The race to the bottom: Shiny. Let’s be bad guys.

I woke up this morning ticked off.

You see, I’ve spent the last two weeks going through everything in my tiny store. One thing that I combed through is my Magic overstock cabinet. It’s full of Magic booster boxes. Some of these are Standard boosters, which I historically ordered deep at the beginning of the set. We haven’t had a shortage of current Magic stock in years, but my post-Return to Ravnica hoarding hasn’t changed.

A lot of it is product that was released in the last year that was supposed to be hot and limited-allocation. Eternal Masters. Planechase Anthology. Modern Masters. From the Vault: Lore.

I have been standing firm at MSRP for these products, because it’s my belief that discounting is a bad business model. It’s low return on capital and labor. It damages the consumer perception of the brand. It harms everyone up the chain, blowing money out of the machine like a disconnected air conditioning duct under your house.

All the retailers who discounted these products got their tiny pile of money back and are preparing for the next desperate, profitless sprint. Wizards sold all of their product to distributors or retailers and could care less what happens to it now. The customers in my area bought the discounted product elsewhere, and are playing with it in my store while glaring at the greedy prices on my shelf.

I played fair. I protected the value of the brand. I looked out for the other players in the industry by not doing anything to hurt the profitability of the product for my partners. It seems to me like I’m the one who consistently lost as a result.

My reward is that my customers hate my over-market MSRP pricing, my peers laugh at me while throwing away their youths chasing slim margins, and the publisher and distributors? Well, they say nothing, because they already got their money. They’ve realized that they have an unlimited supply of suckers who want to effectively sell their product for free. That must be great.

So next week we’re running a sale. We’re going to sell a bunch of this stuff at market price, margins be damned.

Don’t get me wrong: Discounting is a terrible way to try to make a living. I don’t intend to do it again. The way I intend to avoid that is by cutting my initial orders dramatically. The potential downside to this approach is that a limited-allocation product could hit, and I could miss out by not having enough of the product on my shelves. Reflecting on the product releases over the past two years tells me that I shouldn’t bet on hot unobtainium releases from Wizards in the near future. How many times does the ball have to land on red before you figure that something is up and stop betting on black?

My future orders will be for what I know I can sell. It works that way for every other product I carry, and Wizards of the Coast is no longer immune.

Discounters, you were right. You’re still idiots, but you’re not as dumb as I was for fighting the tide. Wizards has set up the incentives, and people always respond to incentives. They’re under no legal or ethical obligation to be judicious in their distribution of their product, but I’m certainly not obligated to be a punching bag while I try to defend it, either.

I’m a retailer, not a speculator. Nearly every time retailers start to fancy themselves investors, they lose. I won’t play that game anymore.


Gift Horse Dental Care

My professional life has been chaotic the past few weeks, mostly due to some dramatic and humbling staffing shakeups at my store. We’re okay, and the store will be better for it in the long-term, but I have gone from 20 hours a week to 70 this month, and as a result I haven’t had the brainpower to talk about bigger-picture stuff. I have been taking notes about future entries as they’ve come to mind, so when my muse comes stumbling home, I will write more.

Modern Masters was, well… I could say that it was over-printed, or that players are suffering wallet fatigue, or that non-Standard Magic is a bubble built on “MTG Finance” speculators that don’t represent as many players as their dollars would seem to represent. It might be a little of everything, but the takeaway is that I was sadly right:

Over the past few weeks the price has more or less settled at $190 a box. At that price, and assuming the most favorable pricing commonly possible from WOTC direct, the COGS on Modern Masters 2017 boxes is 66.8%. This is very close to the COGS of a regular box of non-allocated Magic product sold at $110, which is 69.2%. (Those selling boxes for $100 face a COGS of 75.9%.)

For years, I’ve treated the “X Masters” and other limited-allocation products as sure bets. I’ve bought as much of them as I possibly could, because I knew that the margins would be great and I’d sell through them very reliably. I came to think of them as love-gifts from Wizards of the Coast to the WPN locations which provide a place to play their cards.

I just did a stock check on Modern Masters 2017. Having stood firmly at MSRP out of principle, I have sold 25% of my product. I will eventually sell it all a pack at a time, but man, that’s a long run for a short slide.

There are no more sure bets on the horizon. With premium releases becoming more like regular releases, and regular releases becoming more like, well, Kaijudo, I can no longer blindly order the maximum allocation on anything. We cut our Amonkhet order pretty dramatically. I haven’t even decided if I want to carry the Commander Anthology in quantities greater than one or two. If I’m wrong, these products will be in short supply and I’ll lose money by not having them.

This isn’t to say that we’re giving up on Magic. It’s still about 20% of my business, and still important. We’re doing events all weekend and we’re busting a case of singles on livestream tonight. As a store we’re doubling down on the enthusiasm. As a buyer, I’m going to work on limiting my potential losses.

Perhaps this is the way I should always have treated Magic. It was just so much easier to take it for granted and work harder on the things that needed more attention to sell. That’s bad retailing, but the price I will pay as a diversified store will be small. What will be the butcher’s bill when the finances settle for all the one-brand card shops out there?