Sunday, 6 September 2015

Preorders: Why we dropped them and delays explained

Mother's Basement, GAME, Comic Toys, Gamestation, HMV, Acestoys, Phones4u, Ratchet's Clinic and Blockbuster.

Forbidden Planet, Zavvi.

Preorders are a convenient way of budgeting and being able to ensure we have what we want booked in and guaranteed at a point when we can afford it. In collecting circles this also means that we don't miss out on rare items and end up paying a lot more on Ebay afterwards, or that's the theory at least.

Preorders are definitely a way of paying for items when we have the money rather than having to quickly find cash on release and often there are incentives for preordering - in collecting it's the 'early bird' pricing, in gaming it's usually a piece of DLC.

Current shows us how many of him were made in this colourscheme

Also one the positives of preordering is that small projects can get off the ground because they know what their sales are in advance and can collect the money upfront before they have to pay out themselves. That way they don't need to fund the project themselves which in toy manufacturing can be in excess of $100,000 just to get a testshot of one figure.

Probably wouldn't have been made without preorder money

But that's also a downside.

Ever bought a third party figure and the quality has been awful? Ever given that company a second chance after they promised improvements only to find that their products are still dire? Again that's the power of preorders because companies can get funding in advance based on promises they don't need to deliver on.

I get to pay again for all these parts which were removed from the toys I've already paid for? Excellent.

If eventually the fandom gives up on a company then they can easily rename themselves and start again - they put up a preorder under a new name, it looks great and everyone pays up on the promise of something good only to be let down again. They know that they can get preorders based on a line drawing or a render so after that they can take as long as they like to release it or just not bother putting much effort into it.

Also the incentives aren't really incentives. Do the early bird prices actually end? Was preordering a game ever worth the one or two weapons you get early access to?

Phew, so glad I paid 8 months in advance to get a gold battlepack to go with my other 32 unopened ones.

There's also something else to think about - how safe is your money?

The names at the beginning of this article are separated into two groups. Zavvi and Forbidden Planet are two companies who list preorders for everything in their field but quite often cancel or deliver them months late. Forbidden Planet listed Brainstorm as being a September release last year while we listed it as October as we tend to be a little behind on things. Our customers received theirs in October, FP's received theirs in January. If you preordered those ultra cheap Star Wars figures from Zavvi then you're possibly amongst the 50% still waiting to get theirs...

Fugly and probably not worth waiting indefinitely for to save £4

The first list of names though are companies who went under while owing people a lot of money thanks to preorders. It took a while but after being bought out GAME and HMV honoured preorders and gift cards again but if you shopped with any of the others then your money was gone for good. Sure some people got their money back through Paypal but the vast majority didn't. Mother's Basement owed around £35,000 to a fairly small number of customers, around 250, because so many had placed multiple preorders of expensive items.

A problem for many businesses is what's called 'Robbing Peter to Pay Paul', which is when you're taking money from one source to pay off another - instead of keeping your preorder money to one side and paying for your preorder, it's used for stock due out now but then by the time the preorder needs paying there's no money so more preorders get listed to pay for the existing preorders that are now due. It's a downward spiral.

Preorders are a great way to for businesses to gauge how many of an item need ordering in but they often lead to a business' demise. Or worse.

Recently we added new suppliers for third party products, we scouted a few and settled on four. One of those stopped responding to our emails quite quickly (a competitor had a word), one was great but then vanished and reappeared after a month or so, the third wanted a bank transfer of $2,000 up front (how about no?) and the fourth are thankfully solid as a rock.

That distributor who vanished is a pretty major one and it affected customers of other retailers as they had to cancel customers' orders. They seem to be back up and running again and hopefully everything is resolved but it's a still a worry that they'll vanish again. Either way relationships need to be rebuilt and they are rebuilt with trust and money, but whose money?

With the Chinese economy in chaos recently there are concerns over the factories who produce some third party products as they have to increase production costs. In any financial crash some businesses will fold under the strain but thankfully the crisis seems to be nearing its end as the stock market starts to level out.

So why does our stock take longer to get here?

Most retailers don't buy directly from companies even the third party ones. Sure some do, but most use distributors. You don't have to order in crazy quantities of a product from a distributor like you have to when buying directly.

We buy from four of the most reliable and reputable distributors in the businesses and when you deal with the best you pay more and/or you get product later because there's a middleman involved. Sure we can't offer you deep discounts like other retailers do but then we pay every bit of tax we're supposed to and while some of our stock is late arriving here, it will get here. We could get it here quicker but then that means paying for FedEx shipping and then we really can't compete with the tax dodgers.

£3 profit per unit after fees, postage subsidising and tax? Pass.

From here on in our Hasbro and Takara products will get here on time. Hot Toys and Sideshow products are fine and so we still accept preorders. However, about half our third party and all of our Hasbro Asia/TT exclusives will arrive about 3-4 weeks after release as they always have done. Realistically will there be a huge issue where the factories or third party companies run off with everyone's money? Probably not. Is your retailer about to run off with your money? Doubtful. However there is some instability in the market and we're not gambling your money. We may be a little slow and it may be frustrating to not be able to preorder from us but ask yourselves how many businesses genuinely put you first...