailer.

There's a theory running around that GW is spiking the prices up to make it harder and harder to buy the stuff, so that B&Ms stop carrying it, and the online policies are nixing the market too. Supposedly, the theory posits that once everyone has stopped carrying GW product, GW will axe its prices and be the sole distributor of its own product. That's total bogus though, because new contracts for supplying still pop up and are taken up by GW. There is some merit to the theory that GW will lower its own prices to drive customers into its own stores, but..... we've got MWG, and theWarstore, and wholesale who will continue selling GW product at a more reasonable retail price than GW.......

so really, the only reasons that GW is running it's own gig and using the pricing policy it does is to undermine FLGS sale of their product (by not carrying the entire range) and to get in on the profits of selling the box at full retail value.

GW do not make $85 profit on a $100 kit. It's closer to about $12.

Ailaros you've done what the Americans tend to do, but in reverse, looking at another country's prices and going "ooh, that's silly cheap". If you're looking at an American or UK distributer, or at least one that buys their products from one, no wonder the prices are half of what you're paying. I'dve thought it was a common enough gripe in Oz to know that other countries pay much less than you for GW goods. =P

http://www.amazon.com/Space-Marine-Raider-Redeemer-Crusader/dp/B001GQQT2A/ref=sr_1_2?s=toys-and-games&ie=UTF8&qid=1353099777&sr=1-2&keywords=land+raider

Here's an example of an LRC, but you're paying 7 dollars in shipping. (This item is not eligible for Prime shipping). So while it looks like a really good deal, its not really the best deal ever.

 Testify wrote:
GW do not make $85 profit on a $100 kit. It's closer to about $12.

Sorry just wanted an opportunity to use those laughing emoticons!

I think if GW really only made $12 profit on a kit, they would have gone out of business long ago. Why do you think they were able to spam extra finecast kits at people by the dozen when replacements have been requested?

I think you would be shocked by how cheaply most of their miniature line is to produce when it is mass-produced on that level - they have overheads to maintain their stores which are significant, but wouldn't eat into anything like that amount of profit.

Automatically Appended Next Post:

 WarMill wrote:
Typical cost from a manufacturer to retailer is 40 -45% off retail, but to a distributor it's 60% off retail, so if Amazon are buying as a distributor even selling at 50% off they are still making a profit. I don't know whether there's a requirement from GW that a distributor services retailers, or whether it's as simple as placing huge orders, but either way it's probably safe to assume Amazon are big enough to get things at that 60% off.

Amazon are not buying as a distributor. The GW kits you see on amazon are sold by 3rd party amazon affiliates. GW is not taking on any new distributors. Distributors in the US recieve either 45% or 47% off. Which is why many of them only sell to retailers at 30-40% off of retail, not the full 45% you can recieve from GW direct.

The US distributor we've spoken to expects 60% off retail in order to sell to his retailers at 45% off. Maybe you've spoken to a different distributor, just saying those are the numbers we've got from everyone we've spoken to regarding distribution. And if there is a distributor out there who only expects 45% off retail, please pass their details on to us so we can sell them some stuff

 poda_t wrote:
It's probably been metioned, but in the event it hasn't:



There's a theory running around that GW is spiking the prices up to make it harder and harder to buy the stuff, so that B&Ms stop carrying it, and the online policies are nixing the market too. Supposedly, the theory posits that once everyone has stopped carrying GW product, GW will axe its prices and be the sole distributor of its own product. That's total bogus though, because new contracts for supplying still pop up and are taken up by GW. There is some merit to the theory that GW will lower its own prices to drive customers into its own stores, but..... we've got MWG, and theWarstore, and wholesale who will continue selling GW product at a more reasonable retail price than GW.......

so really, the only reasons that GW is running it's own gig and using the pricing policy it does is to undermine FLGS sale of their product (by not carrying the entire range) and to get in on the profits of selling the box at full retail value.

Yes, that theory has no legs. GW could cut us all out at any moment, they don't need some elaborate scheme based on price hikes to kill sales. If a FLGS sells 1000.00 in GW it really doesn't matter whether its 20 kits or 200. We make a percentage, so its the over all total that matters.

End of the day, Trade Sales makes money off of selling to FLGS, and GW gets exposure in the shops that carry their product. They don't want to throw away the profit and support.

 Testify wrote:
GW do not make $85 profit on a $100 kit. It's closer to about $12.

On average, a kit that GW sells for $100 will cost them ~$25 to make.
That doesn't mean GW makes a profit of $75 on each kit. To determine the actual profit you also need to cost of operations, which IIRC is about 65% of their revenue.
65% of their revenue is an enormous amount. Ridiculously enormous. So large that I can't believe they're still in business enormous.

Trasvi wrote:

 Testify wrote:
GW do not make $85 profit on a $100 kit. It's closer to about $12.

