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Some of you by now have guessed that I have a "route" into GW -Dear **********,
Thanks for contacting Games Workshop about the change in our trading terms for European accounts. I know this has frustrated you and for that I am truly sorry. As a long standing customer, you deserve to know why we made this decision.
As you know, we introduce people to the Games Workshop hobby of collecting, painting and gaming with Citadel miniatures through our Hobby Centres and local independent trade accounts. Games Workshop Hobby Centres run introductory games and painting sessions, beginner lessons, hobby activities and events. We provide all these services free of charge. We only recover this investment if customers then buy products from us.
Where we don’t have a Games Workshop Hobby Centre, we support local independent trade accounts. These businesses provide a convenient place for customers to buy our products close to where they live. We support these businesses with local customer service teams and warehouses to ensure customers have immediate access to our best selling products and new releases. Many customers discover the hobby this way.
In addition we invest millions of pounds every year in our design studio and factory to ensure that each month we release more new products. This makes the Games Workshop Hobby more exciting for existing customers, helping them stay in the hobby longer. We can only afford to do this because of the volume of customers we have recruited and developed through our local Hobby Centres and trade accounts.
It is for this reason that we have changed our European Trade terms. Over recent years, a number of currencies have moved a long way from their historical relative values, and this has opened the door for some traders to try to take advantage of these currency movements and offer deep discounts to overseas hobbyists. This has been the case with European internet traders selling to some of our customers overseas.
While this may seem great in the short term, the simple fact is that European internet traders will not invest any money in growing the hobby in your country. Their model is to minimise their costs and free-ride on the investment of Games Workshop and local independent shops in creating a customer base.
The inevitable consequence if this was allowed to continue is that Games Workshop would not be able to operate Hobby Centres, nor to support local trade accounts. And if this happened in more territories outside Europe, the loss of volume would leave Games Workshop no choice but to scale back our investment in new product development, further eroding our customer base. Not something that we or our customers would want us to do.
That is why we took the decision to take legitimate action to restrict European trade accounts from selling the goods they purchase from Games Workshop outside Europe.
While I understand that you may still be unhappy with our decision, it was taken to ensure we can continue to support the Games Workshop hobby communities around the world through our Games Workshop Hobby Centres and local trade accounts. And to ensure we continue to invest in developing the best possible new product releases every month. I hope therefore that over time you will see the benefits of this decision for you and your hobby.
18 May 2011
I was being nice before I read this, but the gloves are off here.
I work in the polymer industry. I sell raw materials (plastics for example and packaging), to people like GW. I know how their business operates - their buyers do TALK to me....
What GW are attempting to do is ILLEGAL. You cannot legally prevent people from selling your product outside of certain areas (unless those products are designated military or there is a UN sanctioned Trade Embargo).
If Australians and Canadians are paying 40% more "street price" than UK consumers, here's what people can do perfectly legally (and GW can't do a damned thing about it) - they buy at full UK price, they add on 20% markup and they sell to overseas consumers via the internet.
Ok, they won't get their trade discount, but believe me - even buying at full retail price ensures that GW won't get the full 40% markup in places like Australia.
In the meantime - could I please ask eveyone NOT to buy direct for the next month regardless of where you live. It's about time GW was shown that it can't do without the FLGS's.
(Or it's suppliers for that matter)
Y'know what really gets me is GW think they lose "volume"? HOW THE **** DO THEY WORK THAT OUT? Even if it's sold by a third party retailer outside of their supposed territory, the product is still made by GW.
How is that losing Volume exactly?
Last edited by Fantasticmrfox; June 2nd, 2011 at 18:00.
Bullshit, utter bullshit. FACT: GW receives the money and chooses what to invest - the route the money took back to GW is IRRELEVANT.We only recover this investment if customers then buy products from us.boo hoo. My heart bleeds. Either put your prices up, (oh yeah you did already) - or cut the discount to third party vendors. Or stop paying dividend to shareholders, or cut staff numbers. DON'T BLAME THE CONSUMER FOR WHERE THEY SHOP OR THE RETAILER(S) FOR RUNNING AN EFFECTIVE BUSINESS.This has been the case with European internet traders selling to some of our customers overseas.
