Distributor Cost Increase - One Year Debrief

By JohnWE, in X-Wing

LGS prices went up, prices at my preferred on-line retailer went up but by less. I'm still buying most of my kit on-line.

If you want to see what internet stores have done to local hobby shops, just look at the ads in back of some of the hobby magazines. Fine Scale Modeler had two pages of shops advertising in the back of the magazine. Now it's only one. There once was five or six hobby shops within a 30 minute drive of me now there's one.

Some online "hobby shops" don't actually stock anything. When you place an order, they in turn place their order. You get your stuff dirt cheap but not quick. With zero overhead, or close to it, a 10% is great. "Successful" brick and mortar shops are seen with a 3% to 5% net profit.

I also think this is the reason so many big box stores are closing. Higher prices, lack of customer service and convenience makes online buying more attractive. You get better prices and convenience and didn't lose customer service.

5 hours ago, Skargoth said:

No difference. As a whole I've been spending less on X-wing, but the pricing hasn't changed my spending one bit.

It just took me a while to realize I don't need enough of each ship to field just them to 100 points (8 Zs, 5 Kihraxz, etc.).

6 hours ago, Blail Blerg said:

Incredibly affected: I only buy for 1.2 factions now. Imperial get only what they need: 1 Striker, 1 TieSF (though I splurged on 2 Batwing shuttles. That was a poor buy, I'm selling my 2nd). And Rebels and Scum only if its a small ship that REALLY cool (so far nothing at all from wave10,11)

So no Rebel Tie no Uwing, no scum larges, no tugboat. Won't be buying anything from Wave11 except 2 Tie Aggressors. Mostly for TLT boats and the LwFrame and Unguided rockets.

2 hours ago, kraedin said:

That generic ships are so disfavored in the meta has probably changed what I buy more than anything. I used to buy enough to run a full squad of generics, but now I just buy one of each in most cases. My X-Wing spending has probably dropped by about 75%.

1 hour ago, MajorJuggler said:

FFG's prices to distributors did indeed increase across the board even for the brick and mortar channels , although not to the extent that internet-only stores pay. Internet only stores now pay more for the same product than brick and mortar stores pay, and FFG pockets the difference. Your LGS is now making less profit now than before the change about a year ago (likely around 5% of MRSP). This is not unique to X-wing, it is the entire Asmodee product line. Asmodee went on a spending spree to buy a bunch of other games and companies (seriously, look it up, they're huge now), and they have leveraged their size / monopoly by squeezing more profit out of the LGS and internet stores. This information has been readily available for a year now, it just requires some googling and research on the subject.

For me, personally, I used to buy a ton of ships via MM / CSI before I started playing competitively. I was one of those people that played at home on the kitchen table with friends, and had never stepped foot into a LGS in my life. In 2015 I started playing competitively, at which point the entirety of my new purchases came from tournament winnings. So I haven't bought anything from either online or the LGS for a couple years now, aside from my tournament entry fees, and this started slightly before Asmodee's new pricing scheme was implemented.

Also, for reference, all of the LGS in the Boston area that I have visited sell at 100% of MSRP. So nothing has changed in regards to the LGS pricing, except that the stores are making slightly less money now.

P.S.

This also describes me. (For example I have 12 A-wings, 12 B-wings, 12+ T-65's, and 18 TIE Fighters... don't ask). My tournament winnings cover enough to get 1 or 2 of each ship now going forward, and that's fine for me, partially because I don't feel as justified in getting excess quantities of non "original canon" ships, and also because it would cost way more $$ now anyway.

This is also something to consider in these discussions.

Every competitive build currently and for the foreseeable future only has 2-3 ships in it, with the occasional 4 ship build.

There is no real reason to own more than one TIE Advance Prototype for example. Or to have 6 TIE Fighters or Z-95's.

With power creep, it's better to stack a bunch of force multipliers on 2-3 (or even one ship, Kanan Biggs and formerly Dengaroo are essentially one ship builds) ships than it is to have 8 useless ones with no upgrades.

Buying mostly online because that store organizes some tournaments near me, so online is actually "buy where you play" for me.