On average, a kit that GW sells for $100 will cost them ~$25 to make.
That doesn't mean GW makes a profit of $75 on each kit. To determine the actual profit you also need to cost of operations, which IIRC is about 65% of their revenue.
65% of their revenue is an enormous amount. Ridiculously enormous. So large that I can't believe they're still in business enormous.

If that's the case, they'd have been out of business already, not throwing thousands upon thousands upon thousands of dollars at a law suit that's costing them more than they will make out of it, and that's damaging to their PR. Seems to me you don't know how a business can rearrange its books to look like it's only just floating, but, honestly, GW is doing pretty good. Fudging the books may or may not relate directly to paying someone or others retirement fund, but even then, I would love to get where you are collecting your information from, because, else i would love to know how both of you define "barely making any profit", because netting 17 million pounds, especially accounting for repeat performances in the subsequent year, sounds like a fair profit to me. They're not Shell, Exxon or Mobil..... that's true, so they're not rolling in cash laughing like crazed maniacal insaniacs wondering if blowing up another refinery can drive prices even higher, but 17 million GBP its quite a bit of cash.

That said, I'd like to remind you both that I'm using only vague unsupported examples to illustrate that selling it themselves gets them more money than selling it to a retailer.

Wow - lots of misinformation on here.

@warmill -GW does in fact only give distributors 45-47% off. They changed that back in the 90s! Distributors only get what the best regular stores get + a shade more on occasion. They just got big enough to not do it anymore. The US system was different so they used distributors for a while and then decided to take the money themselves. GW didn't give them a choice....in fact if they would not have carried it GW would have lost very little really (back then) except a few more doorways to be in....

I wouldn't be surprised if internet discounters have a bit to do with their pricing though. After all they sell a 50 dollar kit that someone sells for 40....raise the price to 62 and the discounter is selling it for 50.....That is what mattesr to GW - ...that space on the wall (or in our warehouse) did $X? And in my example GW make 34.01 instead of 27.50! So they are taking that extra 6.51 per mini.

 poda_t wrote:

Trasvi wrote:

 Testify wrote:
GW do not make $85 profit on a $100 kit. It's closer to about $12.

On average, a kit that GW sells for $100 will cost them ~$25 to make.
That doesn't mean GW makes a profit of $75 on each kit. To determine the actual profit you also need to cost of operations, which IIRC is about 65% of their revenue.
65% of their revenue is an enormous amount. Ridiculously enormous. So large that I can't believe they're still in business enormous.

If that's the case, they'd have been out of business already, not throwing thousands upon thousands upon thousands of dollars at a law suit that's costing them more than they will make out of it, and that's damaging to their PR. Seems to me you don't know how a business can rearrange its books to look like it's only just floating, but, honestly, GW is doing pretty good. Fudging the books may or may not relate directly to paying someone or others retirement fund, but even then, I would love to get where you are collecting your information from, because, else i would love to know how both of you define "barely making any profit", because netting 17 million pounds, especially accounting for repeat performances in the subsequent year, sounds like a fair profit to me. They're not Shell, Exxon or Mobil..... that's true, so they're not rolling in cash laughing like crazed maniacal insaniacs wondering if blowing up another refinery can drive prices even higher, but 17 million GBP its quite a bit of cash.

That said, I'd like to remind you both that I'm using only vague unsupported examples to illustrate that selling it themselves gets them more money than selling it to a retailer.

Going from the Full year report 2011-2012
Page 26: Consolidated Income Statement:
Revenue: 131M GBP
-Cost of Sales: (30M GBP)
= Gross Profit: 101M GBP
- Operating Expenses: (85M GBP)
+ Royalties: 3M
= Operating Profit: 19M GBP


That gives a gross margin percentage of (131-30)/131= 77%. Or alternatively, they make approximately* $77 Gross Profit on every $100 kit they sell.
Similarly, later in the document, Operating Expenses of the retail group is given as 71M, with the remaining 14M expenses coming from other divisions such as web costs.
70/131 = 53% of their revenue is spent of maintaining their retail stores. Ok, got my first estimate a little bit wrong, that may have been for a previous year when they weren't doing so well.

I'm not saying that they make 'hardly any profit' (though I would expect more than 17M profit from 131M in sales given a margin of 77%) but they are definitely making a loss in Australia where the retail expenses are higher.

Trasvi wrote:

That gives a gross margin percentage of (131-30)/131= 77%. Or alternatively, they make approximately* $77 Gross Profit on every $100 kit they sell.

Unless Games Workshop don't pay their workers, get free shop rents and free gas and electricity, that number is meaningless.

Their operating profit is £12.8m vs revenues of £123m. That's acutally about 10.4%, so they're making $10 off a $100 box. Not $77.