Mark Wells is clearly a pillock of the highest order if he believes the crap he spouts. You're not fooling anyone Mark - some of us know how the game works. Perhaps if GW ran efficiently and hadn't have been greedy in the first place they wouldn't have cheaper retail competition. The man's an idiot.
The fact remains that GW make money no-matter who buys the product.
The customer volume of sales or customers is not falling! This is horseshit! The volume remains the same or rises every year (proven) - therefore it is the route the sales have taken which is the issue - not the level of custom. The route the sales have taken is GW's OWN FAULT.
Stop trying to screw your suppliers over too!
Last edited by Fantasticmrfox; June 2nd, 2011 at 18:10.
...wait, hang on. I'm an educated guy, but I'm not sure I understand what's going on here. I've been seeing a lot of hate/anger/resentment over GW's current new business practices, and I've been trying (like yourself) to be nice and fair about it, but this one has me stumped.
According to their eMail and my only-slightly-above-average knowledge of business management, this is what I'm seeing:
They price their product based on the pound
Ok, British company, that makes sense. They buy from their suppliers (MrFox) in pounds (or equivalently exchanged currencies) then pay for manufacture, packaging etc, and then mark it up 40% to their customers to make a profit. This all makes sense.
"A number of currencies have moved a long way from their historical relative values..."
Again, I follow this, roughly. So what we're seeing is the general backslide of the global economy, the dollar is falling, the Deutschmark is now the Euro, etc etc. Now to me, if GW is selling something in the UK for say, 30pounds, and the pound is worth 1.5USD, then shouldn't we be buying here in the states for 45USD?
To check this, I ran the price of the newly released TK "Prince Apophis" model through a converter. As it stands right now, we're looking at 1.63USD = 1BPS. Prices for the Apophis model?
10.5 in the UK (6.3 before 40% markup, so let's assume that 6.3BPS is the 'manufacture cost')
18.25 in the US (56% mark up)
It should cost 17.15 here in the US, today thanks to the stock exchange.
That seems fair, except that we're getting a 16% higher mark-up than the UK buyers
Let's check Australia- I hear they tend to feel quite gouged by GW prices, and that their economy is actually doing better in spite of the global slump...
exchange rate is 1.5AuD to 1BPS
Apophis again, 10.5BPS
Apophis AUS- 28AuS (35% mark up)
should cost them 16.13AuS (granted, this is of course without around-the-world shipping)
That's pretty steep for the Aussies, but they have the smallest actual mark-up, and that's with shipping included.
Ok, so if I follow the email, what GW is saying is happening is that some third-party is buying items in the UK at dealer prices (20% mark up), then selling them to companies overseas like the US who are suffering a 56% mark up, and therefore being able to under-cut the GW prices. This makes sense, I can see that being very profitable for the 3rd party. They have a 20% markup from GW, and they tack on another 31%mark up and they're still managing to undercut GW-direct prices by 5%.
To profit from Australia, the 3rd party would have to manage to ship the items with less than a 13% markup and still undercut GW-direct sales. Apparently, there are betting shipping methods out there than the ones that GW uses? Maybe they should use FedEx, as the advertisements go.
So what GW is crying about is that they're losing 36% of their profit (in the case of America) whenever a 3rd party undercuts them.
So how about this simple fix:
Sell everything for a 40% mark up, before shipping! Sure, you'll make slightly less profit on foreign sales, but it makes it that much harder for someone to undercut your prices. Now the 3rd parties have a flat 20% to work with, regardless of where they sell, and they have to cover shipping within that margin. Cripes, most people end up paying for "Shipping and Handling" themselves. I don't know if GW still does this, but drop the 'Free Shipping' offer on orders over $100. It's so easy to spend $100 on GW stuff, that they probably end up paying for most of their shipping anyways.
