Friday, May 20, 2011

GW Haters are Hating GW!

I've read the same articles as you, the same blogs as you, the same forums as you, and I've been around long enough to be surprised when something that GW does actually - er - surprises me. The last week of business announcements, for example; resin releases with simultaneous price increases, countrywide embargoes for online retailers, etc., has certainly been an aggressive set of moves.

Overall it looks like they are pulling a money grab, and putting the screws to us, the consumers. Looks like. But is that what is really going on?

Let's forget (if we can) for a moment that we're going to be paying more for our plastic crack goodies. A lot more. Ugh. Right, let's forget that. Let's focus on the fact that GW is, first and foremost, a business. A publicly-traded company, at that. They are profitable and solid. As an investor, they aren't a bad choice; they have a history of making good business decisions, regardless of your opinion on some of their actions.

The sole rule of capitalism is "Whatever the market will bear." In that regard, GW is doing what any company would do when they find their cash cow being threatened. GW has always had a tricky relationship with online stores. From my perspective, the online store sells the models, but it's the brick-and-mortar FLGS' that actually sell the product.

An online seller can't host a tournament, can't walk you through the product line and ask questions or make recommendations to a new user about what army and what units to buy. The FLGS is the heart of GW's business. They have already reduced their own workforce to keep costs low. They have to protect the brick-and-mortar game stores because they are the entry point for new customers.

See, there's this thing called commoditization; it's what happens when you start selling things in bulk. The sole selling point for a commoditized product is price; the guy with the lowest price wins. The guy with the lowest price, in this case, would be the online seller. It's great for the customer, but bad for the business, because all of a sudden your margin starts shrinking.

Say you have a choice between selling 1,000 units of a product at 50 bucks each, or 100,000 units of a product at 5 bucks each? Which would you choose? Keeping the volume lower and price higher forces you to maintain a higher quality product but you're only shipping 1000 units; less workforce required, less shipping cost, less tariff costs, less expenses overall. Your margin stays high and your stockholders (and the board of directors) stays happy.

The increase of prices on the new resin models does indeed reflect an attempt to increase their profit margin. I don't really have a problem with that, if it means I'll be able to do more conversions without breathing metal dust and scorching my fingers on hot lead. More glue less pin.

The increase on retail pricing, however, does mystify me. Particularly the increases in Australia. I'm sure there's a reason for it, I just don't know what it is.

These price changes affect me less than some others, true. I've got three armies cooling their heels at home, two of them being pretty massive. My future investments will be minimal, so I will be limited to buying new rules editions or codices (until something really cool comes out). But when I do I'm sure I will be outraged.

What are your thoughts on this? Good Business Sense or no?


  1. Well written. Nice insight. Thanks!

  2. Thanks. As a PS I did actually mean to imply that $50,000 was a better number than $500,000 under some circumstances. It's just a different business strategy; compare the revenue numbers from companies like Bugatti to those of Honda as an example.

  3. I really enjoyed reading your take on the matter. I think everyone is as mystified by it as you haha.

  4. GW has long focused on reducing miniature sales through online retailers (other than their own store of course). However, there appears to be a curious double standard for UK versus non-UK e-tailers. If GW was truly concerned with protecting your FLGS ability to move product given the rationale stated in the article, then how are UK ecommerce sites such as Wayland games able to openly list and sell Games Workshop product at a discount?!

    Regardless, I have not been too bothered by GW's stance on internet retailers up until this recent embargo on selling to non-EU countries. This is a strong arm move that is nigh on indefensible.

    Adding insult to injury, continuously increasing prices on models with a (let's be honest here) poorly supported ruleset smacks of corporate hubris of the worst kind - assuming your customers are stupid!

    Like you, I enough GW (and other) miniature product sitting unpainted on shelf to last me a good while. At this point, I have made a conscious decision to not buy more GW product but to continue to enjoy the hobby with what I have.

    Apologies for the rant but I read this just after publishing my own take on what is going on here:

  5. No matter how gruesome the gouging, it all comes down to business strategy. The company won't mark something up to a price where they think people won't buy it.

    If enough people stop buying product, that policy will change again, no worries!