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Got calls from a few FLGS owners. They are looking to close shop, don't expect things to go back to the way they used to be.

Anyone know what's a fair price for stock? Like, what would be considered a fair offer? I know what they paid for everything but I don't know how to price a wholesale purchase of store inventory.

There are significant inventories of the following, along with other stuff.

- GW - 40k / AOS / Other
- X-Wing / MTG
- Car Model Kits
- Gundam stuff
- RC Cars - Parts / Kits
- Model Trains
- Paints (GW, Vallejo, Testors, etc)
- Books - mostly to go with games
- Board Games
- Comic Books - mostly backissues and graphic novels
- Assorted stuff - dice, keychains, stickers, etc

To be clear, this would only be a purchase of the stock / inventory, not the stores themselves. No one would be assuming any leases or debt. And nothing would be going on consignment, this would be a straight deal for the inventory.

You would have to have a detailed, itemized list of the inventory to even begin to make an informed offer. A list of game names and product categories is insufficient.

 oni wrote:
You would have to have a detailed, itemized list of the inventory to even begin to make an informed offer. A list of game names and product categories is insufficient.

So pricing is based on the popularity of the product? There's no general secondhand discount rate for wholesale product in these categories?

Depends what you want to do with the stock.

If you know what they paid that gives you a baseline.

Are you buying to resell yourself? (In which case why aren't they doing that - what do they know from existing experience?)

Are you trying to grab a load of stuff cheap? (As low as they will go when winding up their business then)

Do you actually WANT all the inventory?

stroller wrote:
Depends what you want to do with the stock.

If you know what they paid that gives you a baseline.

Are you buying to resell yourself? (In which case why aren't they doing that - what do they know from existing experience?)

Are you trying to grab a load of stuff cheap? (As low as they will go when winding up their business then)

Do you actually WANT all the inventory?

That's a good question.

For the right price, yes, I want everything. There's a few ways I could move it and I have a warehouse for storage.

Was thinking about offering each store 30% retail for the lot. That's about what their average margins would have been.

I think I see what you're doing here.

IMO, if you want to have a respectable margin; start at 30% of MSRP and haggle from there. Anything more than 45% of MSRP and the ROI will be abysmal.

It's important to keep in mind that you will likely only be able to move the product at 80% MSPR or less.


Automatically Appended Next Post:

 techsoldaten wrote:

 oni wrote:
You would have to have a detailed, itemized list of the inventory to even begin to make an informed offer. A list of game names and product categories is insufficient.

So pricing is based on the popularity of the product? There's no general secondhand discount rate for wholesale product in these categories?

Yes, second hand market pricing is largely based on popularity.

I’d say even less than 80%. Reason being that Amazon and eBay do 85% with free shipping. Your 5% less generally wont be able to match that after you charge shipping. You’re looking at 75% to charge, at best. Add on that you’re an “unknown guy” selling stuff and not an online storefront on eBay or Amazon with solid reviews and many people will rather pay 85%+ free shipping over 75%+shipping. So you might be looking more at 70% to entice people. Then how much does the warehouse space cost you/month? You might buy everything at 30%, sell half of it at 70%, sit on the other half indefinitely, pay for it to be stored and realized you lost out on time and money.

If they liquidate at auction they will get about 10 cents on the dollar.

oni wrote:I think I see what you're doing here.

IMO, if you want to have a respectable margin; start at 30% of MSRP and haggle from there. Anything more than 45% of MSRP and the ROI will be abysmal.

It's important to keep in mind that you will likely only be able to move the product at 80% MSPR or less.

Yes, second hand market pricing is largely based on popularity.

timetowaste85 wrote:I’d say even less than 80%. Reason being that Amazon and eBay do 85% with free shipping. Your 5% less generally wont be able to match that after you charge shipping. You’re looking at 75% to charge, at best. Add on that you’re an “unknown guy” selling stuff and not an online storefront on eBay or Amazon with solid reviews and many people will rather pay 85%+ free shipping over 75%+shipping. So you might be looking more at 70% to entice people. Then how much does the warehouse space cost you/month? You might buy everything at 30%, sell half of it at 70%, sit on the other half indefinitely, pay for it to be stored and realized you lost out on time and money.

Easy E wrote:If they liquidate at auction they will get about 10 cents on the dollar.

Thanks everyone for the advice.

No overhead on the warehouse space. Already using it for other reasons, would just need new shelves and tarps to keep that area isolated.

Spoke with one of the owners, he's willing to part out the inventory for a cash offer. So I don't have to pay for stuff that's unlikely to sell. Honestly, outside the miniatures and gaming supplies, I don't have a huge interest or know what would make money.

As far as online storefronts go - here's a question. A couple of these places already have online storefronts. They don't do a lot of business, but they have some loyal / repeat customers along with eBay accounts.

