Reports are coming in the GW is shipping left over metal models to be melted down instead of trying to sell them at even a minor discount. Now tin is running about 10 dollars a pound and a 4 cm cube is about a pound so the metal represents about 1/4th the retail value for many of the models. So if they marked them even 50% off the would still be able to get twice the amount of money for them than scrapping them. Ofcourse there are costs of sales which will eat into that return but at least the product goes to your customers who will use it to play your games with other people who could your customers also. Thus improving the network affect of the gaming which is why you were on top in the first place.
GW has been known to do things like this in the past where rumor has it that piles of Dreadfleet boxes went into essentially the wood chipper but that was a limited release item that you do want people to buy right away. Many of these models might have been sitting around for 5 or more years based on sculpts that might be 25 years old. People are not generally going to wait like 5 years to save 25% especially with prices going up 5% each year.
Now I will assume that they are going to be doing this locally as opposed to shipping the stuff all back to the UK and doing it from there as that would be a real announce since their poor distribution of specialist models around the globe back in June allowed for down under to still be fully stocked while the US and UK were sold out of many things (at full price).
GW point of view is probably that if we offer these items at a discount then our customers will buy them instead of high margin plastic and in this case we get money from a non customer source. This view is stuck back when GW was really the only game in town. More than likely these are dollars that would not have been largely parasitic as many of those old metals are very different from the current stuff and for a different group of people.
Again as before really not thinking about the customers.
I'd have to disagree with you here. This sell off base don raw material value is the smartest move for GW due to their economy of scale.
ReplyDeleteSelling that stuff as refined scrap is a far simpler affair than attempting to inventory, pick, pack and ship all those individual blisters. GW's website doesn't have a stock level ticker. If they only have 1500 of a given model in stock in this theoretical warehouse, and they put it up for sale at 50% off on the website, they might get 3000 orders for it. That sells the on-hand stock, but leaves the other 1500 orders in a lurch. They can either say "too slow, sorry!" and get hit with a wave of cranky gamers, or cast up another 1500 units at a loss.
The smartest financial move to recoup costs is to just sale it all as refined scrap and take a minimal loss (or even a gain, depending on the price point at which they bought that raw material X years ago!).
Thanks for coming by and commenting.
DeleteGiven that GW lists on the front page how many of this or that limited edition codex are left, I think that can count stock in the store to better than 1500.
They also have no problem selling things then cancelling them later. Happen to me during the panic out of stocking of the specialist stuff back in June.
Given that the models are made, packaged, and sitting waiting to sell already there are most of the costs already incured.
Yeah, TheRhino is right, this is a much smarter move, the cost of sale is probably more than the value of the model and there is no way they'd sell all the models even at 50% off.
ReplyDeleteIts a moot point anyway because they still have metal models available in the UK store.
Thanks for coming by and commenting.
DeleteMy guess is that the report is many about the specialist games models that now have absolutely nothing available plus metal standard game models that have been obsoleted by plastic kits.
I think the only major cost of sale left is shipping to the customer and they just need to make it such that the models do not count toward free shipping total.
Ofcourse their software might not be able to handle actual sales and such.
I agree that they're not thinking about the customer--they're thinking about the bottom line. They probably factored in the continued costs of warehousing and selling their remaining stock of metals, and it reached a tipping point where it made more sense financially to just dump it and not worry about them ever again, than trying to eke out small profits in selling the remaining stock, for which there'd likely be diminishing returns anyway.
ReplyDeleteThanks for the comment. I guess I just think that it the income is essentially the same either way doing something for your customers is probably the way to go.
DeleteMelting down the minis is the smarter way to go simply because you can get rid of it quick and reduce the cost of storing the items, staff wages, overheads of warehouses, and paying taxes for value of stock. It's also a set value per weight and if GW was to try and sell the items and the packaging was older or worn due to amount of time in storage it wouldn't do their visual image any favours. It would be a logistical nightmare to try and split the stock up to places where they think it would sell and if the demand was larger in some places they would have to ship stock around costing more and more money.
ReplyDeleteAs much as the thought of some nice metal figures melting away pains me, GW realise that while they won't get the same return, provided they sell them all within a reasonable timeframe, selling off the metal is cheaper in the long run.