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Jul 1, 2013

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Tenacious Toys interviews Dov Kelemer of DKE about their Suckadelic SUCKLE figures Kickstarter


So I backed this Kickstarter, of course, but the use of Kickstarter by DKE and Suckadelic as a supplemental funding source intrigued me. So I asked Dov Kelemer (owner of DKE) if I could interview him about it. His responses to my questions were so thorough that I really only asked two questions:
Suckadelic S.U.C.K.L.E. Sucklord figure
Suckadelic S.U.C.K.L.E. Sucklord figure


Tenacious Toys: 
Most of us know you as a distributor of art toys and related products. In some ways, this Kickstarter is a very public announcement of your role in toy production. How and when did you get involved in the production end of the industry?

Dov Kelemer: 
There are two issues here really. The first is whether or not it's a conflict of interest for a wholesale distributor to retail items that are sold to stores at wholesale and essentially compete with your customers. Our attitude has always been and still is that if we distribute it that we don't sell it retail. Many other companies do it especially those who are manufacturers but we have with little exception stuck to that. Now we will sell exclusive items meant for retail only at the few conventions we do like Designer Con and San Diego Comic Con. On occasion if there are left overs we will sell them wholesale to stores around the world. We aren't going to throw them out, but those items were meant for retail in the first place.

One could argue that Kickstarter in a sense is like selling retail if you ignore the whole issue of the financing, without which the project might not exist. At least in a case like this, any retailer who buys them at wholesale later on will at least know ahead of time, like with a retail exclusive, that they were previously available and be able to make an informed decision whether they want to carry them or not. It's not as if we sold through a lot of a product at wholesale and then later on decided to sell them retail to try and take away market share from the stores.

The second issue is whether or not it's a conflict for a company like us to manufacture items which could be seen as competing with the 200-300 brands we are in charge of representing. While we have done our best to avoid this over the years, I don't draw as hard a line. From the start we have always encouraged artists and designers to make items that we knew we could sell. We have advanced some money here, pre-sold exclusives there, hooked this guy up with the factory over there. That is part of our job and comes with the territory. If there is money to be made and all we have to do is advance some money to get the product to the states against royalties owed it would be stupid not to take advantage of what is put in front of you. Is that unfair? Maybe to some, but running a successful business is far more important. If we go away a lot of people are going to have a really hard time.

So what happened a couple years ago as the market contracted was that we just couldn't get that many good exclusives to sell at SDCC from the vendors we represented. It's easy to get a new colorway of something old but generally speaking those items don't sell well at shows with so much other competition so it's hard to stick out when there is so much other stimulus distracting you. And why would they give us an exclusive when they could sell it themselves at full price on their site? There are some promotional benefits, but bottom line is, it got tough. So we had to start making our own stuff or stop doing the shows. The expenses were too great and benefits too intangible. So we have done our best to find some artists that we are passionate about like, Mike Egan, Scott Wilkowski, Sucklord and others who frankly not too many people in the beginning were trying to work with when we started with them. So you could say that we are breaking new talent in a way. What you don't see us doing is making 500 pieces of a limited edition vinyl or a blind box series with artists other people are generally working with. We are either doing small handmade artist editions or items that are meant to sell thousands like the S.U.C.K.L.E.  I think it complements what we do as a distributor.
Suckadelic S.U.C.K.L.E. Gay Empire figure
Suckadelic S.U.C.K.L.E. Gay Empire figure

TT:
As one of your retailers, I do not personally see any sort of conflict. Frankly it does not matter to me how a line of toys is produced, or who does it. What concerns me, as a businessman, is whether I can make a decent profit when selling them!

As you and I have both seen in recent years, profiting off the sales of art toys has become more difficult. I know I am becoming much more selective in what I stock, for that very reason. It HAS to be special, or I literally won't be able to sell any.

To that end, one thing I have not seen from Suckadelic is a line of tiny mini figures at low price points. He has a big audience, and the SUCKLE figures are (relatively) cheap to buy, so that makes it a great product for my shop.

That's interesting that this whole concept was developed as a response to having cool products for your SDCC booth. Whose idea was it to go the Kickstarter route? And would you consider using KS again in the future for follow-up projects?


Dov:
I would agree with you about how an item is produced not being a conflict, but how a product is distributed is part of the formula for you determining whether it is "special".  Access is key but one way to make it 100% not special would be for DKE to have a booth next to you at NYCC and sell all the same stuff I have sold you in the past. But if it's a popular toy and you are the only one selling it (an "exclusive"), then it is special and customers have to seek you out if they want it. The hard part is for you to anticipate what the customers will want. That's what puts stores out of business. Quite often a store owner will ask me my advice about getting an exclusive and I tell them I can get it made and sell it to you, but then I ask them if they have ever sold 50 or 100 pieces of the same toy before, or have they had experience with that particular artist or brand, and the answer is usually no. I think most retailers have an exclusive horror story to tell where they learned the hard way. We do end up redistributing a lot of unsold exclusives to other stores and the formula generally works out ok. They have an opportunity to get all the hype and glamor of the exclusive, maybe sell half of it and make a profit and then we sell the rest months later and they break even or lose a few dollars. The other stores who then have access are usually pretty pleased.