I mean, apparently Price-fixing is illegal, but it's no cheaper to buy things at my local RT than it is for me to order it from GW, and this 3rd party internet stuff is threatening to put my LGS out of business. I mean, why doesn't he undercut GW all the time, and keep himself in the black?
The only other method that I can see (and I see this going badly) is for GW to realize that this is happening because their prices are so steep. So why not do this? Why not include shipping in the 40% mark up? I know that probably makes their profit look more like a 35% mark up for them, but it keeps these 3rd parties from being able to undersell them so easily. Do you want a 10% discount and have to pay for shipping? Or do you just want to buy direct from GW?
Finally- Fox, how are they screwing up the suppliers? The eMail you posted was definitely informative, but I fail to see how it hurts you for selling them plastic. Unless you're referring to their constant material-swapping etc.
We only recover this investment if customers then buy products from us.
This quote is interesting and reveals the standard Gw business strategy. You use hobby stores to get people into the hobby then once they have all the basics shunt them to a local gaming club and sell to them on the net. ( yes this is simplified). It's a fairly sound strategy Gw stores can concentrate on intro games and carry only basic stock therefore having having more space and when the sell online they make more as the have less overheads in that area.
This falls flat on it's face when you add in independant retailers. Primarily these are places where people go to purchase therefore they will want to attract custom by say sales and reductions. Now this chappy who wrote the email hasn't quite worked out Gw don't own the Indy stores and therefore they don't fit into his pretty business model. People aren't getting into the Gw hobby in an Indy and then buying from Gw online.
All in all he has calculated a profit without taking the Indy stockists into account as far as operating goes and is miffed that he's wrong. His answer is therefore to lash out with borderline illegal policies.
Edit: Woot 1500 posts!
Games Workshop are constantly attempting to "tie in" suppliers to Scheduled Drop orders at a fixed price. Sadly they have so much buying power that although many suppliers don't HAVE to sell to GW (we don't HAVE to sell to anyone - and in that respect GW is exactly the same). The truth in practice means that (partly due to the general economy and partly due to GW's dominance of the hobby sector) the amounts of material GW (and companies like them) buy, the more they can dictate the prices they are willing to buy at. They have us over a barrel and they pull the strings. I am fed up of broken promises. I have spent the day desperately kow-towing to major customers trying to placate them for not being able to fulfill orders due to other customers swallowing up stock as an alternative to re-negotiating price for remaining amounts.
It does not seem to bother the GW's of this world that they have committed to agreements (often in writing). But then they do have very very well paid legal "experts".
In the past few months I have heard the following from GW:
1. Materials costs are rising above inflation, we're not able to pass this cost on.
Not necessarily true - In metals of course yes, we know this - hence the boom in the second hand jewellery trade for example, but across the board it's been doing this for the last 3 years or more. But not in everything - plastics for example have seen only "arbitary" rises in some sectors, escpecially due to Chinese producers driving DOWN the costs.
They're not able to pass this one? Like hell they aren't. They already have!
2. The volume of GW's customer base is falling due to third party retailers.
Not true - the customers are still buying GW product. Okay, so not from them directly, but through someone else. This makes a difference to the volume of FULL PAYING customers, yes. But not to the amounts being sold. In theory cheaper product should equal MORE sales - regardless of how many customers those sales are going to.
It is better to sell lots cheaply and a few at a more expensive bracket than restrict the amount of sales. The profit gained may be slower and you may have to wait longer to accumulate wealth, but in the meantime your have more money to operate, and this means more flexibility to absorb market costs and exchange rate "dips").
Mark Wells seems to have the END PROFIT above the WORKING CAPITAL. It deeply worries me that someone who doesn't understand that having money in your pocket is better than the promise of a large amount later on....in fact it's scary that a CEO of such a PLC does not seem to understand this.
