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Thread: Why doesn't GWS ever have a sale.

  1. #1
    LO Zealot Rafici's Avatar
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    Why doesn't GWS ever have a sale.

    I'm sure there must be other topics on this and you have all thought it.

    I now have 4, 40K, armies and I have bought every little from GWS (shop/online). Most of my first 2 armies was from ebay or online retailers that give 20ish% off. Whilst my 3rd and now my 4th (started today) have all come from other retailers.

    I know GWS still make plenty of money when other companies sell their products but would they not make even more if they were getting those sales through their own stores/site. Almost every shop in the world has sales at some point or another and yet GWS have never (to my knowledge) done one. If they had random days where they gave 10-15% off, Im sure a number of people would buy from GWS instead of other retailers, even if they are up to 25% off.
    This is not just an online thing as I was at dark sphere in london today where I got 20% off.

    I am not going to pretend that I am a marketing guru but if every other company, many so big they make GWS look like an ant in comparison, in the world does it at least once a year it has to be a good business plan. I know many do it to get rid of old stock but not all are. Even with that being the case, GWS do have old stock. They still have many things in metal etc that they now do in finecast. The metal stuff can sit on the shelf or be reducted and sold. I know you may say that with a limited number needed, GWS dont want to have buyers only buying old stock and not the new finecast but I look at myself and think, If I had bought everything from GWS I would have only 2 armies and they would be only about 2500 points each.

    As I can get them creaper, I dont mind buying more models. At 20% off I may buy 4 razorbacks instead of 3, just incase I want to play that bigger game.
    Don't forget that the more they sell the cheaper the design and machinary cost are for each item (thats not the matterial or labour costs as they will be the same) so in effect by buying 4 they are making more money on each item.

    I wanted to know what everyone else thought as I really dont see myself ever buying from GWS dirrectly as I go past the dark sphere shop about once a month and will be getting it from there from now on (20% off, 25% if I spend over £100, and I dont have to wait for delivery). Yes GWS is still making money from me but if DS can afford to sell it at that rate they must be getting it for about 40-50% off the GWS shop price to still make about 20% gross profit.

    Tau: 6K - W17-D3-L4, Orks: 4K - W9-D0-L2, SM: 7K - W7-D3-L4,CSM: 4K W5-D1-L1, Nids: 3.2K W3-D0-L2
    Apoc games (mixture of armies used): W5-D0-L1

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    Ogre Tyrant waddywoos's Avatar
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    I'm doing a business degree specialising in marketing and am currently in the process of gathering information to write a dissertation on Games Workshop's marketing strategy and the market that it is in - so I guess I can bring at something to this debate.

    Firstly a quick point about Darksphere - if you order online and opt to pick it up from the store you get the online price rather than the instore price, so save even more money. I've done it, its brilliant.

    WARNING: THIS WILL BE A WALL OF TEXT. I make no apologies, it is all relevant to the question and there is much to say on this topic.



    Right, sales. I think comparing this to any other industry is fruitless for one main reason - Games Workshop is in a market dominating position. The only other company in the world that I can think of right now that even comes close to this is Apple, but even they have viable competitors in their field. Another issue to bear in mind is that GW does not produce neccessary items for human existance, or at least items that we perceive as neccessary like an iPod, phone, car etc. They're a company that only produces luxury items to a niche market.

    When clothing companies have their end of line sales, yes they like to move their stock and yes they like to put a squeeze on competitors, but most importantly consider this. Would people go out on Janurary 1st to a clothes store and spend the money they do if there was not a sale? No. Would they be spending any money at all? No. Whilst it is true that in nearly all cases sales do boost sales and in turn boost profits over a regular trading day even though the margin on each product sold is smaller, the important part of this is to consider where those extra sales come from. In almost all cases they are from customers that would normally buy from another store (which isn't on sale at the time) or are customers that wouldn't normally be looking to buy new items but were attracted to a sale.

    Taking that reasoning forward and applying it to Games Workshop, there is damning evidence that a sale would do more harm than good. The player base for their games will not change based on a week long 15% off sale. If you are someone who regularly can't afford to buy models and as such is interested buy cannot play, a short term 15% decrease makes no difference to you. Equally if you are a passer by and see a sale sign in the window - that isn't going to sway you from your opinion that 'wargaming is for nerds' or that 'they're silly little plastic soldiers for boys.' So GW would have a net gain of approximately zero extra customers as a result of the sale.

    This leaves them in the position of needing to make up 15% of their profit just to break even, based on sales to their existing customer base. The issue here is that while existing customers will be more likely to spend on their product when there is a discount - many of us already know we can get it for 25% off elsewhere. The players that don't know that are generally younger children, who have a limited amount of money to spend per person and were going to spend it all on GW products at full price anyway (I used to be one of these!). The net effect of a 15% off sale would be to discount product for those that were going to spend their money on your product anyway, and that is it. This obviously results in losing profit that GW would have made had they not had a sale.