 Testify wrote:

Trasvi wrote:

That gives a gross margin percentage of (131-30)/131= 77%. Or alternatively, they make approximately* $77 Gross Profit on every $100 kit they sell.

Unless Games Workshop don't pay their workers, get free shop rents and free gas and electricity, that number is meaningless.

Their operating profit is £12.8m vs revenues of £123m. That's acutally about 10.4%, so they're making $10 off a $100 box. Not $77.

And we need to break out sales to trade vs sales to consumers, to get an actual dollars per box sold. A 100.00 in revenue coming from my shop is about 180.00 retail, vs a 100.00 in revenue from their own stores on a 100.00 box.
They make less per 100 dollars selling to trade, but with far less costs involved. Make more selling direct, but incurring all the costs of the system (mailorder, stores, gamesday...) that go into selling that 100.00

But 10.4% of revenue as profit is something I wish I could pull from my stores

Hi all.
I think the point Travi, (and others) was trying to make is that if GW plc didnt have the expence of its own stores eating up over 50% of thier gross profit.
They could take advantage of the economies of scale thier heavy investment in plastic manufacture was developed for.

'...to lower the entry cost to our hobby...'(JJ 2002)

If GW plc halved thier current prices they could compete in the open market , grow thier customer base and increase profits.
As opposed to the current practice of driving away customers with ever higher price increases over the rate of inflation.

GW plc has lost over half of its customer base in the last 8 years.(Based on sales volumes -constant purchasing practices.)

I REALY hope GW plc corperate instigate the changes required to bring GW long term growth.

Lanrak wrote:
Hi all.
I think the point Travi, (and others) was trying to make is that if GW plc didnt have the expence of its own stores eating up over 50% of thier gross profit.
They could take advantage of the economies of scale thier heavy investment in plastic manufacture was developed for.

'...to lower the entry cost to our hobby...'(JJ 2002)

If GW plc halved thier current prices they could compete in the open market , grow thier customer base and increase profits.
As opposed to the current practice of driving away customers with ever higher price increases over the rate of inflation.

GW plc has lost over half of its customer base in the last 8 years.(Based on sales volumes -constant purchasing practices.)

I REALY hope GW plc corperate instigate the changes required to bring GW long term growth.

Why do you have to keep typing out "plc"

Lanrak wrote:
Hi all.
I think the point Travi, (and others) was trying to make is that if GW plc didnt have the expence of its own stores eating up over 50% of thier gross profit.
They could take advantage of the economies of scale thier heavy investment in plastic manufacture was developed for.

'...to lower the entry cost to our hobby...'(JJ 2002)

If GW plc halved thier current prices they could compete in the open market , grow thier customer base and increase profits.
As opposed to the current practice of driving away customers with ever higher price increases over the rate of inflation.

GW plc has lost over half of its customer base in the last 8 years.(Based on sales volumes -constant purchasing practices.)

I REALY hope GW plc corperate instigate the changes required to bring GW long term growth.

You are probably right here, except that it doesn't follow that halving prices would result in the dramatic upsurge in the customer base required to get even the same level of profits. (for the current model). If they divested themselves of stores, then the benefits of an upsurge in profits will be felt by the board and the investors.

They would also rapidly loose their market presence and the community would shrink as games stores don't exist in sufficient numbers to attract new gamers to supplement the existing ones. For that reason I cant see a halving of price increasing sales to any great extent and the stock price would crash faster than the turnover would decrease.

The director who over saw this move would be chopped.

Disminishing returns is not a new thing.

GW cant't keep this business model forever. I can see it working for another decade or so, but as the world economy gets worse veteran wargamers will be content to keep their collection of miniatures and just buy a new rule book every 4-5 years.

 notprop wrote:
They would also rapidly lose their market presence and the community would shrink as games stores don't exist in sufficient numbers to attract new gamers to supplement the existing ones. For that reason I cant see a halving of price increasing sales to any great extent and the stock price would crash faster than the turnover would decrease.

^ This.

My personal peeve is how GW US holds off on shipping new things to ensure that you don't get them\ at home before they arrive in stores. Irritating.

But clearly someone at GW thinks it is really, really important to drive foot traffic to GW stores.

I think part of it is a sunken costs/we've always done it this way bias. In the UK they have had so many stores for so long "keeping stores open" has probably turned from a means ("we need to stores to make money") to an end ("we need stores"). If so, that's dumb.

But I think part of it is that GW figures miniature gaming is a weird, anachronistic hobby that depends on a social network of gamers. And that if they don't provide spaces where people can find a game, learn to paint, and get into the hobby, then the whole hobby will die. And I'm not sure that's dumb.

And if you do believe that, then the otherwise weird war on modern channels of distribution sort of makes sense. It might be wrong, but it's not insane.