I also stopped buying much. I never bought everything, but my high point was wave 7 where I got 3 K-Wings and 4 Punishers on release day. I always avoided large ships or rather boxes if they didn't entice me. I started selling some things I don't use, though, so currently an Interceptor, 2 Phantoms, a Firespray, my Falcon, an IG-2000 and various other ships I don't enjoy are awaiting resale.

... Well i got a 2nd tie striker. Cuz thats fun.

Swarms need some help.

I buy everything from my FLGS, with the exception of a few "droughts" in the past where I REALLY needed another Z-95 and couldn't find it anywhere, and an extra T-70.

It does make me wonder when we'll see an "across the board" price increase in X-wing figs; the painting has gotten better, and I don't think plastic prices go DOWN... so when does a $15 ship become $18 or $20? It'll still be worth it for me, and I'm one of those hapless "one of everything" players, so... yeah.

9 hours ago, JohnWE said:

People said they'd quit X-Wing. Too expensive.

Choose one :

-X-wing.

-Expensive miniatures game.

Please....do some research about other games pricing. Entry point for X-wing (tournament ! not casual) is around <100$ in some cases.

Tournament entry for other stuff? 100$ is minimum where you will have something to play with. To make is at least good triple it.

2 hours ago, Vitalis said:

Choose one :

-X-wing.

-Expensive miniatures game.

Please....do some research about other games pricing. Entry point for X-wing (tournament ! not casual) is around <100$ in some cases.

Tournament entry for other stuff? 100$ is minimum where you will have something to play with. To make is at least good triple it.

My roughly 60$ of Blood Bowl orcs feel plenty competetive. And they are all that I will ever need for that team...

1 minute ago, Admiral Deathrain said:

My roughly 60$ of Blood Bowl orcs feel plenty competetive. And they are all that I will ever need for that team...

Come on...you had to pull that one ? :D

I average 1 ship purchase, per faction, per wave - for about a year now.

The two closest FLGS have stoped running events and only carry a small selection of X-Wing (that never seams to get restocked). I don't know if it was players burnout or price changes. But going from four local stores I could play at depending on the day I was available to one that still host any events that I can attend and only two that stock the game stinks.

I tend to go for ships that I actually like rather than pricing at this stage (Asmodee have not yet turned into GW).

That said my purchases have substantially decreased because the ships do not interest me.

Spending as much as ever. Preordered 11 ships from wave 11, because 11one!!11.

Do you guys have a source on distributor prices to FLGSes going up? I work closely with my FLGS owner to organize the FFG Star Wars games and as far as I can tell, his wholesale prices haven't changed noticeably. I also haven't been keeping a close eye on it.

Even Warzone Resurrection, which is laughably cheap compared to 40k, cost me over 300 to field a decent sized army. As others have mentioned you can get into xwing for ~100USD easily.

The ONLY thing i'd knock xwing down a peg for is the card system. People who dont want to play the other two factions are still forced to buy them in the long haul if they want to go super competitive. Minor issue since the price is so low, but an issue nontheless.

Still, i'd rather buy more minis so i can get some variety and even run a different faction than buy another 50USD rulebook aka GW's mindset....

4 hours ago, mightyspacepope said:

Do you guys have a source on distributor prices to FLGSes going up? I work closely with my FLGS owner to organize the FFG Star Wars games and as far as I can tell, his wholesale prices haven't changed noticeably. I also haven't been keeping a close eye on it.

ICv2 is a good place to start. Search their archives for anything "Asmodee". Around the time of the announcement there was some commentary pointing out that Asmodee was standardizing their prices to distributors for their products across the board, which generally had the result of slightly raising costs to the LGS for most games. There's also at least one blog post from a LGS owner at the time who was extremely unhappy about the situation. Admodee publicly stated they were doing all this to help support the LGS, but in reality it was just squeezing the LGS profit margins to fill their own coffers.