    The online retailers that sell GW products at a discount are another issue. Take Wayland Games for an example - they have and absolutely gigantic amount of sales, but in comparison to those sales do not have many employees nor do they make millions. Why? Because they have a very small profit margin. If GW sold their product at 60% of RRP (and it certainly wouldn't be lower than this, if anything its more like 70%) to Wayland then Wayland are making 20% on each sale. Minus the cost of a warehouse, staff, utilities, transport from GW to them etc and you're looking at approximately 10% or less profit on each sale which as a lower total than RRP to begin with. Its a business model that does work at large volumes, but the smaller the sales amount the larger percentage of profit overheads cost - so the smaller the sales total the less profit per sale.

    The other way to sell GW products online is to combine it as only part of your business. This is the way Darksphere operates - they have a store that sells GW product at 20% off and online store selling at approximately 25% off, but couple this with an exceedingly strong player base for magic the gathering as they host national tournaments, booster drawings etc. The markup on card sales is absolutely huge incase you were wondering. In this way Darksphere can offer those low prices that give them little profit on their online sales, as their overheads as a store are already covered by card sales - so online GW sales only serve to boost their income.

    Now consider GW's position. Their aim as a company is to make as many sales as possible, with the smallest overheads possible. If every single player went and bought online, their profit margins in theory go through the roof. A bricks and mortar store makes a profit each month. However you're paying out rent for the store, costs for promotional materials and stationary as well as salaries for staff. If those stores disappear they save 10's of millions - and if the sales that those stores would have made were transferred to online then does the 20% reduction in profit margin per sale make a dent in that money they just saved? Perhaps.

    Say I farm and sell cabbages. 1500 locals pass by my store and buy one a week. I sell for £1 and make 60% profit on that. My overheads are £600 for the stock, £200 rent, £300 labour and £40 transport each week. Thats £640 coming out of my sales each week. I make £1500 sales per week, after overheads leaving me with £360 profit.
    Now say I decide to sell my cabbages online and still have 1500 customers. I sell for 80p and make 50% profit on that. My overheads are still £600 for stock, but nothing for transport as customers pay shipping, nothing for rent as I ship them straight from where I farm them and nothing for labour because I don't need to pay someone to man the store. Sales are £1200, giving £600 profit after overheads.
    Of course this is a very simplified version and there are holes you can poke in it - but the truth is that Games Workshop are infact losing money by maintaining stores were their customer base to stay the same size if they were to sell online only.

    Of course, the reality is that by removing their stores GW would eventually lose its market dominating position - which is why they must keep them. However they are an expense of doing business rather than a profit generating mechanism. For reasons explained previously having an instore sale serves no purpose.
    Warlord Vrrmik likes this.
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    LO Zealot Farseer Macleod's Avatar
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    All very interesting and clearly explained. Despite the wall of text I enjoyed reading it.

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    Interrogator-Chaplain pilot00's Avatar
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    The online retailers that sell GW products at a discount are another issue. Take Wayland Games for an example - they have and absolutely gigantic amount of sales, but in comparison to those sales do not have many employees nor do they make millions. Why? Because they have a very small profit margin. If GW sold their product at 60% of RRP (and it certainly wouldn't be lower than this, if anything its more like 70%) to Wayland then Wayland are making 20% on each sale. Minus the cost of a warehouse, staff, utilities, transport from GW to them etc and you're looking at approximately 10% or less profit on each sale which as a lower total than RRP to begin with. Its a business model that does work at large volumes, but the smaller the sales amount the larger percentage of profit overheads cost - so the smaller the sales total the less profit per sale.
    IMHO those margins are a bit off.20% is not a profit at all, it is subsistence.You must consider the fact that pricing differs from Business to Business and from Business to customer.A retailer doesnt buy ten marine boxes.Buys a hundred.A hundred of those boxes would never had been sold if there wasnt the retailer due to pricing.GWs is already selling its product in triple perhaps more price in opposing to cost.So assuming a marine box in costs is 8 pounds a retailer will buy it for 15-18 pounds.Based on the volume sold that is a good net gain.Profit for a healthy organization is considered more than 40% per unit sold(to customer base).Combine that with the huge expansion of wayland the last year (i think they moved their warehouses two times). Plus if they sell with 20% net gain,then people like me who make orders based around 100 euro and wait for their free ship adverts,must be considered cost not gain and trust me with the regularity those adverts were offered recently and the people using them by now they must have been bunkrupt.

    And even if you are spot on the margin assessment,Wayland simply resells readily available product.No need to manufacture and stuff.Just have a storehouse,a couple of people,a website and a programmer.I happen to know the local retailers (my homeland) buy GWs stuff at 60% discount too (i worked into one of them) so why would a retailer in England buy for more?

