Saturday, March 5, 2011

Perceived Value and Feeling Fleeced

This morning saw one of the most dynamic debates I have ever witnessed with trading card manufacturer representatives, industry insiders, bloggers, and collectors. The forum was Twitter and the participants were Gregg Kohn of Upper Deck, Steven Judd, Doug from Card Corner Club, Gellman from Sports Cards Uncencored, Sports Card News and myself. Others joined the conversation later but by that point the fun was already over.

What jump started the whole conversation was a very public exchange between SCU and Panini on the lackluster, early returns and opinions regarding National Treasures Football. That in and of itself is a topic for another post but the subject quickly turned to value, perceived or otherwise.

While I understand how a P&L statement works, I admittedly am not privy to the nuances of how building a trading card product affect the numbers from a bottom line stand point. However, what I do know is that a product delivering $20 worth of cards with a SRP of $100 is doing nothing to grow The Hobby's collector base. Instead it is causing people to no longer purchase unopened product instead choosing to shop for singles on the secondary market. That is a trend that if allowed to occur unabated is bad for all parties involved; manufacturers, distributors, retailers and collectors.

Long gone are the days from the early 2000's that you could flip the contents of a single box at a profit. Unfortunately it seems many collectors feel that should still be the case. I am not one of them. That was a short lived anomaly, that created the "every collector is a dealer" mentality. While it is certainly understandable that many wish this was still the case, it just isn't realistic.

What should be realistic is to expect a certain level of tangible value in return for your purchase. That value should be commiserate and in proportionate scale to the SRP. In addition, x% of that value can be attributed to the entertainment value, so that any product, regardless of price point returns a % of value in entertainment and secondary market value.

As an example:

Now, how do you define entertainment value and tangible value? Entertainment value is the fun of opening the product. This can be accomplished in the "cool" factor of the cards, the degree of base set completeness, the hit quality etc. The Tangible value is easy enough to calculate. Regardless of the product, their is historical sales data to determine that, as an example- a multi-color swatch, x size, numbered to x of these certain players is worth in the range of x-z. You then repeat this for every type of card insert, hard signed auto, sticker auto, single color swatch, etc and then you pack-out the product accordingly.

As you can see, I don't expect even close to a 100% tangible value return. Is 50% though, really asking to much on a product that costs over $300? I don't think so. Is it to much to feel like I got my money's worth? If I go to a casino with $100 and play Black Jack at a $10 table for 3-4hrs and walk away with $0, did I win or lose. In my mind I won because I got 3-4 hours of quality entertainment ( and free drinks ;) ). So many times I open a pack, blaster or box of trading cards and feel "ripped-off". I know I am not alone in that regard. What that simply means is that there is a fundemental flaw in the current way trading cards sets are designed, produced, and brought to market.

I also understand that the licensing fees from the league are exorbitant and way out of line. Ultimately the manufacturers need to decide if they are producing collectibles or commodities. because as it stands right now, how much longer can you continue to deliver a product to market that in the end yields little, if at times any, secondary market value. If you are producing collectibles than secondary market value HAS to matter in your product development and yet no manufacturer seems to be concerned with that and yet are then the first to complain when sales quotas aren't being met.

I understand that a trading card manufacturers first and foremost responsibility is to turn a profit but if you market your product as a collectible but produce it as a commodity, guess what, ultimately the two are going to catch up to each other and you won't be turning a profit at all.

Simple rules to follow, particularly with high end product-

1) Never, ever, ever, ever, ever us single color swatches.
2) No sticker autographs
3) Lower the print run. Simple Econ 101 says the less supply the greater the demand.
4) Forget the fluff packaging. You can put lipstick on a pig but its still a pig. Eliminate the mfg cost of packaging and put it back into the product's content value. Packaging is meant to attract an on the fence purchaser to entice them. The people that buy $300 product are going to buy it if its in a laminated wood box made out of mahogany or if its in a paper bag.

I'm sure it's not as easy as I make it sound. Or is it? Is it just that the powers that be have been doing this for so long that they can't see the forest for the trees?


the sewingmachineguy said...

Great post. The sticker auto is the bane of high end for me. There is something cool about knowing a card has been in the hands of the star for signing.

Fuji said...

Great post... had a similar discussion at my LCS yesterday. Hopefully card companies start listening to the consumers... it's bad enough that there aren't enough kids collecting to support the hobby's future... do we really need to scare away more collectors during these tough times?

Post a Comment