Also he fails to understand the difference between SALES VOLUME and CUSTOMER VOLUME. You cannot and do not succesfully expand your market place (in terms of customer volumes) by restricting the sales of your produced product. This is not the way you increase sales and not the way you expand your target audience. This is a basic concept and if I was a shareholder I'd be bloody scared of the person called CEO.
Now, to make sure no one thinks I'm bearing a personal thing against our Mr. Wells - I would like to say that I do not believe him to be stupid. In my opinion he is not stupid - I don't believe he doesn't know all this. But in my opinion the email answer above is deliberately attempting to "smokescreen" the consumer/retailers.
The fact remains that it is illegal (for a UK company) to "fix" prices. They have no legal right to do either of the following:
1. Price Fix - product manufacturers cannot insist their products are sold at a specific price. They can however insist they are "advertised" at MSRP (or RRP) - thery have no power to prevent discounts or promotion pricing (this is why you see so many "special offers" or "sale pricing" on product.
2. Restrict sales by territory - Unless a retailer has voluntarily entered into a written agreement stating they will not sell in certain areas (or certain product lines) - and the only way a retailer would agree to restrictions such as this is in return for major price incentives, which the likes of GW are not willing to give!
Europe has in it's constitution issued VAT rates for all member states and allows freedom of trade across it's borders. Gw know this very well (hence the reason they are not enforcing their new conditions inside Europe. They've no facility to get away with it).
All countries apply taxes at point of sale - and whilst I do NOT agree with European consumers paying more to fund cheaper NET prices (ie before tax is applied) abroad after they apply local taxes - GW should not be screwing the foreign customer over in the first place if they can't afford to be there then they should be supporting the third party market - not attempting to punish it!
Bottom Line : If GW are short on money, or revenue is falling, they need to look at themselves and their overall attitude to their business. They are not attempting to grow their market - they are stifling it for the supposed reward of a bigger buck. If they are saying they can't afford to continue investing then they need to stop lining the pockets of their shareholders by suspending (or lowering) dividend.
The reason I say Mark Wells in "smokescreening" is because it's becoming obvious that the leadership of GW PLC is very detached from the various activities of their subsidiary limited companies. By taking this stance they risk cutting their own throats. Foolish behaviour! I say this because the above comment from Mr Wells is blatently trying to shift the blame onto anybody else.
The truth is GW PLC does very well (in an unstable econony too!) - It's a great success story. However, the retail arm is losing money (while all the other parts are making it hand over fist!).
THE PROBLEM IS WITH GW RETAIL - not the marketplace.
As for my earlier PS. comment. I'm lashing out.
haha, I understand that you're lashing out- you're entitled, they're stepping on your actual living. Few of us here on LO can say that.
I don't know- if GW wasn't such a freakin' success story, I'd venture to say that Wells is actually anticipating the whole thing going bottoms up in the near future and is trying to ride this decline all the way to the ground, making as much money as he can before it's totally sunk. I think perhaps he's lost faith in the community, reasoning that there's no way he'd be bringing in more consumers even if he did drop prices. And that's where he has it wrong. They've never tried dropping prices, and if it doesn't work, he can't just say "oh, well, back to $40 regiments". At least his current strategy is making money. At the expense of gamers and longevity maybe, but it's money from a decaying market (according to him).
They should take a look around though- companies like Privateer Press and Flames of War have been making gains in the industry, so it's apparent that new gamers will come. It's just a matter of attracting them and making it possible for them to sign on. $450 for an "average" sized army isn't the way to do it.
I don't think that their retail is running in the red at all. Maybe taking a slight downturn while the other sectors are dominating, but I'm sure they're still making money. Plus, even if they're not, that's where all the interest in the auxiliary is coming from. Without that core to net people in and give them an idea of what's up, they'll start looking at Warhammer like people look at WoW- most players that I've met recently don't even remember Warcraft, just the WoW version. It has empty background and no meaning anymore. GW won't survive as a hollow hobby like that- without the TTG to date it and remind people that everything else is a variation of this original, they'll just get lost in the realm of fantasy books/vido-games/films.
