The Economy Seen from the Dealers’ Room Floor by Leigh Kimmel
My husband and I run The Starship Cat, a small business selling at various kinds of fannish and nerdy events. For the most part we stay in the Midwest, although an exceptional show can take us further afield.
As a result, we have an unusual perspective on the economy. As Jim Baen was fond of saying in reference to writers, we’re competing for “Joe’s beer money.” However, we’re doing it at events scattered widely across a region, rather than a single storefront, or an online store that can potentially reach the entire world. This means we’re selling in a wide variety of areas, but dealing directly with customers and observing their decision-making process as I interact with them.
Also, convention dealers talk to each other, both at conventions (usually during set-up hours in the morning) and online in various public and private fora. We give each other heads-up information about venues and promoters, but we also let each other know how sales went at our shows.
This year our company sold at fifteen conventions and two small outdoor events. Of our conventions, four were anime conventions, six were comic cons, one was a media con, two were traditional science fiction conventions, one was a pulp fiction convention, and one was a writers’ convention.
Of our fifteen conventions, four were complete flops, in which we fell short of our break-even point by such a significant amount that there could be no question of our returning. All four of them were first-time conventions for us, so we went in knowing we were going into unknown territory.
Two of them (the pulp fiction convention and the writers’ convention) were simply not the right markets for our product. We went to both of them hoping they would be good places to sell off some of our book stock from the days when we were making a good profit selling books at science fiction conventions and online. However, the people at the pulp fiction convention were collectors rather than bibliophiles, and were looking for books several decades older than our stock, and in near pristine condition. The people at the writers’ convention were by and large so busy with their panels and workshops that they never managed to get to the dealers’ room and do any significant shopping. As I was wheeling out a stack of book boxes on Sunday, I had a woman say that it was a good thing she never made it to the dealers’ room or she would’ve blown her entire budget. I had to bite my tongue hard against a sarcastic thanks a lot, lady.
The other two complete flops were both comic conventions, and in both cases were first-year events. In both cases, it appears that the promoters grossly overestimated their ability to draw attendance, and as such oversold the vendor hall, spreading too few customer dollars over too many dealers and artists, meaning that no one made any money.
Of the remaining conventions, five showed noticeable declines in sales compared to the previous year, two showed significant rebounds after poor sales the previous year, three held steady, and one was a first-time convention that did well enough that we will definitely want to go back next year. Of the five that showed declining sales, one had moved off its normal weekend, another had changed location and weekend, and the other three were held the same weekend they had been previously, so the drop in sales could not be ascribed to such differences.
Although two of our conventions did show significant increases in sales compared to the previous year, neither of them was a huge win for us. Both of them had declining sales last year, to the point that both of them were potentially on the chopping block if the downward trend continued. And while both of them moved back into positive numbers, our profit margins at them remain sufficiently slender that we will have to be very careful in how we plan for them in 2020.
Overall, the figures show a troubling picture that squares with reports I’m hearing from a number of other convention dealers. Some of the decline in sales and profitability can be ascribed to a saturation of the convention market as more and more promoters, especially for-profit companies who have the financial reach to rent large venues and sign large numbers of high-ticket media guests, move into the business. Whereas a decade ago there might be only one or two conventions each year in a region, now there are often a dozen or more. Furthermore, very few of these conventions are old-school fan-run science fiction conventions where the membership can hang out with the guests of honor at the con suite. Instead, more and more of them are focused primarily on media celebrities and formal encounters with them, to the point that attendees (a significant difference in terminology) spend as much or more time and money on getting autographs and photo-ops with the celebrities as they do on buying things from the dealers and artists in the vendor hall.
Because these extremely celebrity-focused shows (often referred to as “autograph mills”) draw such large crowds, they can sound like great possibilities to a dealer accustomed to lower-key shows. However, they often prove to be a double whammy to the unsuspecting dealer’s bottom line: not only are the large crowds not spending on the dealers’ wares, but the large crowds are also used to justify much higher booth costs to vendors, leaving the vendor with a much higher break-even point. As a result of having discovered this dynamic the hard way, we avoid all shows by certain promoters known to run this sort of convention, and look very carefully at the lineup of celebrity guests at any media or comics convention we’re considering selling it. If there are more than one or two really big-name actors on the guest list, and especially if booth prices are also very high, we are apt to avoid it no matter how promising attendance numbers may look.
Even more concerning to my mind is the shift in the pattern of what items are selling well. When we started the shift away from science fiction conventions to anime and comics conventions, the bulk of our sales were t-shirts. When I go back through the ledgers from 2013, 2014 and 2015, I see whole pages covered with transactions for various sizes and designs of t-shirt, with a sprinkling of other merchandise scattered here and there. By 2016, a shift away from t-shirts as a significant part of our sales becomes noticeable. Initially I chalked it up to the increasing saturation of the t-shirt market as more and more dealers got into selling (and in some cases, producing) t-shirts. Where we previously might have been one of three or four t-shirt vendors at a larger show, we were now often one of ten or fifteen dealers selling t-shirts. At one convention in late 2016, someone counted twenty-six vendors with t-shirts making up a significant portion of their wares.