Should I be looking to buy the online storefronts? Or maybe just the existing website addresses? I'm not really looking to start a new gaming store, just sell off the inventory online. But maybe directing customer interest to my own online storefront makes this simpler.

If they are going fully out of business you could offer to buy the business - that would get you the store and the name and website and the stock; but might lumber you with loads of stuff you don't want and there might be legal things to do with debts that the store has already.

Buying just the website might work, but the person closing might not want a stranger running "their store" that way even if they are closed because any problems might still blowback to them.

Buying the list of emails and registered accounts might work but might also come with a LOT of legal red tape.



It might just be easier to make your own store front and then ask if the retailers going out of business can send a single email to all their registered customers announcing their closure and pointing them toward your store. They might also close their online store, but keep the website up for a time and put a big shiny banner and direct link to your store.
That would be the simplest and best way with the least red tape and cost for both you and the other retailers.

Of course you'd have to get your store front up fast so that the closure and your opening happen at exactly the same time.

 Overread wrote:
If they are going fully out of business you could offer to buy the business - that would get you the store and the name and website and the stock; but might lumber you with loads of stuff you don't want and there might be legal things to do with debts that the store has already.

Buying just the website might work, but the person closing might not want a stranger running "their store" that way even if they are closed because any problems might still blowback to them.

Buying the list of emails and registered accounts might work but might also come with a LOT of legal red tape.



It might just be easier to make your own store front and then ask if the retailers going out of business can send a single email to all their registered customers announcing their closure and pointing them toward your store. They might also close their online store, but keep the website up for a time and put a big shiny banner and direct link to your store.
That would be the simplest and best way with the least red tape and cost for both you and the other retailers.

Of course you'd have to get your store front up fast so that the closure and your opening happen at exactly the same time.

I'm in the process of working this out, it's not that complicated.

Don't want to buy any businesses, not interested in debt, leases and other liabilities. The conversations are really about converting inventory to cash. I do want their customer lists if they can provide them, the only red tape I'm aware of is related to opt-in permission for mailing lists (and that is insignificant.)

Did speak with a lawyer about URLs and company names, it's probably not worth the effort. Would have to put some work into establishing this is a separate business if debt collectors come looking.

So, since my last post, some developments, 2 other hobby store owners came to me. They don't have the resources to get through this and margins on Internet sales are razor thin. They don't want to do eBay / credit card payments and wait for them to clear, they just want to make a clean break and get out with something. They're looking for cash.

So I made an offer to the first person that came to me, 15% MSRP for some of the inventory, mostly tabletop stuff, paints and model kits. The deal is done, going over there tomorrow to load up a truck. Not taking on the RC car stuff, just not familiar enough and don't know how to sell it.

Made the same offer to 2 other stores, both told me they're thinking about it which I think means they're looking for other offers. Dunno if they will come back, but I have the cash if they decide to.

There's a fair amount of stock, going to pick through anything I want to keep then sell the rest through eBay.

Just want to chime in with a major warning.If you buy a certain percentage of a company/stores assets, you assume the debt of that company. I don't remember the exact percentage, but it came up when my FLGS was looking to buy the stock of a competitor that was going under. He offered to buy the store inventory till a friend who was a bankruptcy lawyer warned him against doing that. The store turned out to have a considerable debt.

This was a decade ago and tax/debt laws may have changed.

 silent25 wrote:
Just want to chime in with a major warning.If you buy a certain percentage of a company/stores assets, you assume the debt of that company. I don't remember the exact percentage, but it came up when my FLGS was looking to buy the stock of a competitor that was going under. He offered to buy the store inventory till a friend who was a bankruptcy lawyer warned him against doing that. The store turned out to have a considerable debt.

This was a decade ago and tax/debt laws may have changed.

That's good advice, I appreciate it.

Do you happen to know if the competitor was already in bankruptcy or heading there?

 techsoldaten wrote:

 silent25 wrote:
Just want to chime in with a major warning.If you buy a certain percentage of a company/stores assets, you assume the debt of that company. I don't remember the exact percentage, but it came up when my FLGS was looking to buy the stock of a competitor that was going under. He offered to buy the store inventory till a friend who was a bankruptcy lawyer warned him against doing that. The store turned out to have a considerable debt.

This was a decade ago and tax/debt laws may have changed.

That's good advice, I appreciate it.

Do you happen to know if the competitor was already in bankruptcy or heading there?

They were shutting down and closing the store, but I don't recall if they were in bankruptcy or not.

Yeah, I would watch what the inventory is, many times it stuff that wouldn't sell even discounted.
Plus if it is a shop trying to get out most of it might be over a year old and games like X-wing have moved on and First edition stuff isn't worth much except for a few certain pieces.
One thing I have seen in the past when game shops "changed hands" is the previous owner cherry-picked a lot of the valued items. They still got a significant amount of stock but
the high ticket items that could help make a return a little faster were gone. So get a complete inventory and put your eyes on pieces that you know are worth something.

