Outline · [ Standard ] · Linear+ Panini Vows Sweeping Changes to Distribution, From Beckett

[Lew47]

Panini America officials headlined Monday’s first full day of the Sports Collectibles Industry Summit in Las Vegas by announcing sweeping, comprehensive changes to the company’s distribution network.

“These are things we’ve wanted to do for 10 years,” Panini VP Mike Anderson told a room that included more than 100 hobby shop owners. “We are nolonger turning a blind eye to the problem that has been killing marginsfor hobby stores.”

Anderson and Panini hobby sales director Rodney Alsup outlined their plans – slated to launch in the fall – that strives to address one of retailers’ most pressing concerns: Online sellers’ negative impact on brick-and-mortar profit margins and key buyer relationships.

Among Panini’s pledges to an enthusiastic retailer audience at the Summit:

-- Re-authorizing all brick-and-mortar hobby shops. Only authorized stores – and potentially, a handful of authorized show retailers – will be able to purchase and sell Panini product directly.

-- A dramatically reduced wholesale distribution network. Anderson noted that, currently, as many as 50 entities operate as quasi-wholesalers, through online services such as DealernetB2B, eBay, individual websites or through a sub-distribution sales force. Going forward, Panini will appoint and promote a select number of authorized distributors – perhaps as few as four nationally, Alsup said.

-- A no-tolerance policy for distributors who sell to non-authorized retailers. “If people do not abide by the policy, we’re done with them,” Alsup said. “No warnings.”

-- A no-tolerance policy for retailers who attempt to wholesale product, rather than selling directly to collectors. “Again, no warnings,’’ Alsup said. “They will be black-listed.”

-- A clear distinction between wholesale and retail businesses. “You are one, or you are the other,” Anderson said. “And never the twain shall meet.”

The Panini executives credited CEO Mark Warsop for the company’s renewed commitment to integrity in distribution and admitted that, prior to Panini’s purchase of the former Donruss/Playoff LP in early 2009, the company made distribution choices that were not in its or the industry’s best long-term interests. Some of those choices included selling significant a volume of new issues and closeouts to online retailers, and allowing certain wholesale distributors to develop and operate online retail businesses.

“We turned a blind eye toward those things, because, honestly, we had to. Our ownership needed the money, and we perpetuated the industry’s problem,” Anderson said. “But under Panini ownership, we work for a CEO who is allowing us to do what should’ve been done 10 years ago. We are well structured, well financed and committed to doing what is best for the brick-and-mortar stores who are the lifeblood of this hobby.”

An enthusiastic Industry Summit crowd of 114 brick-and-mortar store operators applauded repeatedly during the Panini presentation.

Jeff DeGraw, an Illinois-based retailer, said Panini’s presentation addressed his concerns so thoroughly “it was like they were listening in on our retailer welcome meeting [Sunday] night. This was clearly our No. 1 issue, and they’re taking a stand in support of us.”

Said Mike Fruitman, a Colorado-based retailer: “I have just two words: ‘Thank you.’ ”

Among the other initiatives discussed during Panini’s Monday session:

-- The company continues to destroy any returned NBA trading card product to protect collectibility.

-- The company is willing to implement a MAP (minimum advertised price) program, but believes its authorized distributor and retailer qualifications may address the new-release pricing issue without a formal MAP initiative.

-- Anderson and Alsup said more details regarding the distribution initiative will be announced this summer, including the formation of a brick-and-mortar standards committee.

-- Panini is initiating an upgrade of its hobby ordering systems and schedules.

-- The NBA Adrenalyn XL trading card game launch has been an unquestioned success, thanks to strong marketing support including a mobile tour. The company plans to extend the Adrenalyn brand to football and hockey as part of its investment in re-developing a youth collecting segment.

-- The company will launch a new product tentatively called “The Vault,” which will feature compelling autographs and memorabilia swatches from sports, history and pop culture. Alsup indicated the initial release may be available as early as December 2010.

“Salvation is not going to come in the form of some new whiz-bang,wow, big-hit product,” Anderson said. “It’s just good honest blocking and tackling, and that’s what we’re doing here.”

[aceecards]

shawn @ diamondcards is there at the conference and he felt very "singled out" regarding this matter when i spoke to him last night!

[SinatraKing]

How come he felt "singled out"?

shawn @ diamondcards is there at the conference and he felt very "singled out" regarding this matter when i spoke to him last night!

[sahetu]

Panini is jumping the shark on this one.

[Gottabe]

With obviously the intent here is to cut out so much stuff being so cheap that tons of it are available at any given time, which equates to fewer cards, better value, Right?

