Warehousing and Fulfillment Services - Are they right for me?
By Ayal Latz, Vice President
Latz Chance Games, Inc.
Producing a new game is an exciting, creative process. You engage in many right-brained activities including the conception, development and design of your new product that's sure to be the hottest thing since sliced bread. Getting this game to market and keeping your head above water financially is another issue. All too often the game inventor fails to adequately budget for some of the most important tools that are necessary for the product's market success. This includes a well thought-out marketing plan consisting of advertising, creation of sales literature, public relations, trade show presence and much, much more.
In addition to costs associated with marketing, operations carry their own price tag. Invoicing, accounts payable, customer service and warehousing/shipping are all required to sell you product. Having a "do it yourself" philosophy is important for those who have limited budgets, however, spending all of your time "operating" your business leaves less time for the tasks that generate revenue. But what if there is a more cost-effective way to handle the tasks associated with operations that will also free more time for the things that are really detrimental to your success?
In order to obtain efficient production prices, most printers recommend an initial production run of 5,000 to 10,000 units. Depending on the size of the game, this can translate into approximately 17 to 34 pallets of product that will need to be stored. This amount of product is more than will fit in the average two-car garage and will quickly take over your household if you decide to store it yourself. Making sacrifices is important to making your dream become reality, but think twice before you put games under the bed, eat dinner on your table made of games and construct what's known as "the corrugated room divider" (not sold in furniture stores). Mini-Storage units are very expensive for what you get, and also remember; you will have to hand-unload this stuff yourself.
Thinking of getting your own warehouse, think again. Open the Real Estate-For Rent section of your local newspaper. Warehouses are rented by their size. The larger the facility, the less expensive the rate. 34 pallets of product including aisle space and a shipping/receiving area will require approximately 1,000 square feet of space. By real estate standards, this is a very small facility. Depending on the economy in your town, the rent for this facility can cost between $500 and $1,200 per month. Then you will need a phone ($40.00 per month). Utilities can cost at least $50.00 per month with no a/c or heat included. You will need equipment to move those pallets around. Garbage service and water may not be included. Some office parks also charge a common maintenance fee to keep up the grounds. Of course, the cheaper the space you find, the worst part of town you're in. Worst of all, you are committed to paying rent on 1,000 square feet for the term of your lease (usually one to three years). If this space becomes too much or too little in the future, then what? Your 5,000 games will hopefully decrease over time as you sell them. With only 2,500 games remaining in inventory, you will be paying for twice the space you need-not exactly a model for efficiency.
I'm here to tell you that there is a better way. What you need is a Fulfillment House. No, not a house that fulfills your every desire, but a third party company to store and ship your product for you. After all, you don't print the board and box of your game in your living room, so why store the games there?
Fulfillment Houses have been around for a long time. They are located in every major city, and some off the beaten path. So which one is right for you? There are many points to consider when shopping for a service provider. First, be sure the company you use is insured and guarantees your inventory. Product can get lost or damaged in even the best-run warehouse. You don't want to be out of pocket for someone else's mistakes. Next, find a company that specializes in servicing your industry. This is important as different industries have different distribution requirements and experience is key.
Find a company that is geographically strategic. The majority of the population lives East of the Rockies. Unless you are selling surfboards, most of your shipments will be going to this region. Stay away from companies that structure their rates on a percentage of your invoice. Why should your revenue matter? Pay for what you get, otherwise you will find yourself paying $200.00 to ship four boxes that have a total wholesale value of $1,000.00. Lastly, find someone small, who really wants your business and will regard you as an important customer. You don't want delays because the Fortune 500 company utilizing the same service provider takes priority.
Latz Chance Games, Inc., a toy manufacturer and distributor, offers fulfillment services for the toy industry. I would be happy to discuss your specific needs with you and provide a free quotation, but feel free to investigate other providers. There are many good ones out there. Your trade directories are a great place to look for them.
For additional information on Latz Chance Games, Inc., click this link.
www.latzchancegames.com/fulfillm.htm
