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The glut of Pokémon

If you’re like me, you are addicted to watching Poké Tubers of all kinds. Box breakers, players, collectors, and store owners alike. If you’ve been watching recently you’ll notice a little shift in tone from the store owners. Maybe they are scowling a bit more, a touch of crankiness. You may have also noticed how much more product has hit the market all at once! Retailers have significantly more product to sell, prices have fallen to levels where the average Jane and Joe can finally get their hands on awesome sets like Evolving Skies!

So what gives? Why are retailers a bit on edge?

It seems clear to me, the Pokémon Company wanted to make sure there was plenty of product available for the holidays – Black Friday, Cyber Monday, and the intense shopping that happens between now and Christmas day. The odd thing is, we’ve been scratching for more product for over a year… How did they suddenly resolve the capacity to produce more product??? My guess is, to be able to release the amount of product as quickly as they have over the past couple of weeks they must have been stockpiling cards as they were printed, readying to unleash the November torrent we are now seeing.

This might initially seem awesome for everyone. Retailers want lots of product to sell. Buyers want access to lots of product at fair prices. Sounds kind of like the old days when our distributors always had some set booster boxes in stock, ready to ship… EXCEPT, for the past year retailers have been ordering with the idea products would be received in waves. For example, if I place an order for 96 boxes of Chilling Regin with my distributor I would be told I was going to get that amount divided into 3 to 4 waves – a nice chunk at release, a bit more a few months later, and maybe the rest some time after that. Stores planned their ordering and cash flow around that concept.

A little preface and then we explore the trouble some stores now find themselves in…

We have always been huge advocates of using cash on hand, not credit, to purchase new inventory. Of course this is limiting, you don’t have the leverage advantage that using credit has, and you are literally limiting you business by the amount of cash you have available to spend. The huge advantage cash on hand has is limiting risk. You don’t have to worry about selling though inventory just in time to pay back credit cards before interest kicks in – margins on trading cards are so thin paying interest can quickly wipe out profits. Add the lack of inventory control and putting products on credit cards and you’re setting yourself up for disaster! This right here is one of the things shaking the retailer side of the business right now. So many retailers are stuck taking on product they don’t have cash on hand for, putting it on credit cards, and they still don’t know what other inventory they might have to take on come the new week.

Why don’t stores simply turn down new inventory? Because demand is so high, everybody and their mother opened a retail account – so many, that some distributors are no longer accepting new applications – distributors have so many accounts they can allocate product to, turning down product you had previously said you would buy can quickly put you on the outs with your distributor, and potentially put you out of business.

We count our lucky stars we are risk averse and don’t order beyond our ability to purchase with cash, but even we are not immune from the unexpected! When we put our orders in for a product we usually get the original invoice price when the product is ready for us to take possession of. One of our distributors thankfully holds to this and always honors the original price. One of our other distributors doesn’t.

For example, when we put in our order for Vivid Voltage many moons ago our quoted price was our standard booster box rate (DM me on Twitter if you want to want to know the numbers, etc.), we just got our final wave and were invoiced $115 per booster box. Obviously that means we can no longer sell them for the $109.99 price we were selling them for 🙁

Here’s the breakdown of selling a Vivid Voltage booster box for our current $129.99 price
+$129.99 our price to customers
-$115 current cost of product from our distributor
-$3.98 in credit card processing fees (2.9% + $0.35)
-$10 USPS priority mail shipping
-$0.98 sturdy shipping box
$0.03 Adj. NET 🙁

We obviously don’t want to see our favorite TCG shops go out of business, but the current situation could shake the market up a bit. Keep in mind, all those $95 Chilling Reign booster boxes and $85 Battle Styles booster boxes you see online are being sold at a loss by retailers. They need to get rid of them to free up capital because the next round of product might be around the corner and those credit cards are gonna come due!

Does this help or hurt the hobby in the long run?

The obvious answer is, “who knows?” The immediate reality is, there is currently an imbalance in supply and demand. In a perfect world the customer gets what they want at a great price and the retailer makes a little money so they can keep providing Pokémon to the customer. We spent the last year out of balance with severe supply shortages, mostly hurting the end consumer. Now we’ve swung the other direction. Can we find our way to the middle again?