 Genoside07 wrote:
Yeah, I would watch what the inventory is, many times it stuff that wouldn't sell even discounted.
Plus if it is a shop trying to get out most of it might be over a year old and games like X-wing have moved on and First edition stuff isn't worth much except for a few certain pieces.
One thing I have seen in the past when game shops "changed hands" is the previous owner cherry-picked a lot of the valued items. They still got a significant amount of stock but
the high ticket items that could help make a return a little faster were gone. So get a complete inventory and put your eyes on pieces that you know are worth something.

To be honest, I'm more concerned with Coronavirus than I am with getting bad stock. Anything that won't sell I can give to a Children's Hospital.

Very satisfied with the first truckload. A big cardboard Primaris cut-out now guards the warehouse.

Owner says he's just walking away from the business, doesn't plan to actually go through bankruptcy. Other than the lease, the only debt is to distributors and he doesn't believe they would sue.

In the US, there is a way you can buy the business without buying the debt. It is typically part of any sale contracts, but it is a clause you need to look for.

The details escape me, but a 30 second google search OR a contract reviewed by an attorney before signing will easily root it out.

 Easy E wrote:
In the US, there is a way you can buy the business without buying the debt. It is typically part of any sale contracts, but it is a clause you need to look for.

The details escape me, but a 30 second google search OR a contract reviewed by an attorney before signing will easily root it out.

Yeah, we're past that. I am getting signed contracts that state the terms of sale, we've included clauses that state what we are and are not taking on.

The interesting part of this is talking to people and understanding a little more about FLGS financing. I used to help a friend manage his FLGS, mostly sitting at the counter and never getting involved with the distributors. What all 5 shops have in common is they purchase their stock on credit, making payments on terms up to 365 days. They have regular walk in sales but depend on these big bursts of transactions that come with new releases to keep from going under.

Everyone is in debt all the time. They pay themselves to cover living expenses but never really catch up with their distributors, meaning they never really made any money so much as deferred costs with interest. Along with the cost of leasing the property, the one's I'm talking to don't seem to have ever reached the break-even point even after 10 years in business. One owner told me he has over $100k in personal credit card debt and the business has about $70k in debt to distributors with no cash in hand - which puts him in a better position than most of the others. Plus most of the stock is non-returnable, once it's on the shelves it's there until it's sold. From the first store, I have a stack of boxes in Warhammer packaging that looks to be at least 10 years old.

This model could probably work if someone actually owned the storefront property and maybe rented a second unit to another business. But all I see is fragility - low margins, irregular sales cycles, cutthroat internet competition, too much stock on hand, landlords that only care about the rent, retail space turned over for playing tables, dependent on local customer base with no opportunity for upselling, etc. It's clear the owners loved the businesses and hung on as long as they could, one big disruption sends everything spinning.

I've got copies of the distributor agreements for the first FLGS, will root through them once this is all over. Really curious what kind of retail establishment benefits from this situation, seems like you have to make your money on volume if you want to succeed.

I wonder if anyone is keeping a list of confirmed closings.

Obviously you're not going to jump the gun and reveal which stores you're talking to but a central list would... well really sad to read but maybe good for us.

A bit risky as a false 'confirmed' closing could badly impact a business both now (if they're still running online but the storefront is closed)

or when things pick up if they're closed temporarily (some store owners may even think they're done and have a change of heart later) and customers don't come back because they think its gone

 Kid_Kyoto wrote:
I wonder if anyone is keeping a list of confirmed closings.

Obviously you're not going to jump the gun and reveal which stores you're talking to but a central list would... well really sad to read but maybe good for us.

Not sure there's a reason for a list. This is likely normal churn, no good calling anyone out.

The people I'm speaking to are all saying the virus is just the straw that broke the camel's back. They would have found another reason in the next year had this not happened, current events just mean they have to be creative with getting out.

There doesn't appear to be a robust secondary market for inventory or even store purchase. The stories I get are about being turned down for loans / business development grants, lack of resources to create electronic storefronts, significant losses due to shrinkage, variable customer bases depending on whether or not college is in session, insurance requirements relative to revenue are fairly high because of the average ticket price, stuff like that. The only place they can get credit is from distributors and that's only with agreements to meet minimum order amounts. Some distributors also require personal guarantees from the owner once credit exceeds a certain limit, which is very risky with new releases. One owner had a broker trying to find a buyer for over 2 years with no interest. And none of them like the idea their chief supplier is also their chief competitor.

The margins are just too thin, I don't see how anyone had a real exit other than closing the doors. I might share some distributor contracts to give you a sense of how stacked the odds are against financial success. Not saying it's this way for every FLGS, but it's not a business I would want to be in.

