When Does It Make Sense to Sell Directly Instead of Through Distribution? – Stonemaier Games

When Does It Make Sense to Sell Directly Instead of Through Distribution?

While it may not always seem to be the case, I prefer to sell the majority of our games to distributors. Quite simply, it is much easier to sell and ship a pallet of games to a single location than to sell and ship 126 games to 126 individual customers. I’m still glad we have the opportunity to serve those who prefer to buy directly from us, of course.

While most of our products are in distribution, not all of them are. Scythe’s metal mechs would require an MSRP of over $100 for a single set of 1 mech per faction if we sold them to distributors, so we don’t. We also have a number of ala carte items without bar codes that don’t seem like a good fit for distribution.

But because of the worldwide value added by distributors (here’s a basic explanation of the board game supply chain), it often surprises me when I see Kickstarter exclusive projects, Target exclusives, and any publisher that entirely ignores distribution. Especially since a significant number of consumers buy from retailers:

Why then, you might ask (if you’re in the US or Canada), is Stonemaier Games selling Wingspan on our webstore right now when US and Canadian retailers can’t get it from distributors?

In September, I initiated a 21,520-unit print run of Wingspan. Approximately half of the print run was for distributors who prepaid for it, which is incredibly helpful, as making 21,520 games ties up quite a bit of cash.

In addition to the prepaid units, I reserved 15,000 units for distributors and direct sales. But 15,000 isn’t half of 21,520, is it? That’s because I wrote down the wrong number on a spreadsheet I use to communicate to our broker. Basically, I told Panda to make 21,520 units (which they did), but elsewhere I wrote down 26,520.

A few months later, we solicited non-North American distributors for their desired quantities of Wingspan. We do this because it allows us to ship to those distributors directly from China instead of freight shipping to the US and then to their final destinations. When our broker portioned out games to those direct-ship distributors, they used the 15,000 quantity I gave them, not the correct number of 10,000.

As a result, when our broker received games for North America, they received far fewer than they were expecting to have for distributors. It was then that I discovered my clerical mistake, but it was far too late at that point.

Meanwhile, our broker received tens of thousands of orders from distributors in the US and Canada with only a few thousand copies of Wingspan available. This presented quite a dilemma, as a few thousand copies of Wingspan can barely cover one distributor’s orders, while there are nearly ten major hobby game distributors in North America to whom we sell.

Our choice was to divide the few copies we have among those distributors, knowing that each will be frustrated for being heavily allocated (and that local game stores in particular would end up receiving 1 or 2 copies at most, which would be frustrating for them), or do we wait until we have a more robust supply of Wingspan?

I decided to wait. We already have a mid-sized print run in production, so its primary focus will be to serve demand for distributors in North America. In addition to that, our broker accepted orders from distributors without prepayments for the next print run of Wingspan–we’re funding this print run ourselves so that we can make exactly what each distributor wants. That print run should arrive in stores in July.

In the meantime, however, I decided to sell the extra copies of Wingspan on our webstore. I understand this decision may not resonate well with distributors and retailers, but I think it’s a better way to serve the thousands of customers who requested a back-in-stock notification on our webstore than to let those games sit in our warehouse for 3 months.

For full context, there are now 300,000 units of Wingspan in print worldwide. Stonemaier Games has sold approximately 20,000 of them directly to consumers, so over 90% of all units have gone to distributors and localization partners. Yet–with the exception of distributors who have pre-committed to a portion of reprints before production begins–distributors have been continually frustrated by allocations. That played a major factor in my recent decision.

All of that said, I don’t want retailers to suffer from my clerical mistake, especially not small brick-and-mortar stores. Over the last few days, I’ve received some notes from US and Canadian retailers saying that they would love to get a few copies of Wingspan to serve their local customers, and I’ve offered them the ability to buy a case from our webstore at the standard 50% retailer discount. I applaud those retailers’ willingness to serve their customers without blasting me (I received a few very inflammatory messages), and I’m happy to help them.

Anyway, those are my thoughts on this subject, and I’d love to hear yours in the comments below. You’re welcome to disagree with my decision, but please do so constructively.

If you gain value from the 100 articles Jamey publishes on his blog each year, please consider championing this content!

