In today's episode of the Manaverse Podcast Wayne hosts John and I at Dueling Grounds in Toronto and we discuss the variety of ways a game store owner can build their shop's inventory. We go over the product mix matrix suggested by a listener of the show which is quoted down below for your convenience.
Quote:
Tom,
I think a business plan is important but having positive cash flow is the key to any success. I think talking about is about product mix; in restaurants we call this menu mix. Here are the terms:
- Stars: are extremely popular and have a high contribution margin (high, high)
- Plough horses: are high in popularity but low in contribution margin (high, low)
- Dogs: are low in popularity and low in contribution margin (low, low)
- Puzzles: are generally low in popularity and higher contributions (low, high)
So in a game store - what are the Stars - magic singles? Ploughs - Warhammer figures? Dogs - "got to have board games that can be bought on Amazon" cheaper then you can sell in the store? Puzzles - deck sleeves/dice?
I think that any new game store business plan has to take into account that people will buy products from Amazon after seeing them in your store - Best Buy faces that challenge everyday. The store has to be more focused on people environment then product selling. ESPN realized its future lies in live broadcast of events because you can not get that anywhere else.
I also think that there are good profit margins on Magic sealed products - Kevin over at Derium's CGG has posted videos listing his MTG buy cost and folks are making $1.75 per single pack bought at $2.17 and reselling at $3.99. He has made his "crate service" the Plough of his business. But he does enough of those crates to cover operating costs for everything else. I would love to a business analysis of a game store to see what items lie in what categories because I really do not think owners look at their data analytics enough because they are just trying to get buy and using their own judgement and bias selection as the default answers to what they should be doing.
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