Asmodee is owned by a French hedge fund who recently went on a leveraged spending spree to turn Asmodee into the largest North American hobbyist games conglomerate by sales. The AsmodeeNA CEO (originally the FFG CEO), is well known for paying his own employees way under market rates, funneling the savings to FFG (i.e. himself). The pricing scheme was not accidental, it was the entire purpose of restructuring AsmodeeNA into what they themselves called "not a customer facing entity", but rather its purpose was to create corporate value through other means. Translation: becoming a monopoly (or as close as possible) and raising prices.

They made an initial PR release proclaiming their price restructuring was benevolent for the good of humanity. It was essentially pointed out that "the lady doth protest too much". So after significant blowback they released a second PR statement, which was even more cryptic than the first and filled with indecipherable corporate legalize. The changes in fact are extremely beneficial to FFG/Asmodee. You may choose to support FFG/Asmodee because they make a quality product (I still am in a limited capacity), but anyone who believes they are a white knight trying to "save the LGS" is either uninformed or deluded.

Edited by MajorJuggler

This seems like a great thing for FFG from a business perspective. It can only help them to encourage customers to buy from the FLGS. (Coming from warhammer I can guarantee you that this hobby is not too expensive).

Myself I usually buy single ships or at most two ships at a time in the FLGS (I still have a lot of ships to collect so I usually only get 1 a month or every other month). If I am going to make a big purchase (usually over $100 to get free shipping) I got to an online retailer.

I no longer buy as many ships as I could theoretically run, for example I bought 8 z95's back in the day because, hey, it could be possible. Now I just buy as many ships as I think I will nominally need for real lists and upgrade cards. I would say I cut spending back 10% or so.

40k habits prevents me from buying that many of every ship. I still have some repeats i will never use (3 falcons due to 2 HOTR boxes) but for the most part my repeats are low.

40k prices prevent you from buying like that. You pick one model you wanna buy that way, thats it, and even then its expensive. Cost me over 200USD to get ONE UNIT of Ghostkeels and you can technically run 3 units in a standard game lol....nope!

My big issue with buying repeat xwing ships is most of them require repeat other expansions to get the proper cards. For instance, practically anything with Awings you need like 3-4 expansions PER AWING and most Awing focused lists run 4-5 of them lol. That can spiral out of control quick....

55 minutes ago, MajorJuggler said:

ICv2 is a good place to start. Search their archives for anything "Asmodee". Around the time of the announcement there was some commentary pointing out that Asmodee was standardizing their prices to distributors for their products across the board, which generally had the result of slightly raising costs to the LGS for most games. There's also at least one blog post from a LGS owner at the time who was extremely unhappy about the situation. Admodee publicly stated they were doing all this to help support the LGS, but in reality it was just squeezing the LGS profit margins to fill their own coffers.

Asmodee is owned by a French hedge fund who recently went on a leveraged spending spree to turn Asmodee into the largest North American hobbyist games conglomerate by sales. The AsmodeeNA CEO (originally the FFG CEO), is well known for paying his own employees way under market rates, funneling the savings to FFG (i.e. himself). The pricing scheme was not accidental, it was the entire purpose of restructuring AsmodeeNA into what they themselves called "not a customer facing entity", but rather its purpose was to create corporate value through other means. Translation: becoming a monopoly (or as close as possible) and raising prices.

They made an initial PR release proclaiming their price restructuring was benevolent for the good of humanity. It was essentially pointed out that "the lady doth protest too much". So after significant blowback they released a second PR statement, which was even more cryptic than the first and filled with indecipherable corporate legalize. The changes in fact are extremely beneficial to FFG/Asmodee. You may choose to support FFG/Asmodee because they make a quality product (I still am in a limited capacity), but anyone who believes they are a white knight trying to "save the LGS" is either uninformed or deluded.

I'm fairly certain that the purpose of standardizing their pricing was to prevent online stores (be it Miniature Market, CoolStuffInc, or Amazon) from offering deep discounts, especially during the initial release of a product. This is why Amazon generally takes a little bit longer to put up products sometimes and why they're almost always sold at retail prices on Amazon during the first month or so after release, as opposed to being $9.99 when the MSRP is $14.99. Around that time, they also put limitations on which stores are allowed to sell their products online, which I believe was mostly to prevent a lot of the random Ebay sellers without actual physical storefronts from offering steep discounts since they don't incur the usual costs associated with gaming stores (rent, electricity, employee wages, etc).