Fewer sellers higher prices... What happens to group box breaks now..I would assume the price goes up as well per individual, team, slot or whatever.
Just won't be as many bargains on the newer stuff. The older stuff willl become appealling for price, but the guys selling it who can't get the new stuff, what do they do raise prices before the "store" is empty?..

I like Panini and the idea sounds pretty fair on their proposal..I'm just saying, is there a ripple effect? Naturally it is, Just Where?

[Tromni]

Ah yes, let's raise prices for collectors, that's sure to grow the hobby.

[kooljazz1966]

Pannini Bread is only one entity in this hobby. To me, it smells like cardboard Politics on Steroids. Upper Dreck and Topps Lobbyist ( aka the Bigtime spenders who do the show circuits pimping wax as well as the "wholesalers", dearlernet, etc will find a way to beat the system in the near term. I applaud Pannini for its efforts but they will have obstacles to face unless they truly do have George Soros, Billy Gates type of finanical clout. The entrepreneur is creative and always finds a way to circumvent restrictions that inhibit the Free Market enterprise system.

Ultimately, it always comes down to "Big Brother" , in this instance Pannini looking out for the interest of its shareholders. As I do not have a stake in Pannini, I tend to empathize with the soon to be odd man out that will feel the hammer from the Pannini Zero Tolerance stance. No doubt, the odd man out as usual does not believe Fat meat is greasy and will test the waters anyway making him/her the odd man out for Pannini Product at the least and a lawsuit for damages at the worst.

[Beavers98]

Great Sounds Like Higher Box Prices to me.....Well being the deal hound that I am I guess I won't be buying/opening nearly as much as I do now....

[MWS]

All I see here is higher prices for Pannini products, and a hit to whats left of this hobby. I don't have a retailer in my area. Not only would I have to pay more for the box, but the gas to go get it... Maybe its time for the Shop owners to update a little and start selling online.

[northicehero99]

Someone, anyone . . . want to inform Panini that this is not 1980, nor 1990 and certainly not 2000? This is now, the internet is a driving factor in the world economy, and is here to stay. Hello, the dinosaurs became extinct because they failed to evolve, please tell me Panini is not this dumb! I like the products and I think that brick and mortar stores need some support, but who is ultimately going to pay for a decision like this? A. The consumer or B. Panini? Sounds to me they are playing with a double bladed knife and someone is going to get hurt. If this goes into effect, I would expect online stores not to carry their product which would ultimately hurt their business. If they raise prices by going this route, Panini will be dropped from my purchase list. I want a decent product at a decent price, and if I can get it online, that is where I will get it.

[Lew47]

From the brick and mortar point of view it's a bit different. I believe places like Blowout and other online sellers (or at least the ones this is addressing) were getting product at distributor pricing. This is lower than direct pricing. They in turn are selling to retail. Distributors are supposed to sell wholesale. Not be in competition for retail.

It's hard to compare to other businesses because of the limited amount of merchandise and demand. There's nothing like being allocated a three box case of a hot product, and see Blowout with a seemingly endless supply.

[Gottabe]

All I see here is higher prices for Pannini products, and a hit to whats left of this hobby. I don't have a retailer in my area. Not only would I have to pay more for the box, but the gas to go get it... Maybe its time for the Shop owners to update a little and start selling online.

I have a local card shop, and his venture into internet selling is primarily singles. Store sellers (single wise) seem to want high BV in cash, like we do in trade. Sort of 'not feasable" from a bargain hunter standpoint. They don't sell many if any boxes online due to competion.

One thing from the store owner standpoint I don't get is, Why not buy the boxes/cases from places such as blowout and such and do your little mark up and sell in your store cheaper. My dealer for example buys his from a supply company that
1. pays for the box at a slightly higher rate than say blowout.
2. Has thier own little mark up to generate a profit.
3. My guy then puts his mark up on it, to pass it to me.....

If they could buy it cheaper (like we do) why not increase volume sales by pushing out more of a lesser priced item? I'd rather sell 50 items at say a $10 profit then try to sell 25 at a $20 profit. If you run a store and can get 130-150 for an SPA box, why pay 105-110 for it when you could have gotten it less than 100. Seems you'd make more dollars if you changed your source of procurement. How about we dump the Wholesalers who start the mark up process? (No offense to the wholesellers).

Am I missing something here?

[Lew47]

Joe, to run on smaller margins you need more operating capital to have more inventory and the ability to actually sell your increased amount of inventory. For whatever reasons, customer service.. market size, the amount of money he wants to have tied up in wax, who knows ...he may have chosen to sell fewer boxes at the larger margins.

As for paying more than Blowout prices...he either doesn't want his competition making a profit off him, or he hasn't found the right distributor. Blowout is cheap, but there are cheaper wholesalers out there.

