Newsletter Article - State of the Industry
From the latest Chibi Chop Shop newsletter, comes an article about the state of the nendoroid industry and small businesses like Chibi Chop Shop.
News came down this week that Connexe Toys has gone out of business. This retailer focused on Nendoroid sales and was even a source for us for a few items. I'm not sure how their company was set up and if they were a brick and mortar store or purely an online one, or how large they were, but my impression is that they were a small business and seeing any small business have to shut down is a massive shame.
I want to take a moment and appeal to you, the customer base and implore you, in fact no, BEG you to stop preordering items or in fact ordering items direct from Good Smile Company at all and instead bring your business to small business retailers such as us, or companies like the now out of business Connexe Toys. Your business can save failing shops like these.
Good Smile Company owns the distributor in the US, and they have been engaging in frankly unethical practices of undercutting their own retailers by selling their products on their own site for less than we can even BUY them for in many cases. This is scummy frankly and GSC should be ashamed and should be making every effort to direct customers to their partner stores if not ALL stores in general that sell their products. Instead they offer preorders direct from the source meaning NOBODY gets them faster, and even offer little bonuses to lure you in. Those little extras along with lack of patience in getting your Nendo items leads to less people placing preorders with retailers, even though GSC REQUIRES us to offer them in order to be a partner store. I fail to see really what "partnership" benefit they even offer other than a link buried on their confusing website.
Most retailers are stopping preorders altogether with GSC (ourselves included), and it would be a better support for the industry at large to support small business and simply buy items off the shelf or online rather than relying on preordering. It used to be that preordering was the only way to guarantee a copy of a figure you wanted, but as GSC has been vastly expanding over the last couple years, supply is not a problem. In fact we have surplus of most product on hand but nobody to sell it to because folks want it now and give their money direct to Good Smile.
The only saving grace is that we are a split item shop first and foremost and frankly whole product matters very little to us with the small discount we get after you factor all their extra fees and shipping they charge us. We prefer buying collections, importing large lots from Japan, and buying a few figures here and there from various other sellers to maximize our selection diversity. Right now we are sitting on mountains of whole product with little hope of needing to split them and trying our damnedest to liquidate them on some other outside market platforms, but that also costs us another 11-15% in fees, making most sales of those items a loss.
Since GSC's distributor decided to require full case purchases just for the sake of their own convenience, our business has been shrinking because our product diversity has dropped and most money is committed to buying their ever growing influx of new items by the case full, which we are stuck honoring from about a year ago on, due to the hideous preordering model the nendoroid hobby works under. Basically it required us to foresee the future of our business and we didn't foresee a pandemic and post pandemic recession, and they have no forgiveness for those facts which have shrunk the business by about 30% vs last year.
June was probably the worst sales month we have had in about 2 years. June is typically pretty slow since it marks the start of summer time and school getting out, graduations, family trips and the like, but we usually survive through it without much trouble. This year was much harder and it doesn't look that great moving forward into July. We seriously are going to have to consider cancelling several items from the distributor which were over ordered back when the business was estimated to be able to support it, and lose about 20% of the cost of those items, which is honestly a LOT of money, but if it frees us to be able to put 75% of our funds back into other sources, it will be a benefit in the long run.
Right now we are continuing to tread water and striving to expand our name and pay the bills and stay open, but every day is becoming a struggle since around November of last year. We're looking for any means to push product, expand our presence and grow the brand, but it's challenging to say the least.
I know this sounds a bit like a blogger complaining about their work day, but we think it provides valuable insight into the nendoroid industry at large and how the status quo practices affect real small family businesses like ours and presumably, like Connexe Toys.
-Travis