A New Wizards of the Coast Distribution Policy?

[Jhaggs]

I was shopping around for some 5th Dawn box prices and I came across this page (also found on essentialmagic.com):

http://www.anycraze.com/CustomerLetter.asp

Recently Wizards of the Coast, manufacturer of Magic: The Gathering, has made some drastic changes to the way they do business which will effect all Magic players. They have decided to ban distribution of their products to all companies they deem to do the majority of their business on the internet, including AnyCraze. This will cause a variety of changes throughout the industry, but ultimately, it will mean that you, the loyal Magic fan, will have to pay a significantly higher price for the same product you're receiving now. You may have already noticed a recent hike in the price of Magic boxes on our site, and many other sites. This trend will no doubt continue unless changes are made. Without competitive pricing on the internet, don't be surprised to see the street price of booster boxes approach the Suggested Retail Price of $132.84, or higher! We will continue to do our best to secure as many Magic boxes as possible, and offer you the best price we possibly can, but this is a major threat to AnyCraze and all online Magic communities. What can you do?

I'm not an economic guru by any stretch of the imagination but IF this is true, why would Wizards of the Coast decide against selling to online distributors?  That just doesn't seem to make any sense.  Also, $132.84 a box?  How was that figure constructed?  I couldn't find anything on wizards.com/hasbro.com to verivy this new policy.  I am hoping to see if tmd.com has any vendors in the community that could explain this to me.

[Dr. Sylvan]

The suggested retail price is based on paying $3.29 (or whatever they raised it to) per pack. I don't know what moron would pay that much for a box, but that's where that comes from.

I, too, am shocked by this. I was shocked when SCG couldn't ship boxes to Europe. I'll see if any of the non-TMDers I know can shed light on this and report back.

[Jebus]

As far as I understand, it is to prevent online retailers from undercutting local shops.

[Magi]

I had lengthy discussions about this with a couple of the local store owners around here

basically it was summed up as follows: WotC just wants more control of how their product is being distrubuted, to make as much $ as possible.

I was told that as long as an online store has an actual store front, it should be okay to conduct business online for them. Only stores which deal exclusively or almost exclusively through the internet will be majorly affected by this.

[Mykeatog]

First of all--

you are wrong.

This isn't about wizards making more money.

Being that I actually know what is going on, and Jebus si the only oen with a clue here, I will clear things up. But first a slight rant-- if you don't know about something, please don't post like you do. Eventually everyone knows that you are lying, and coincidence also pegs you retarded.

NOW...

Wizards has been getting alot of shit from 'mom and pop' stores, because they can't sell boxes in there stores because of online pricing. Wizards did a little research and found that there were business's that claimed to be wholesale distributors, but they were only distrubuting on the internet, selling wholesale product at whoelsale prices to the public. That is against the rules in any industry, it under cuts all competition, and can be horrible for the general market. Wizards; not wanting to cut out all of their 'brick and mortar' stores, decided to act against the companies that were doing this. Anycraze was breaking the fucking rules and got nailed for it.

Star City isn't allowed to ship product to Europe for a very similar reason. Wizards DOES want to charge Europeans more money for product, for the simple reason of-- the Euro is worth 1.25 of the dollar. Which means that if wizards doesn't stop american distributors from sending shit to europe then it will actually be cheaper for european dstributors to get product from the american power houses, and once again- sell boxes online cheaper than can be sold by stores. If wizards doesn't do this they won't make ANY MONEY AT ALL, this is not the music industry.

In short... yes, you do have to pay more for your boxes from now on. All wizads is doing is trying to make sure you always have a place around to play magic in. They are saying no to big business, and yes to local market prosperity. Is that really all that big of a deal?

A vendor in the community-- doing his part.

Note: Anycraze's price of 132.00 is because theya re no longer shipped product, so they have to buy it from other wholesalers. This is a very tricky place for them to be in, because it is discouraged to sell product to people who have been known to break the rules. Most online stores will still have prices less than 132.00, but the days of 60-80 dollar boxes are long gone.

[Dr. Sylvan]

Yeah, this makes a mad lot more sense when you get the detail that 'wholesalers' get cheaper boxes than direct retailers, which puts the latter in a very bent-over position competitively. Thanks for clearing that up, Mykeatog.

[Magi]

First of all--

you are wrong.

This isn't about wizards making more money.

Being that I actually know what is going on, and Jebus si the only oen with a clue here, I will clear things up. But first a slight rant-- if you don't know about something, please don't post like you do. Eventually everyone knows that you are lying, and coincidence also pegs you retarded.

Hey mike

Well first of all I wasn't lying. I actually did have discussions with a couple of local store owners/managers around here, while I was bitching about the rising price of MTG to them. Perhaps I misinterpreted some info, or drew up a wrong conclusion (and for that, perhaps I deserve to be called retarded) but I'm not trying to feed anyone false info here, or act like I'm on the inside track in regards to this issue. I simply typed down a quick summary of what I knew about the question, and gave my sources (just so ppl wouldn't think I'm bs'ng it).

We did also touch on things like exchange rates and online VS local stores, but I couldn't remember everything that was said, so I didn't wanna post any wrong info. Had I known I was that far off the mark, I would not have posted anything at all.

[st00mie]

Mike seems to have summed it up perfectly.  Until a very recent layoff due to downsizing, I worked in a card shop for nearly two years.  I placed orders with Wizards and I know the following:

In order to purchace product directly from Wizards of the Coast, you have to apply and be accepted as a Premiere Store.  Some of the requirements for attaining Premiere Store status is that you have to have a physical storefront, and you have to offer table space for people to play.  After you have met these (and some other) requirements, you are authorized to buy product directly from Wizards of the Coast at exactly 50% of suggested retail.  At the current suggested retail price of a pack of magic, this brings a box to roughly USD$66.  If you can't buy from wizards of the Coast, you have to buy from a disbributor (like Alliance Games or ACD distributing) at a marginally higher cost, which last time I knew (about a month ago) was roughly $72 per box.

Online stores such as AnyCraze and StarCityGames profit by charging hypothetical pennies over cost and selling mass quantities, where local shops have to charge suggested retail in order to pay the bills.  When sales suffer in a store because all of the players can just go online and buy there boxes, cutting out the middle man, and his profit.  Once a store-owner can no longer pay his bills because he no longer sells cards, he has to close down.  In turn, the Magic community dies.

[Dante]

Yeah, this makes a mad lot more sense when you get the detail that 'wholesalers' get cheaper boxes than direct retailers, which puts the latter in a very bent-over position competitively. Thanks for clearing that up, Mykeatog.

Yah, in a lot of industries, wholesalers (who are only supposed to sell to retailers not compete against them) are required to get Tax ID and other general resale information from all their customers to ensure they are selling to the retailers like they are supposed to and not competing with the retailers.

This is one thing that Cisco chose to do extremely well - execute on their channel strategy (partners).  They chose a channel model (where all sales must go through the cisco resellers and consulting companies instead of direct to Cisco, with the exception of some extremely large named accounts) which allowed them to have the effect of an enormous sales staff without having to staff all of them (the sales that they do have are aligned in territories and get credited when vendors sell the cisco product).  Contrast this to companies like Avaya and Extreme Networks, whose sales staff are not compensated for using vendors, so more often than not, it's own vendors are competing against the manufacturer, which is NEVER a good way to grow sales.  This is what WoTC is trying to eliminate, the distributors competing with the retailers directly.