21 Comments on “When Does It Make Sense to Sell Directly Instead of Through Distribution?

Leave a Reply to Jamey StegmaierCancel reply

If you ask a question about a specific card or ability, please type the exact text in your comment to help facilitate a speedy and precise answer.

Your comment may take a few minutes to publish. Antagonistic, rude, or degrading comments will be removed. Thank you.

  1. Always enjoy your articles Jamie, and your games are a big influence on our work as indy game designers. We currently sell on amazon and via our website but we would love to get our games into local and international game shops. Do with any recommendations for good distributors or where to start looking?

  2. Hey Jamie,

    I’m setting up my supplier profile with a distributor and they’ve asked us if we have a damage policy and (separately) if we have any company boilerplate. A damage policy seems prudent, but I’m not sure what is standard or reasonable. Based on your experience, are there terms or policies you’d advise publishers to set up in advance of distribution?

    1. Juli: Great question! To avoid shipping a damaged products back and forth, I would offer a refund on damaged products (basically, if you sell them something they can’t sell because of damaged, just refund them what they paid for it).

  3. Hi Jamey, . I’m wondering if you can answer a question about distribution margins today. I had last had a game in distribution decades ago, and I was giving my distributors 20% and freight (ie. for a $10 MRSP, retailers paid $5 and distributors paid $4). Someone I assume to be very knowledgable told me that distributor margins are much lower today and I should not be offering that much off wholesale. I’m not asking you to disclose you are offering distributors, but what in your opinion are the typical publisher-to-distributor terms today? Thanks!

    1. Andy: Industry-standard distributor terms today (for board games) are that distributors get a 60% discount. This typically results in a 5x multiplier on manufacturing cost to determine the MSRP of a product. For example, a game that costs $10 to make is priced at $50, and a distributor pays $20 for it.

  4. Stonemaier is one of the bastions of good customer service in a market where good CS is very difficult to come by. It is the close second reason (the first being quality games) why I am willing to be a Stonemaier Champion. I think Celophaire is the only other company I’d consider as they have been equal good with their CS. For those times you get reamed no matter what you do or say I say “hang in there”. You will not and cannot please everyone and some folks will not be pleased. Keep up the good work!

  5. I’m looking for some clarification as I’m not sure if I followed that correctly (my wife and I have gone back and forth on the meaning).

    Did the distributors who prepaid get what they paid for, and Stonemaier just weren’t able to fulfill excess non-prepaid orders, OR are those who prepaid being required to wait until July to have any portion of those prepaid orders fulfilled?
    (or some third scenario?)

  6. I really enjoyed your discussion on the Covenant podcast. Looking forward to giving you feedback on some local retailers if you decide to query.

  7. Jamey your transparency is incredible. I appreciate your constant willingness to connect with the larger community and try to explain your companies decisions. Additionally, I think you have helped bring the issues with the current distribution process to light and maybe things will change. In the end I think you have established Stonemaier as a respectable company and many of us simply know your best intentions. 300,000 copies of a game like Wingspan in one year is unbelievable. Congrats to Elizabeth and Stonemaier!

  8. I understand the business decision you’ve made here. I’m not super happy about it, but I’m not mad. Wingspan is a great game and demand is high. I wish there were more hobby games with such high appeal! You have to decide how to handle your business and I have to manage mine. It’s frustrating that I’ve been telling people since October that we’d have a restock in January and now I have to manage those expectations. I can put on my big-girl pants and do that. We’re looking forward to some day having Wingspan as an evergreen title in our shop. Scythe is in that position now. We’ve been able to get it consistently for 6 months or so.

  9. As you know I have great respect for you Jamie. But you are the exception to be honest. Everyone knows what you’ve done and what you’ve built, and it is brilliant. I’ve built something decent myself, but on the other side of the coin, despite pouring in more time and resources into being more available and making a big push for retail distribution, out retail revenue got cut in half in 2019… and this while our top line growth was nearly 50%. It is incredibly frustrating to me to see our products do so well direct and at conventions only to be more or less ignored by most of traditional distribution. I don’t have the answers, but I do know that pouring a significant amount of time and resources into an area that is such a small percent of our revenue doesn’t make a lot of sense to me. 2020 is definitely a do or die for distribution for us, but if it doesn’t work out I can see going the other direction and ignoring it altogether. The main draw of distribution is volume and without that there isn’t really a lot for small publishers to be excited about. All this to say, I can definitely see why more and more publishers are going exclusive. For most of us distribution is high risk low reward. Unless you hit the jackpot and strike a decent hit, it isnt going to payoff. Better off taking the higher margin on direct sales and not over printing in my opinion. It is a ruthless competitive environment out there in retail distribution right now. I’m still hopeful we can make it work, but I have to say I become less and less enthused by the model daily.