[road_runner_1964]

The primary comment from my LCS owner is that he goes to the wholesaler primarily for the concerns of case/pack searching by the distributors....not sure how it would be done, but he refuses to go to Blowout or any others.

[northicehero99]

The primary comment from my LCS owner is that he goes to the wholesaler primarily for the concerns of case/pack searching by the distributors....not sure how it would be done, but he refuses to go to Blowout or any others.

Bob, I believe this exists, as I know a local guy who in the past has told me where certain things are within cases. Like with UD hockey the third row down in the case box contained all the case hits or top rookie, or on the Rookie sets, the bottom left/right box had the auto in the case. I never verified if this was accurate, but knowing something like that gives others an advantage that individual box buyers don't get. I am not sure if those rules still exist during production, but it has made me question the "ethics" of some people/dealers/manufacturers in the hobby. I have also heard rumors that there is special coding on boxes or packs, but have not ever seen that. Similar to how Beckett got those killer boxes of Ultimate for their break from UD. I guess that is why if you can afford to buy a case you buy a case over a box, and a box over a pack?

[RGBII]

I can see both sides of this debate.

The Brick & Mortar guys simply can't
compete with the online super suppliers.
I have stated it before and sadly it seems
to be coming to pass that the days of the
local card shop are numbered. Sure, there
will be some that can survive by branching
out with memorbilia or other offerings. I'm
afraid the evolution of the hobby is going
this way.

I can also see the collectors point of view.
We want our boxes at the lowest possible
prices. The Panini decision will only put
product in the hands of a limited number
of distributors and prices will most certainly
be higher. While I like the intentions of
the folks at Panini, it appears that they are
alienating a lot of folks.

Collect Hard!,
RGBII

[sahetu]

I have a little business plan chicken-scratched on a pad... there are ways for card shops to survive and thrive - it just takes serious work (looks like 20 hour days). Everything from weekly 'parties' for gaming, trading, etc, to prize pools for sporting events, to eBay commissions, inviting cub scout troops/youth groups for talks about collecting, organizing bus trips to sports events/Cooperstown, and so on.

I'm very seriously considering it in a college town that has NEVER had a card shop (yet a comic shop has survived there for over 30 years).

[northicehero99]

I can see both sides of this debate.

The Brick & Mortar guys simply can't
compete with the online super suppliers.
I have stated it before and sadly it seems
to be coming to pass that the days of the
local card shop are numbered. Sure, there
will be some that can survive by branching
out with memorbilia or other offerings. I'm
afraid the evolution of the hobby is going
this way.

I can also see the collectors point of view.
We want our boxes at the lowest possible
prices. The Panini decision will only put
product in the hands of a limited number
of distributors and prices will most certainly
be higher. While I like the intentions of
the folks at Panini, it appears that they are
alienating a lot of folks.

Collect Hard!,
RGBII

I agree. I do like my local hobby shops, but of the ones I frequented the most, only 2 still remain. Of those, I only go to one infrequently due to it being on the opposite side of town and having hours that don't fit. The other made me unhappy with it, so I stopped going there. Actually as I recollect, both pulled the same "stunt" that sort of lost my business (although there were other issues with the one I stopped going to). I wanted product that they had on original cases, but they both jacked up prices because the products were hot, so they could buy the same product as "restock". In both cases I am talking a $40-50 jackup in box prices from the original offering price. While I understand price increases, I was annoyed that neither valued all the money I had spent with them over the 5-10 years previous enough to cut me some sort of a break and tell me they could do it for a little better price. I looked at it this way, I bought all those products, some of which they would have had a hard time selling, only to find out that my $ did not matter when a product was hot.

Anyway, I would like to see bnms remain, but as with any business you need to adapt to your environment or fail (unless you can get a government bailout ).

I do understand the issue of bnms being charged more for products directly, than they can get them through wholesalers, but not sure how you change that, as a wholesaler is buying more product than a bnm? Definately, if I was running a wholesale business and you were charging me more for my 4-5 cases, compared to the bnm buying 1 case, I would be upset by that as I am helping to move your product.

[Gottabe]

The primary comment from my LCS owner is that he goes to the wholesaler primarily for the concerns of case/pack searching by the distributors....not sure how it would be done, but he refuses to go to Blowout or any others.

My LCS owner has mentioned that as well, but honestly..What keeps the Wholeseller from taking care of his most valued LCS's? I still think it's just as "hit or miss" with who they buy it from and who we buy it from.

[Lew47]

Just like individual collectors, a card shop owner learns who takes care of him. I don't buy in quantity from people who I don't trust or don't take care of me.