Profiting from art toys is going to be more diificult for you though as a online only retailer. We really don't want retailers competing on price so for you to get noticed you really have to have a good presence and reputation which can be costly. People have to like you and be happy with your service and really be motivated to come back because more than likely they can get the same thing elsewhere for about the same price. The brick and mortar stores are really the folks on the front lines of the battle though. They are the ones educating the random people who walk in and dont know why this hunk of vinyl is $60 when the comparable item at Toys R US for example is 20% of the price and might talk to you or have articulation. So they have the opportunity to encourage sales and growth as the customer first comes in because his friend told him about this thing called a Dunny, to the time where he comes in looking for something deeper and more meaningful. They also have the advantage of the social interaction the customer is looking for when shopping and if they are smart they are trying to create a sense of community with their base. When a customer comes to your site they pretty much have to know what they want or at least know who you are and what an art toy is.  The down side is their expenses with rent, insurance, staff, stock, etc. You on the other hand have the ability to really run a tight ship if you are savvy.

In general though the designer toy market has contracted quite a bit since the financial meltdown a few years back. In order for the market to grow new people need to come to the hobby all the time to offset the ones that have left due to financial issues, space constraints, lack of interest, whatever. New collectors are needed to buy up the stock on ebay these old collectors are selling otherwise who is going to want the latest releases. So this has had a spiraling effect, down in a bad way. With fewer collectors, manufacturers have a harder time making larger runs of toys for distribution to stores, so the stores have to start risking more, buying exclusives (which as we discussed is risky) or tying up even more money making their own toys. So stores start closing, outreach to new collectors stop, and the artists still need to find a way to make a living. Many artists are figuring out ways to support themselves by making smaller runs of toys and selling them direct to their fan base. While this is amazingly liberating, democratic, and a triumph for DIY culture, these artists also will experience diminishing returns as well. In some cases it only takes 50 hardcore fans with plenty of money to keep some of these artists afloat but eventually collectors will drop out for all the same reasons. That's why I am always pushing artists and manufacturers to make even one run of their toy for distribution to give stores a chance to not only make a little money but to try and expand the market to new collectors.

There are several well known artists that early on did all their own retail and tried to maximize profit on all their toys from day one, and that really worked for them, but when you walk into a store their work was never represented (or not for very long) and that was great for collectibility but bad for outreach. Look at what Frank Kozik did early on. He worked with everyone and for a % of the run in lieu of royalties. So he had product to sell for himself but when you walked into any store there was always a Kozik item on the shelf and at all price points $5-$10 range, $50-100, $200, $2000 even. So not only did that expand his collector base but also anytime some ad exec, producer, or creative went into a store they saw his name and the perception was that this guy must be a star (I mean he is but not more so than some of the other guys) and this got him a load of really lucrative other work while the other guys are still having trouble paying the rent. I am not knocking anyone. Being an artist is a difficult existence and many do what they have to survive. All I am saying is that Frank was fortunate enough to see the big picture and sacrifice some money up front for his greater career goals.

The Sucklord is an example of an artist who has survived making his own handmade toys throughout the years, but the toys are too expensive for most and it's harder for a new collector to know where to start. S.U.C.K.L.E., as you mentioned, are super affordable at $2 each and is a perfect way to get Suckadelic branded items into stores and expand his market, not to mention the crossover with vintage toys we all love so much (well most of us).

The Kickstarter idea was basically the same model borrowed from Ayleen and George from October Toys who used it with great success on OMFG and they have been super supportive answering all my questions for hours on end. Injection molded PVC toys are cheap to produce individually but the tooling is a killer. Designer toys are a small niche market and while we can fund a project with the help of 200 people, in the real world if your tooling is $10,000 and the market is maybe for 10,000 pieces then your cost is a $1 per unit before you have produced anything, paid for sculpting, paid the artist, shipping, packaging. So with no financing your 2" plastic slug of a toy needs to retail for $5!!! That is why all designer toys are so expensive.  If you are able to sell a million green army men and your cost of tooling is the same then it ammortizes to one penny each. Now you can sell a toy retail for .25 or .50 each in huge tubs of 100 figures. So Kickstarter has allowed us with relatively little support to cover those up front costs and frankly for the time being its where most of our projects will start from now on.


 
TT:
Suckadelic S.U.C.K.L.E. Vectar figure
Suckadelic S.U.C.K.L.E. Vectar figure

That was the most incredibly thorough response I've ever received to an interview question. You literally covered every facet of toy production and the current state of the art toy industry. I have no further questions. Good luck with the Kickstarter, not that you need it!




Readers: back this Kickstarter! They have achieved several of their "stretch goals" which means backers of a certain level ($40) are now getting EVEN more figures for their pledge! The project ends July 16th so you don't have very much longer to get in on it.

Not convinced? Maybe the fine piece of videography below will convince you:



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