Again, the last time I checked the invoice from the distributor to the FLGS, the prices didn't really seem significantly different.

20 hours ago, MenaceNsobriety said:

I buy all my ships from the FLGS so it has not affected me at all. Got to keep the place to play open and profitable. Our previous game store closed party because everyone bought online.

I'm making a conscious effort to buy my ships at the FLGS theses days.

8 hours ago, Admiral Deathrain said:

My roughly 60$ of Blood Bowl orcs feel plenty competetive.

In other news, apples are not oranges...

Bloodbowl while a wonderful game is not really a miniature tabletop game, it's an advanced board game, with a very limited number of pieces needed for any given team.

2 hours ago, mightyspacepope said:

I'm fairly certain that the purpose of standardizing their pricing was to prevent online stores (be it Miniature Market, CoolStuffInc, or Amazon) from offering deep discounts, especially during the initial release of a product. This is why Amazon generally takes a little bit longer to put up products sometimes and why they're almost always sold at retail prices on Amazon during the first month or so after release, as opposed to being $9.99 when the MSRP is $14.99. Around that time, they also put limitations on which stores are allowed to sell their products online, which I believe was mostly to prevent a lot of the random Ebay sellers without actual physical storefronts from offering steep discounts since they don't incur the usual costs associated with gaming stores (rent, electricity, employee wages, etc).

Again, the last time I checked the invoice from the distributor to the FLGS, the prices didn't really seem significantly different.

https://icv2.com/articles/columns/view/33327/rolling-initiative-asmodee-na-what-it-means-you

Pertinent snippets:

" The three companies will remain independent in terms of product, however distribution will consolidate, starting January 1st. This means that Alliance will no longer have exclusive distribution rights to the Days of Wonder line of products, which include Ticket to Ride and Small World. At the same time, Asmodee NA will reduce its distribution partners to 5: Alliance Distribution, ACD, PHD, GTS and Southern Hobby. This means that distributors such as Aladdin, E-figures and Mad Al's, among others, will no longer stock the Asmodee NA product lines and retailers wanting to carry them will have to have an account with one of the five authorized distributors or buy direct. "

" A second major change affecting the channel is, instead of raising the price on the combined company's products, discounts on products across the line will drop to 45%, reducing the margin of gross profit anywhere from 3 to 5 %. Much as with WOTC's reduction in margin earlier this year, this reduction comes straight out of the gross margin of distributors and retailers. It remains to be seen what Asmodee NA does with the extra percentage. "

In other words:

  • AsmodeeNA is cutting the number of distributors they sell to.
  • This change is across all product lines (FFG, Days of Wonder, Catan, etc etc)
  • Asmodee now charges the distributor 55% of MSRP for product. The remaining 45% is split up between the distributor and LGS, and has to cover transportation costs, capital expenses, labor, etc, with the remaining going to profit.
  • This new 55% of MSRP generally represents an increase in price (to the distributors) of 3% to 5%. This may vary according to the product line, and I don't know specifically where X-wing stands.

Your LGS may not be seeing the full 3% - 5% increase at their end, because:

  • the distributors may have ended up eating some of the cost
  • X-wing costs were already more closely aligned with the 55% MSRP distributor cost than other product lines

I don't look at distributor or LGS invoices so I don't know the answer to either of these. To your point, it could be that your store has not seen a significant price change.