The UK arm does that as well. It makes slightly more sense in the UK, if only because we have a higher density of stores. Doesn't change the fact it's irritating as hell, especially in regards to White Dwarf subscriptions.

 notprop wrote:
They would also rapidly loose their market presence and the community would shrink as games stores don't exist in sufficient numbers to attract new gamers to supplement the existing ones. For that reason I cant see a halving of price increasing sales to any great extent and the stock price would crash faster than the turnover would decrease.

The director who over saw this move would be chopped.

Disminishing returns is not a new thing.

Also, in closing it's own stores, GW would be in the position of having it's potential customers exposed to other products and systems. FLGS staff are free to sell whatever system they see fit.

Just to clarify.
I post GW plc to refer to the directives of the corperate managment that drive customers away.
(Rather than GW as this could include the studio and stores staff who do everything to atract customers.)

I meant to write if GW plc was trading with prices at the same level as they were 8 years ago.(Eg HALF thier current RRP allowing for inflation.)
Rather than if GW plc halved thier prices.Ooops.

I agree simply slashing prices would not work.
But the current buisness practics is fine for short term restructuring.(5 to 10 years.)
it is NOT a long term solution.

The distribution of weath means as price rises shift across income bands they are going to have to increase exponentialy to make up for the greater fall in sales volumes.

There are 2 ways to look at the situation.

A.GW plc products are comparativley expencive , so they can not compete in the open market.And so using insular marketing of a chain of B&M stores is the only way to maintain artificuialy high prices.

B.The only reason GW plc products are comparitivley expancive is the overheads incurred running the expancive chain of B&M stores.So without the chian of B&M stores the products could be priced competativles and be sold effectivley in the open market.

Lots of game companies seem to be thriving in these difficult times.They dont rely on B&M storesto 'sell toy soldiers to children.'As Mr Kirby seems to imply is the only way to sucess.

But actualy compete in the open market by providing great game play and beter value for money .

GW plc self enforced isolation in the internet age is its own downfall.
Focusing on selling toy soldiers to children means spending ove HALF you profits on recruitment , and less than 1% on retension.

Most sucessful companies realise retaining customers is FAR BETTER than HAVING to recruit new customers .Sending lots of churned and burned customers back into the world does nothing for your company reputaition.

 Mr. Burning wrote:
Also, in closing it's own stores, GW would be in the position of having it's potential customers exposed to other products and systems. FLGS staff are free to sell whatever system they see fit.

They're already doing that in the US, with the gradual downsizing of stores and the removal of gaming space. That might not have such a big impact in the UK, where most gamers have other places to play, but in the US where gaming clubs seem to be less common, that leaves gamers looking for an FLGS to play at.

Here in Oz, I can't see that GW closing their stores would actually have much of an impact. With our population so spread out and so few GW stores to begin with, I really can't imagine that a significant percentage of the Australian gaming community was recruited through walking into a GW store. And that percentage will only get smaller with more of the stores moved out of prime foodcourt locations in busy shopping centres to out of the way, cheaper locations that are less likely to get walk-in browsers.

Interestingly enough, here in NC we just had a GW shop open up in the capital city.

We had one before, but it was in Charlotte rather than Raleigh.

Makes me wonder if it's less a "gradual downsizing of stores and removal of gaming space" and more of a "refocusing". There's supposedly all these game shops within the area around Raleigh...but I only know of three, not including the GW.

Let us not ignore the obvious:

Amazon sells in lots of other high margin categories, so can spread margins, and is also a marketplace enabling third-party sellers to sell on their platform (at pure profit to Amazon via commission).

GW has to originate products, design, make, distribute and promote. They don't have other categories to sell in, and need to make real return on investment.

Sure, GW is ludicrously priced, but Amazon works on predatory pricing to put others out if business for its own benefit. They don't care if low pricing is sustainable for partners or suppliers.

Which would be relevant if Amazon was directly selling GW stuff at predatory pricing. The GW stuff on Amazon is being sold by third party stores, not by Amazon.

 Ailaros wrote:
I just know that when I looked at the land raider on amazon and saw that it cost $55 and then looked at the land raider on GW's site and saw it cost $110 I thought "huh, half off".

You're looking at the Australian retail price price and comparing it to a US third party distributor.

Comparing Australian retail prices for anything to the US prices from anyone is an excercise in frustration.

Just some quick examples.

We pay between $90au-$120au for video games at retail in a shop, unless there's a sale going on. In the US, you pay under half that. We're not buying these from an Activision shop or an EA shop, but from chain electonics stores.

We pay between $30au-$50au for bluray movies in a retail shop, again, unless there's a sale going on. They're not Paramount or Columbia Tristar shops, they're chain electronics stores.

Some companies don't do this to us. A good example is Apple. We pay slightly more - $369au for the 16gb WiFi mini compared to $329us. But they're definitely the exception, not the rule over here.