    However they are an expense of doing business rather than a profit generating mechanism. For reasons explained previously having an instore sale serves no purpose.
    IMHO that is a contradicting reasoning and i am surprised because you partly explained it yourself.The guys who will visit the store and see first hand the product have a chance of becoming customers one way or the other. How many of us are addicted to this due to a visit to a store?How many of us play because we have the stores to go to and game?How many of us have learned to paint into that store?
    The store itself might not generate money but it generates customers by way of public relations and marketing the product,something a web-site in its current state IMHO cant.Wether we buy directly from GW a GW store or a retailer,the final sale is GWs sale.

    Weather the total net gain is 40%(online retailer) 50%(store) or 80%(directly for GW)it is more or less a calculated profit.The fluctuation is an established 'sacrifice' of opening different sales or marketing networks but within the acceptable profit margins.

    Quote Originally Posted by Farseer Macleod View Post
    All very interesting and clearly explained. Despite the wall of text I enjoyed reading it.
    Yep me 2 that why i repped,despite my different opinion on some matters.

    On a side note,ill give a friendly reminder: Keep this thread civil,threads with such a topic tend to degenerate quickly.If you cant comply dont post at all.Thanks.
    Last edited by pilot00; April 8th, 2012 at 00:40.
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    I used to regularly play at a GW that closed near me and opposed from having sales they actually gave away freebies from time to time. I got a unit of night goblins at Christmas and a unit of genestealers from a tournament that I showed up to but didn't even play.

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    I remember when I started the local GW used to have 25% off sales and even sometimes (Although rare) they had days or even weekends when you could even get 50% off battalions and battleforces. Then for a few months they had BFG, Epic, Warmaster, etc instore and it was 20% mail order price

    Then theres the good ol' bits days they'd have every now and again where you pay say $20 for a medium sized GW Bag of bits but most of them had a unit of terminators (Which at the time was around $40), or a genestealer brood (Again $40) and the like

    They died off as of about 5-6 years ago though. Dunno what happened. Maybe ask you local next time your in

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    LO Zealot Rafici's Avatar
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    Thanks for the replies.
    very interesting ideas and I have repped you all

    I can believe that GWS used to do things that stopped when it was publically shown that they were losing money.
    I also had my local store close down in Jan (brent cross/north london), I used to play there from time to time. Although I never really bought models there I did used to pick up a paint or two most times I went (I will never order from them online after the last time - they used a delivery company that are crap).

    I do agree that they are unlikely to achieve more customers through sales but I still think they could make more money through it (although I understand that making a little less money by getting another company to do most of the work is a good thing.)

    I do wonder about their website. I can see why they don't do sales in the shop (because it is unlikely to increase customers) but why dont they do it on their website?
    If they make more money when selling through the website, they could afford to give a discount (this would not reduce sales in the shops as most people who buy their wouldn't buy online or do it for convenience). The big question with this would be: Would GWS make more money by giving discounts and taking back customers from other online retailers, or would they make more money by selling to those online retailers and selling at full price on their own website.
    I'm guessing, since they are doing the second thing, that I have answered my own question. lol
    Tau: 6K - W17-D3-L4, Orks: 4K - W9-D0-L2, SM: 7K - W7-D3-L4,CSM: 4K W5-D1-L1, Nids: 3.2K W3-D0-L2
    Apoc games (mixture of armies used): W5-D0-L1

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    Interrogator-Chaplain pilot00's Avatar
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    Quote Originally Posted by SWAY View Post
    I remember when I started the local GW used to have 25% off sales and even sometimes (Although rare) they had days or even weekends when you could even get 50% off battalions and battleforces. Then for a few months they had BFG, Epic, Warmaster, etc instore and it was 20% mail order price

    Then theres the good ol' bits days they'd have every now and again where you pay say $20 for a medium sized GW Bag of bits but most of them had a unit of terminators (Which at the time was around $40), or a genestealer brood (Again $40) and the like

    They died off as of about 5-6 years ago though. Dunno what happened. Maybe ask you local next time your in
    In?

    Somebody typed in hurry

    I agree most local stores are closing now.They major problem IMHO is the price increase.If they take a marine box for 20$ (eaxample) they have to sell it at least 35$ to make a profit and thats what kills them.You can simply find it cheaper on the net.For the 'mother' company though they have achieved the major objective:Created new fans.
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    Technically the site does have sales all the time especially in Australia since they offer free shipping on all orders over $30 here

    @pilot00 : Nope I wrote it right must be aussie slang just mean it as *Ask them next time your in the store* lol
    Last edited by SWAY; April 8th, 2012 at 15:13.

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    Interrogator-Chaplain pilot00's Avatar
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    Quote Originally Posted by SWAY View Post
    Technically the site does have sales all the time especially in Australia since they offer free shipping on all orders over $30 here

    @pilot00 : Nope I wrote it right must be aussie slang just mean it as *Ask them next time your in the store* lol
    Actually now that i read it again i got it.I was puzzled cause there was no full-stop.Silly me
    Last edited by pilot00; April 8th, 2012 at 16:31. Reason: grammar you got to learn it!
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