Also note that the online sellers now pay more than 55% of MSRP for product. I don't know what the exact number is, but the distributor cost for the online channel is probably now in the range of 70% - 75%. Asmodee pockets the 15% - 20% difference (vs retail channel) as direct profit. Asmodee prevents the online sellers from "cheating" (buying through the 55% MSRP channel and then selling online) by forcing all retailers to sign their Special Retail Policy. This scenario goes far beyond casually observing slightly higher costs to LGS. It is a textbook definition of vertical price fixing that would have been per se illegal (i.e. automatically) under anti-trust laws as recently as 2007, prior to a Supreme Court decision that overturned 100 years of precedent. There's some legal blogs on the subject I found:

http://masslawblog.com/antitrust/supreme-court-changes-the-rules-on-vertical-price-fixing/

https://www.theantitrustattorney.com/2014/10/02/classic-antitrust-cases-leegin-resale-price-maintenance-agreements/

Here's some interesting snippets:

" In Leegin v. PSKS, Inc., the Court swept away the almost 96-year old per se rule against vertical minimum price fixing, holding that henceforth this practice, too, will be judged under the “rule of reason.” "

I am not a lawyer, but basically this means that if FFG were to have done this in 2006, they automatically would have been violating anti-trust laws, even if the "white knight saving the LGS" justification was true, and they would have zero chance of a successful defense if a federal prosecutor presses charges against them, short of appeal to the Supreme Court. After 2007, however, vertical price fixing may be deemed legal if the company can mount a "rule of reason" argument, which essentially states that there is some other greater good for engaging in price fixing. This explains the real motivation for the original press release in December 2015. The PR wasn't written for its customers or for the distribution channels, it was written as a pre-emptive legal defense to prevent AsmodeeNA from getting sued for what is a textbook definition of price fixing. Whether their "save the LGS" argument has any basis in reality is irrelevant. All that is necessary is to deter any federal prosecutor from bringing antitrust charges against them, or in the worst case scenario, at least having a solid legal defense to fall back on.

Here's another relevant snippet:

" The Supreme Court in Leegin, of course, spoke only about the federal antitrust laws. Many states maintain their per se prohibitions in their own antitrust statutes against vertical price-fixing. So if you are a national manufacturer, you really need to know state antitrust laws as well. For example, under California’s antitrust statute—the Cartwright Act—it appears that resale-price-maintenance agreements may still be per se unlawful (although the California Supreme Court has not definitively addressed it since Leegin). By contrast, in Minnesota, where its antitrust statute is interpreted consistently with federal antitrust law, it is unlikely that an RPM agreement is per se illegal under the Minnesota antitrust laws. "

Again, IANAL, but given that their strategy for forming AsmodeeNA was to engage in vertical price fixing, it would seem to be, at a minimum, very convenient that FFG HQ was already located in Minnesota.

Edited by MajorJuggler
15 hours ago, MajorJuggler said:

This also describes me. ( For example I have 12 A-wings, 12 B-wings, 12+ T-65's, and 18 TIE Fighters... don't ask). My tournament winnings cover enough to get 1 or 2 of each ship now going forward, and that's fine for me, partially because I don't feel as justified in getting excess quantities of non "original canon" ships, and also because it would cost way more $$ now anyway.

19 hours ago, voidreturn said:

Yes, I used to buy enough ships to field an all generics squad but I've stopped doing that. Part of it has to do with the fact that generics are far less compelling but also because it will cost significantly more to do so.

17 hours ago, Sciencius said:

I am addicted to this particular form of plastic - prices do not concern me ??

All of these statements reflect my spending habits. I feel a bit burnt by "overbuying" early wave ships that have been overrun by later waves, and consequently don't plan on getting squadron-level ship counts in the future; and since I play Epic only, 8 of one ship type was often "needed." And it has nothing to do with the middle-man's share.

Edited by Darth Meanie
1 hour ago, MajorJuggler said:

SNIPPED

I think you're making FFG/Asmodee out to be far more nefarious than they actually are. Let's be real, how often have we seen a new player come into a store, try the game, not buy anything, then come back in later with $300+ worth of product bought online that would have cost $400+ at MSRP?

Granted, if that player sticks around, they often begin to see the value of buying in store.

My FLGS owner was happy about the change (and actually predicted it about two months ahead of time), since it at least helps to even the field when it comes to online retailers. He saw it as the company showing a degree of respect and appreciation due to the fact that gaming stores provide a place to play, whereas online retailers only provide discounted merchandise. A number of other game companies already do something like this or have since adopted a similar practice. I'm not saying it was only done for the sake of local gaming stores, but it seems a bit disingenuous to portray it as merely being something to line Asmodee's pockets.