    I know everything is relative, but the problems you have faced with Wingspan are ones most of us would kill to have. Doesn’t mean they are easy, but your situation I don’t think is representative of the general market. And I know you didn’t say it was, but by wondering why other publishers don’t see the value in retail that you do it suggests we are on the same playing field when we aren’t.

    Much love and keep rocking it. You are inspiring to us all.

    1. You are not alone, AJ. I echo Jamey’s thoughts on distribution being a generally easier way to go, but you have to be printing in sufficient quantity such that the margins on wholesale make sense. Most small publishers (like me), really are not doing that. I think direct to consumer is the better way to go for us, particularly if you are just starting out and do not have a warchest of capital built up.

      Kickstarter sales pale in comparison to the global market, yet it has changed the landscape quite a bit. As consumers are ever-driven by what’s “hot” at the moment, distributors are taking on less risk by buying fewer games, even from large and mid-range publishers. So now the risk shifts to the publishers, and most cannot take on that risk. So the print runs are smaller, the costs per unit go up, and it makes more sense to print a few hundred over your Kickstarter (if that’s the route you’ve taken), and throw the rest up on Amazon or your own web store. If there is enough demand after, you can do a second crowdfunding effort.

      This puts brick and mortar retailers in a tough spot for new games though, and I’m still not sure how to reconcile that beyond retailer pledge levels. But they don’t really have time for that and it’s too much risk for them to carry.

      The other thing with distribution that is very frustrating is that there are companies purchasing games through distribution, only to sell them on Amazon well under MSRP. I feel this devalues our product and makes things very tough for friendly local game stores. We have our own game on Amazon, but good luck buying it from us even though we’re the publisher and have our games warehoused and fulfilled by Amazon. (FYI – this is known as “owning the buy box”)

  10. We are a retailer in Serbia (Europe). Serbia is a country that is outside of EU and has customs and really high shipping costs. For us, as a retailer/distributor of boardgames in our country it is much more viable to get the games directly from publishers than trough distributors because of the shipping costs (other fixed costs that follow every shipment /export costs /import costs). In theory, yes geting 6 games of one kind and 6 games od the other kind should be better, but when you factor in all costs and higher prices that distributors have compared to publishers, if we have a demand for the game (like Scythe or Wingspan for example), taking one whole pallet is better business for us. That is why we approach more and more publishers to buy directly, and most of the time of they are smaller companies (not in Asmodee group), they glad accept it.

  11. Counterpoint –
    I have been telling customers that placed special orders we would been getting them mid February because that is what you have been telling us.

    Now instead of pumping 6000 units into the NA system, 0 units got put into the system. Even getting 1 or 2 from distributors vs the 25 I have on order would have helped satisfy pre-orders that have been waiting since Christmas.

    Stuff happens, but I don’t think this was the right choice among deal with the situation.

    I called them all my pre-orders this week to tell them we’re now looking at a July timeframe and offered to refund their money or switch it to another game.

    1. Jamie, do you think it’s a good idea for you to tell customers you’re getting a product before you’re actually guaranteed to get it? Yes, I estimated to retailers that we would send more Wingspan would to distributors in February, but I didn’t say how many were available, and retailers definitely didn’t know how many copies they were getting from distributors.

      1. Jamey, do you think it’s a good idea for you to tell customers you’re getting a product before you’re actually guaranteed to get it?

        1. David: We don’t sell products unless we have those products in stock. So if a customer orders from us, they’re guaranteed to get the product.

  12. You sure have a lot of tough decisions to make when it comes to this. I preordered Tapestry and followed all the hubbub surrounding that release, and it seems sometimes like you just can’t win. 90% of Wingspan copies in print went to distribution and they still complain?

    I applaud all your efforts to make everyone happy, despite knowing it’s an impossible task.

See All Comments

Discover more from Stonemaier Games

Subscribe now to keep reading and get access to the full archive.

Continue reading