Paizo Publishing's new online retail store (see 'Paizo Publishing Opening Online Store') risks alienating some of the retailers that carry Paizo's magazines, including Dragon and Dungeon -- retailers who may feel that the magazine publisher is competing with them for consumers' business.  What makes opening the store worth the risk for Paizo?  In a number of posts to the Game Industry Network forum, Paizo CEO Lisa Stevens discussed the company's reasons for opening an online retail store, which we reference and quote with her permission here.

Stevens gave three reasons why Paizo is opening its online store.  First, the company sees an unmet demand for gaming products due to the small number of brick-and-mortar game stores.  'A recent study I read showed that over half of US gamers don't have a full-service game store within an hour of their home,' the opening letter at the site's launch will read.  'These are the gamers that Paizo.com is made for.'

Second, the company needs the additional revenue to supplement its publishing business.  'They have a saying in magazines,' Stevens said. 

'The best way to make a small fortune in magazines is to start with a large fortune.'  Citing circulation declines in the overall magazine business in recent years as one factor making the magazine publishing business, which has been difficult in the best of times, even more difficult now, Stevens says, 'I think the only way to survive and still have [gaming] magazines being published is to diversify your business into similar avenues, such as e-commerce.'

Third, the new business is an extension using existing capabilities.  'Paizo has been doing a brisk back-issue business over the past year or so,' Stevens said.  'We have the infrastructure in place to add more products to the mix.'

Paizo is planning for its online store to have an extensive selection that will include '...products from every company from the biggest to the smallest, and as complete an inventory of each company's games as we can get.'

Paizo is cognizant of the potential conflicts between the interests of the game retailers that carry its magazines and its own online retailing ambitions, and is planning two accommodations to them. 

First, it plans to include a retailer locator on its site to direct gamers to nearby brick-and-mortar stores, where they exist.  And second, unlike most online game stores, Paizo plans to sell most products at full MSRP.  Originally, the plan was for all products to be sold at 10% off retail.  But after retailers on the GIN forum reacted negatively to the plan last week, Stevens recently announced that full

MSRP will be the default price.  Some products in the initial launch will be listed at 10% off retail to match the prices in the company's first catalogue, but full retail will be the standard after that time, as long as the sales support that strategy.  Stevens said the decision 'backs my stated goal of not trying to hurt the brick-and-mortar, full-service retail store.'