This should serve as a reminder to those with FLGS to keep some money back for when this is all blown over.

They’re gonna need it.

These sound like some badly run FLGS? If someone has sealed stock from 10 years ago that's GW it'd have to be pretty odd to not be able to get at least retail on eBay ?

You've got to be online and you've got to realise that your store is basically warehousing for online and you make your store money via creating a decent community which means do events and sell drinks/snacks. Magic is a no brainer. I've seen some FLGS be against it and they're all gone now.

Post this disaster there is a very real risk that it actually changes buying habits and that most places are looking at recession.

I've tried explaining in another forum that right now a lot of FLGS are sitting on GW preorder money. And have no stock. And probably already spent that money those customers paid. So if large numbers want refunds.... Added to people with other preorders further out who now find themselves jobless etc.....Double Ones. Game Over.

Even though its the age of the internet not everyone got online. I do agree it should be very hard for a 3rd party store to be holding 10 year old GW stock. GW stuff sells and ebay would at least let them sell it for trade price if they really wanted rid of it.

Sometimes store owners refuse to part with stock unless they can get top value; which can mean they end up holding a lot of old stock (and paying for storage/lack of space for other things) instead of cutting their losses and moving it on.


Other times the warehouse might be messy and they don't realise what they've actually got till they properly sort it out. 10 year old stuff that didn't sell then and just gathered dustin a corner.

 TwilightSparkles wrote:
These sound like some badly run FLGS? If someone has sealed stock from 10 years ago that's GW it'd have to be pretty odd to not be able to get at least retail on eBay ?

You've got to be online and you've got to realise that your store is basically warehousing for online and you make your store money via creating a decent community which means do events and sell drinks/snacks. Magic is a no brainer. I've seen some FLGS be against it and they're all gone now.

Post this disaster there is a very real risk that it actually changes buying habits and that most places are looking at recession.

I've tried explaining in another forum that right now a lot of FLGS are sitting on GW preorder money. And have no stock. And probably already spent that money those customers paid. So if large numbers want refunds.... Added to people with other preorders further out who now find themselves jobless etc.....Double Ones. Game Over.

Probably not a good idea to draw any conclusions from this except brick and mortal stores operate on low margins and lack access to credit instruments available to other kinds of businesses. The amount of debt they carry at any one time would make it hard for them to get loans and the rent is so cheap already the property owners can't afford to cut them any slack.

I did manage to talk one owner into talking to a commercial loan officer before she does this.

So, quick update and a little bellyaching.

My warehouse sits in an industrial park. I managed to complete 3 hauls to it, no problem.

But now it's closed. The state where I live closed down all non-essential businesses. The owners of the industrial park were forced to close the entrances, have not been able to get in to unload my truck.

The truck is a rental. It is completely filled with stuff and I have more I need to pick up. The truck is just sitting in front of my house, costing me rental fees every day. I can't take it back because I don't have anywhere to put the contents.

Tried talking my neighbor into renting me his garage for storage. Almost had a deal done, except someone broke in the night before. The rear door doesn't close anymore, it's just covered with a tarp and tape and probably not safe in any sense of the word.

They really meant it when they said they're locking down businesses. There's no way to really do anything with it until this is all over.

Ran out of Nuln Oil last night. There's at least 50 bottles somewhere in the back of that truck, but there's no way to get to them without unloading the contents. Tried this morning, all that happened was stuff started breaking. A package of balsa wood flyers fell out when I opened the door, I decided to set them out on a table offering them for free. The last one vanished about an hour ago.

Frustrating.

Ouch, hope you manage to sort something else out soon

That really sucks.

Have you looked into PODS portable on demand storage, or other such container vendor? Another solution may be to rent a place for a while.

 spaceelf wrote:
That really sucks.

Have you looked into PODS portable on demand storage, or other such container vendor? Another solution may be to rent a place for a while.

Thanks for the recommendation. Just starting to look into all the options, there's 3 local storage locations and no one has returned my calls so far. The one I drove by appears to be closed.

I haven't looked into PODS yet. Not sure how I feel about having that thing in my driveway, the wife is opposed. If I put it to her as a choice between the POD or the truck, that might change her answer.

I'm trying to get in touch with the owner of the business park to see if he can make a single exception. His secretary is still working, but she says he's currently unavailable every time I call.

If everyone is staying at home, how come I can't get him on the phone? I get the sense he's dodging calls from creditors. While I pay my rent, maybe the neighboring landscaping and roofing businesses aren't.

The other option I have is to take over the lease from one of the shops, it's in a business park almost across the street from the one I'm at now. That would save me from needing to move their stuff in the first place, and I think I could work out a deal with the owner.

Cubesmart is open, as of right now. Shortened hours, but open. Good luck!