It just seems that perhaps Wells is trying to edge out the archaic TTG version of the game, without realizing that there are still tons of die-hard gamers out there and people with a serious interest in this kind of hobby who are simply quitting or being deterred by his ridiculous high prices and strangle-hold on the market.
Actually I think it goes further than that. He clearly doesn't give a stuff about the "community".I think perhaps he's lost faith in the community, reasoning that there's no way he'd be bringing in more consumers even if he did drop prices. And that's where he has it wrong.The market will decay only if the supply lines are further restricted. He should be FEEDING the market - not starving it in a blatent attempt to justify inflating the prices.They've never tried dropping prices, and if it doesn't work, he can't just say "oh, well, back to $40 regiments". At least his current strategy is making money. At the expense of gamers and longevity maybe, but it's money from a decaying market (according to him).Actually not. Many gains made by retail are short term "hits" - much in the way a druggie shoots up. Most retail outlets steer their customers towards direct through store order points and sales of white dwarf.I don't think that their retail is running in the red at all. Maybe taking a slight downturn while the other sectors are dominating, but I'm sure they're still making money.I completely agree. But Mr wells appears to think retail should pay for itself - and I'm sorry but free gaming and painting doesn't pay. But it does recruit and that IS important. Mr wells needs to accept the retail arm is not a real money maker anymore, times change. Perhaps it would make more with better structed pricing (and that's what the whole "3 in a box ushabti" kind of packs are all about!). In his shoes I would accept that the retail arm is a tool and not a money spinner in the short term sense!Plus, even if they're not, that's where all the interest in the auxiliary is coming from. Without that core to net people in and give them an idea of what's up, they'll start looking at Warhammer like people look at WoW- most players that I've met recently don't even remember Warcraft, just the WoW version. It has empty background and no meaning anymore. GW won't survive as a hollow hobby like that- without the TTG to date it and remind people that everything else is a variation of this original, they'll just get lost in the realm of fantasy books/vido-games/films.The software industry is volatile. Games companies come and go, few of the "big boys" have not had serious times or been around since day one. GW's software arm is designed to pull gamers in. Same as the CGI movie was - a tentative step into new advertising. That's what BL originally was.It just seems that perhaps Wells is trying to edge out the archaic TTG version of the game, without realizing that there are still tons of die-hard gamers out there and people with a serious interest in this kind of hobby who are simply quitting or being deterred by his ridiculous high prices and strangle-hold on the market.
Mark Wells is not stupid enough to bump-off TTG. Arrogant, yes. Foolish, yes. Stupid, No.
Im not so sure the whole raise prices for shipping is the case... looking at some boxes some recent ones hav stickers on the with "packaged in Australia" but most recently have "made in Australia" so that part doesnt realy make sense. Stating that higer prices to go back into stores doesnt seem justifiable especially when where I am there isnt one for a couple of hours drive while some of the cities have two, three or more. I'm not saying i dont like GW, but it just doesnt seem right...
I live in Sydney, Australia. I just did some maths.
If you live in California, GW (from Greenwich, I don't actually know where their factories are) needs to send their products 4000 km (2500 mi). If you live in Sydney, GW need to send their products four times that distance. It kind of makes sense now why their prices are much higher.
Tyranid Raveners in America generally are $45 ish. Here in Australia, we have to pay at least $70. Maybe more with the recent prise rise. That's almost double the price to ship four times the distance. Even with that distance it seems quite expensive. I suppose I will just have to put up with this.
I can just buy most of my stuff from eBay too I don't have a GW for about 40km (25 mi) from here.
And after all of this ranting and letting your steam off, you are still going to buy GW, aren't you? You are still going to walk into that same shop (or go to that same website) and buy some overpriced miniatures, and enjoy assembling them and filling up massive bubbles in arms and then playing with them, maybe even reassembling them after you knock it off the table.
Basically, life goes on. I can't say I am happy with what I have to pay, but I pay it nonetheless.
Couldn't agree more, trouble is they went public and forgot what made them a success in the past.Wankers.