However, there was also another dynamic that I hadn’t noticed until another dealer brought it to my attention. People were changing their attitude about how much they were spending. Five years ago, people would think nothing about paying $20 for a t-shirt. But by 2017 and 2018, it was increasingly becoming something that needed to be thought about. Instead, we were selling more and more low-ticket items, especially in the five-buck range: emoji masks, squishies, Japanese bells. People now bought those with the casual abandon they had once given our t-shirt stock. While I might do well to empty one box of t-shirts, I would often empty two or three boxes of emoji masks and squishies, and a number of compartments in the carrying case for our Japanese bells. I began to use the term “impulse buy threshold” as a metric of this phenomenon, and considered what it would mean for adapting our business model to a changing market.
This shift may not be as much of a problem when you are selling digital goods online — individual transactions are handled automatically and do not take up more of your time. However, when you are selling physical goods in person, trying to make up for the smaller individual sales through higher volume hits the problem that you can only deal with one customer at a time. You simply may not have enough time to take enough five-buck transactions in the hours that the dealers’ room is open. Even if you could, you also have the problem that sales at conventions tend to come in spurts — and many of your customers are not apt to want to wait very long in line unless what you have is extraordinarily desirable. I’ve regularly noticed that people will start putting merchandise back down and walking away as soon as things start backing up, often as few as two or three people.
One conclusion is definite: no matter what the government may say, whatever the numbers we see in high finance, the economy is not doing well for the average consumer. Even if people are doing well at the moment, they do not feel confident that they will continue to enjoy the same success they currently have. So they’re cutting back on their spending, and start thinking carefully about their purchases at much lower prices than they had previously. More are using cash, debit cards and stored-value cards like Vanilla as a way of restricting their spending.
Right now, this shift in the market means that small business owners in this segment of the entertainment industry are going to need to tread very carefully. Here I will echo several other vendors I know: be very careful about large capital purchases, especially of durable goods. If your business model is based upon retail sales, you’re going to have to make wholesale purchases of product, but be cautious in your choices. Be judicious about adding new lines of product, and be willing to eliminate products that are showing stagnant or declining sales. Even with seemingly proven sellers, don’t forget that consumer tastes can turn on a dime, often right after you made a major bulk purchase of inventory.
Even more so, now is not the time to make major purchases of vehicles or equipment unless you literally have no other choice. For us, that means that our business van is going to have to keep going for at least a few more years, even if it means spending some money on major repairs. There are some small items we might have bought to improve our displays, but which will probably have to wait unless we get an excellent bargain at a time when we have surplus cash.
Speaking of cash, now is a time to move away from credit as much as possible. There are certain purchases you’ll probably want to make on a credit card because of the fraud protection built into most major credit cards. However, make sure to pay off the balances right away, and if that isn’t possible, to get them paid off as quickly as practicable. If the economy continues to slow down, or worse has major hiccups that disrupt your cash flow, those obligations can become real difficulties.
Finally, now is the time to really think about how you can diversify your income so that you are not dependent on one type of income. This goes for everyone, even if you have a regular job. Having a side hustle or two that brings a little extra income means that you won’t be staring at the abyss if your job up and quits you. However, be aware of the terms by which you get paid — much as regular jobs pay you a week or two weeks after you did the work, many online income channels pay only some time after you make the money, often as much as two to three months later in the case of many affiliate programs (in which a company pays you for purchases made via special links you place on your blog or website). Others (especially advertisers such as Google AdSense) will only pay when a certain income threshold is made, which can leave you waiting for your money for weeks or months as the click-throughs dribble in.
For this reason, it’s really helpful to start thinking now of ways in which you can legitimately earn some money and have it in your pocket within a day or two. Whether it’s selling something on Craigslist or doing errands and handyman work for your neighbors, it can help cover an unexpected hole in your regular income or a surprise expense. Knowing how to bring in even a relatively small amount of money quickly can keep you out of the trap of “you’re six bucks short on $ImportantBill, it’s due Wednesday, and you have no way to close the gap in time.”
I thoroughly expect our 2020 selling season to be down from previous years, at least in part because we will be selling at fewer conventions, but also because people’s fun spending is shrinking. I’d strongly advise anyone who has a small business, whether as a primary source of income or a side hustle, to take a very close look at the numbers in your particular niche and make adjustments in your operations and expenditures accordingly.
Leigh Kimmel’s retail business website can be found at The Starship Cat. There you can find a list of upcoming conventions she will be selling at, as well as links to how to buy some of her products, especially her substantial catalog of out-of-print books, online. A separate but associated website, Starship Cat Press, covers her indie publishing imprint. She blogs regularly about both on her LiveJournal, The Starship Cat.