Last week, Sideshow Toy made a major announcement.
Sideshow are the manufacturers that have brought us the wonderful 8"
Universal Monsters the last couple years, and have just started to move into
the 12" market with Frankenstein, Wolfman and Spinal Tap figures.
Many toy collectors were hotly anticipating their releases for 2001, with
licenses like Buffy, more Universal Monsters, Young Frankenstein, and
several generic lines like gunfighters, civil war figures, and WWI figures.
The announcement, which had some collectors calling for the heads of
Sideshow's management team, was two fold:
- All new product for 2001 would be sold not
through mass retailers, like Toys R Us or Wal-mart, but through smaller
vendors and from Sideshow direct at their on-line store.
- All new product for 2001 would be sold as 'limited editions', with
specific, announced run sizes.
Sideshow claims this is all their idea. While that could possibly be
the case, it is more likely that poor buyer response from the large changes
dictated the change in marketing plan. In any event, many collectors
are quite upset by this news.
I believe that niche marketing and sales such as this is possible, and it's
been proven by other companies in other markets. It requires a very
hands-on approach to sales and marketing, and it will require that Sideshow
get extremely close to it's customers. There will be no middle man to
stand between them and customer service, communications, and opinion.
Some folks are upset that they will have to purchase these products through
smaller retailers. This usually means that they won't be able to see
the product in advance, but rather have to pre-order from a dealer on line.
This will hurt Sideshow in many cases, since
seeing an exceptional product can be part of the marketing scheme itself,
and if you don't get that 'face time' with the toy, sales can be influenced.
On the other hand, there are great advantages to selling through the small
businesses, including the ability to use materials that otherwise might not
be allowed. We are much more likely to see obscure characters when a
company uses this marketing technique, although it could be argued that the
Playmates people have gotten away with selling some pretty damn obscure
characters in both the Star Trek and Simpsons lines. But the
dissatisfaction over this move to limited sales channels pales in comparison
to the announcement of the limited quantities of figures themselves.
Collectors HATE limited editions. Investors love them, although the
reason for that is completely unknown. There is no example of a
product that was produced specifically as a limited edition collectible that
ended up being worth big bucks - if you have one, I'd love to hear it.
But investors still believe that if something is an announced collectible,
and it has a specific size to the run, that it will be worth more than the
same figure, the same number produced, but no big announcement of any sort
In the short term, the investors can be right.
False demand is created for limited edition figures because of nothing more
than the proclamation itself. People who truly want a Young
Frankenstein figure are trampled by the investor or dealer with dollar signs
in their eyes, lusting after that one of 5000 figure. The figures are
snapped up, and the dealers and investors attempt to gouge the collecting
public for higher prices than the suggested retail, hoping to make big money
and retire early.
Sideshow will lose control over the suggested retail price, something that
doesn't happen when selling through Toys R Us. Once Sideshow has sold
the 5000 or 7500 they've manufactured of a figure, the 'retailers' will be
allowed to set what ever price they feel appropriate, and I believe that if
you do not pre-order these figures early, you'll be paying more than the
$25-$30 you've come to expect.
If collectors become frustrated early in the
process, they will give up on the figures. Once they do that, the
investors and dealers won't be able to get rich off the figures, and they'll
drop their support as well. This can spell absolute disaster for a
So how can they possible market their figures
this way and still make a profit? It might behoove them to look at how
others are doing it successfully. Take two examples - Dragon and Ty.
Both of these companies produce 'collectible' toys. Both have done so
successfully, and neither has announced 'limited editions'. Instead of
announcements up front, they make them on the back, by retiring figures or
beanies. In this way they manufacture only as much as they think the
market can reasonably bear, and then they retire the product for something
Sideshow could announce that they will make a certain number of initial
figures. By telling customers that they will run 5000 of a particular
monster, they give them a heads up that they should buy early if they really
want to be assured that they'll get one. But there's no reason to
close the door - if demand warrants that another 1000 or 2000 of a figure be
produced, Sideshow should be more than willing to produce them, limited
edition be damned. Unfortunately, doing it the way they are removes that
possibility, and forces the collector to buy early, often without seeing the
final product, just to be assured that they can get one.
A mistake that people make is believing that supply drives demand.
They remember the cute supply and demand curves from high school economics,
but forget the real relationships. Supply very rarely creates real
demand. Because something is in short supply does not mean that more
people want them or that there is a demand for more to be made. Demand
- the quantity of some item that can be sold to the real buyers, those that
actually want that product versus those buying it to try to resell it for
profit - is not influenced by how 'rare' the item is. They want it
because they are fans.
Yes, supply can drive price, but it doesn't
drive demand. Demand SHOULD drive supply, however. The greater the
demand, the more should be manufactured. A product should be
manufactured to meet the demand at its equilibrium price. Any attempt
to manipulate a free market by artificially controlling demand will be met
with great dissatisfaction by those creating the demand. And in a free
market, when supply doesn't meet demand and a shortage is created, what
happens? All things move toward equilibrium, and if supply can't rise
to meet demand, demand will fall to meet supply.
What does that mean? That those 'limited editions' will never be worth
the big bucks that the investors are hoping. In the short run, it may
work, but in the long run they'll be in trouble. Of course, that's
just my opinion...
If you'd like to express your opinion on this
subject, I suggest emailing Tom Gilliland at email@example.com.