My Week as a Filthy Discounter, Part II: Early Warning Systems

In Part I of this series I discussed the things I’d learned from slashing prices to match online dumpers in an attempt to recoup some of my investment. Today I’m going to talk about some ways that smaller stores can avoid getting into that situation in the first place. How do you know when a product is going to be something you want to order sparingly?

Accept that, for most retailers, supply is no longer a problem. For a long time, my default position was just to order the maximum allocation from WOTC Direct for any new product. As recently as a year ago I was regularly buying all the product I thought I would need for a set’s lifecycle at the start of the set. I had bad memories of Return to Ravnica shortages, and that had turned me into a hoarder. No more. From now on we order enough to get us through two to three weeks, and then reassess.

Beware distributors bearing gifts. In the run-up to Modern Masters 2017, I received solicitations from my distributors to order boatloads of product. I was getting calls from distributors I hadn’t ordered from in years. We’re a tiny store, and the MTG segment of our business is small in comparison to those of my readers. WOTC employees were telling me that this product was going to be hot. Other retailers were telling me that I wasn’t going to be able to order enough to meet demand. I’m the tiniest of tiny clients to my distributors, so why were they all offering me the moon? If you’ve got a special relationship with your distribution rep and they are hooking you up on a hot product, that’s wonderful, but don’t ever be fooled into the pronoia of thinking that you’re the only retailer getting generous allocation from multiple parties. It is not their job to look out for you. You have to look out for you.

Keep your ear to the ground. Here’s a short list of sources you could check regularly. Most of them are either deep discounters or people living under a popular fantasy that speculating on playing cards is a profitable use of time. In the case of the latter, you’re not checking them out because they’re good advisers. They’re giving incredibly bad advice. But they’re useful in that they and their communities will seek out dumping and deep-discounters so that you can find them more easily. (Thanks to Michael for helping me compile this short list.)

  • Massdrop. Massdrop says they partner with retailers to bring you deals on Magic product, but I suspect that there’s a distribution link in there, too. In the past they’ve stuck to products already determined to be stinkers, but they’ve started doing preorders, too. As I type this there’s a 1200-unit Archenemy preorder: $37.99 on a $60.00 MSRP product that hasn’t even been released. Feel free to take a look at your direct pricing on this product and weep. We’re cutting our order from 16 units to 4. Being on the Massdrop mailing list is tremendously helpful when determining what product is being dumped.
  • The mtgfinance subreddit. Most of the discussion here will be on singles speculation, but this community also tends to upvote “great deals” on sealed product. I find it helpful to skim the headlines every day or two.
  • Longer-format pundits: If you can wade through all the content that isn’t relevant to your dump-spotting goal, Rudy and Saffron Olive occasionally will tip off their audience to an impending deep-discount opportunity on sealed product. I haven’t personally found that it’s worth my time. As in real-world not-silly finance, remember that commentators frequently have a personal financial position in the matters they discuss, and unlike the real world, MTG Finance folks don’t have anyone insisting that they disclose those conflicts of interest. Presumably both the guys I’ve linked would give you the same advice.
  • The #mtgfinance twitter tag is worth glancing over.
  • You probably have a couple of regular customers who have said things like, “I invest in Magic cards as a hobby!” Find these people and befriend them. Don’t trust them, because they’re wasting their time and probably making poor financial decisions, but be there to listen to their excitement about the latest thing. “Hey Jeremy, you do the Magic Finance Thing, right? How’s the new box set looking? Where’s the cheapest place online to get it?” In exchange you can be there for these people when they realize that the game was supposed to be fun all along.

Know that missing a hot product is inevitable. Unless you’re ordering more than you can possibly sell at a healthy margin, there will inevitably be a product that will be in greater demand than your supply. On a long enough timetable, it’s inevitable. If it makes you feel any better, make a list of the last 20 product releases, write down how much you bought, and make some notes about what it took to sell through it. Would missing on one or two of them have been cheaper than over-buying the rest?

More than anything, stop being a speculator. You almost certainly do not have enough information to decide to buy a sealed Magic product and stick in your store’s closet for five years. You almost certainly do not have the cash to invest in that kind of endeavor, and if you do, you’d be better served paying off your house or maxing out your tax-free investment account contributions. You are a retailer. The difference between speculating on Magic releases and buying lottery tickets is that you can probably convince your spouse that speculating on Magic releases is part of your job. It’s not. Why are you hurting your retail business with poor practices in order to speculate on things you’re so frequently wrong about it? Stop it. Your family will thank you.

 

One comment on “My Week as a Filthy Discounter, Part II: Early Warning Systems

  1. Great advice, especially on being a retailer vs a speculator. My grand dad always reminds me that’s it hard to go out of business by selling through a product.

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