Monday, September 12, 2005

Toybiz Tries my patience!

We recently decided not to order much, if any Toybiz products. They create most of the Marvel line of toys, like Marvel Legends and Marvel Figure Factory (not Marvel Select toys, which are a different animal completely). For some reason, Toybiz seems to feel that direct market retailers (the fancy word for comic book and other similar specialty stores) are the “red-headed step-child” of stores and sends us our product last, if at all. We gave them “three strikes” and finally threw up our hands and said, NO MORE!! (Or, at least no more from our traditional distributor, we may pick some up here and there from other sources, but it will be far less than what we did in the past.)

We ordered the Marvel Legends 9 set and didn’t get any from them until after stores had them for MONTHS—we bought them from Toys R Us just to resell to customers and make people happy, but still have cases of the set that came months later, after everyone had the chance to pick them up at “Wal-Mart” prices. We didn’t even get any variant figures for the set, which we could have at least sold.

Then, we ordered Super Hero Showdown, a new Marvel game that’s kind of like Atactics is with Star Wars. Again, big-box stores had them for two months before we got them, and whatever they had left was already on clearance, so we can’t possibly compete with the price, and will probably loose our shirts having these sit, unsold on our racks.

Marvel recently debuted a new line of figures called Figure Factory, and once again Toybiz seems to have forgotten about the direct market. According to what I can find out so far, we are not expected to get our shipment until late October, and by then mass market stores will have had them for almost 4 months—they’ll probably be getting the second set by the time we get the first.

We can’t just call our distributor and say, “hey—I don’t want these anymore, cancel my order.” Our distributor won’t do it—another thing we deal with in the direct market. Those that don’t sell can’t be returned either—again; the direct market is stuck with unsold product. Customers can call us and say, “Hey, I don’t want that set of Legends,” and we can’t do much—we can say they have to take it, but if we do then they’ll just stop shopping here altogether so that they don’t get forced to buy them. We can’t do that with our distributor—they’ve got an exclusive contract with Marvel and DC, and you can’t own a successful comic book store without carrying any Marvel or DC products. We can’t say, “Hey, we’re short on cash this week, can I pick them up next week,” we have to pay for it all, up front, and then try to sell it.

After I read the article below, I was even happier with our decision to discontinue buying much Toybiz: (taken from on 9/12/05)

Wal-Mart Plans Aggressive Holiday Pricing
Wal-Mart has announced that it will be pricing more aggressively this holiday
season. CEO Lee Scott said that it was criticized for cutting prices too much in
2003, and for not cutting prices enough last year, and that it would move back
toward more aggressive pricing this year. This move could portend another price
war on toys this holiday season.

In 2003, Wal-Mart's brutal price
competition on toys (see "Wal-Mart Applying Toy Category Kill Shot") led to the
bankruptcy of KB Toys and FAO Schwartz, and indirectly to the sale of Toys R Us.
Last year, Toys R Us cut its prices to compete more aggressively with the
discount department store giant, as well as bringing in exclusives from a
variety of companies that helped differentiate it from the competition. It was
also helped by less ferocious discounting from Wal-Mart. Now it looks like
conditions are ripe for another tough year in 2005 for retailers competing with
the world's largest retailer.

Let’s face facts; you cannot get rich owning a comic book store. We have more risks, and less profit, than many other businesses out there. Retail is always a risky game, and with the evolution of online business and eBay, it has become even tougher. I wouldn’t mind competing with stores like Wal-Mart if we received our products at the same time, because we do have loyal customers who would pay a couple of dollars more to do business with us. But when the Wal-Marts of the world receive their products months ahead, it just doesn’t pay. We would do better buying a couple of figures off of eBay when they first come out and selling those than getting a better price from the distributor and not getting them until the same toys are on clearance at Wal-Mart. One comic book store owner we know has said he’s not ordering any more toys from distributors—if he knows he can sell the toy he’ll get it on eBay faster and cheaper than ordering it via distribution channels, and he will be fairly sure he’s got a buyer for the item. I can’t blame him! We have decided that, in most cases, we will stick to toys you can't find in most Wal-Mart and Toys R Us stores. That limits us, but it also gives us less risk. Until companies like Toybiz (Hasbro is also a problem) start to improve the way they distribute to direct market retailers, I think they will continue to see fewer and fewer of us comic book type stores carying any quantity of their merchandise.

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