Topps Cuts Dave & Adam's/Product Dumpers
SDavid
Posts: 1,584 ✭✭
This is taken from Bob Brill's newsletter at kckings.com.
March 14
(TOPPS OFFICIALS SET NEW DIRECTION, APOLOGIZE TO DEALERS FOR FAILURE TO COMMUNICATE)
Saying they have done a lousy job in the past Topps officials issued an official apology to a large group of hobby dealers in Las Vegas over the weekend and turned what was a potentially hostile crowd into a group of dealers willing to give them the benefit of the doubt. The day long session (Topps sponsored Retailing for Success Seminar) was the battleground which failed to materialize as direct hobby dealers, angered by drastically cut allocations, were ready to attack. That which irritated dealers the most is they were never told of the upcoming changes except by seeing new order forms with allocations as low as just one case. It was not a good start for a brand new management team and the question was why?
“This could be a bad answer but we were absolutely petrified we would get so inundated with emails and we felt quite frankly that the worst thing to do was to get a response and not be able to handle it,” Topps Vice President John Buscaglia told the assembled group. “We apologize for that, it’s just we thought if we came out with some form letter ‘here is what we are doing, take it or leave it, we love you guys’ that would be the wrong thing.”
Buscaglia acknowledged the entire sales group realized they made a mistake and they did not do the right thing in the way it was or wasn’t communicated to the dealers whose lives are directly affected when such drastic changes are made. Topps had hoped to get the news out at a roundtable at the Hawaii conference and gain some publicity but it all came far too late for any positive publicity.
“I guarantee you it wasn’t because we just didn’t care, that was not it,” Buscaglia added.
Dealers pretty much felt the team showed it was sincere about the situation and were willing to wait and see what transpires over the next several months.
Basically Buscaglia and Hobby Sales director Mike Gardner laid out the plan which has been somewhat misunderstood due to the lack of information and timing of the product solicitations. The Home Team Advantage Program (HTA) is the backbone of the hobby store sales program for Topps which features guaranteed allocations, ordering systems, store promotional support and more. The problem was however the company’s products have been underperforming so HTA stores were ordering less and less. HTA stores were ordering only as high as 20 percent of what they were allocated in many cases. The fact was why order direct when in a week or two the same product could be purchased on the secondary market much cheaper. It was Gardner’s job to fix that.
First he cut the Internet dealers (those without store fronts) from the program, second he looked at accounts who were considered product dumpers in the industry. Those accounts which bought heavy and sold at a wholesale price or lower to the public.
“The largest volume account in the HTA Program was Dave and Adams Card World and we cut them,” Gardner told the group which responded with a loud cheer and round of applause. “Next we revamped the Master Distributors and kept the good ones and last we did the HTA stores.”
Topps old allocation system was based on volume. The more a company bought the more it would get the next time they ordered. Hobby stores who reached certain dollar figures were often offered much more of certain products than they could ever use and therefore did not order the entire allocation. Distributors who play the “flipping game” would take their increased allocations and sell them well below reasonable levels but make their money on volume. Buscaglia said this had to change and turned to Gardner, who left Upper Deck to revamp the Donruss distribution program.
“The allocation system we were utilizing did not work and our response rates were less than 20%,” said Buscaglia. “The stores passed and distributors were not selling it because they were going to the stores who already passed on direct programs after being offered 8 cases direct, and passed on it.”
The stores were choosing to wait for the product to drop on the secondary market before buying. This became the typical situation with Topps the last couple of years. The problem was if this continued Topps probably wouldn’t be making sportscards for too many more years.
“We’re holding on by our fingernails like everyone in this room to succeed, and if the company is not successful as a business entity we are not going to succeed for you guys,” he charged adding a tremendous amount of account cleansing had to take place. “Our first goal was how we distribute the product to protect the stores. We wanted to make sure the people who are getting and selling the products are doing the right thing so it wouldn’t affect you guys who are doing it right, in a negative manner.”
With the lack of communication and some confusion as to what was going on dealers who normally were getting a 60 box allocation of higher end products such as Topps Finest were seeing those offerings cut to just four boxes! Talk about sticker shock.
“Initially we put out an allocation system that was somewhat aggressive and didn’t necessarily take into consideration all of those top end stores which should have received higher allocations,” Buscaglia admitted to the gathering. “Our commitment is we are involved with looking at every single account, understanding that account and using every single resource at our disposal to address and make sure we are supporting our good guys. In moving forward we will support our good guys.”
With that Gardner told the collective dealers to call him if they have questions since many of the key stores did not buy higher end products because Topps didn’t make them very well. This is something which is changing and which TBR will cover in more depth later this week.
“If you were one of those people who wasn’t on board because we weren’t doing good high end, please come see me because I want to move you into the category which makes sense for you,” Gardner stated. “I’m going to reclassify that as I get to know every store and every location within the high end of the HTA program.”
The key for hobby dealers in the new era of Topps is be a company person. Support the company and you will get higher allocations. He said if you support the entire line chances are you won’t need a distributor relationship, but if you do not support the full portfolio you probably will need to supplement from a distributor.
“We are going to look for people to support this entire portfolio, that is what this company needs,” Gardner said. “We are doing 20 baseball releases, 13 in football and 12 or so in basketball…you are going to have to get behind the Topps Company in a big way.”
Gardner promised the number of allocated cases would go up, because he wants it too. Who wouldn’t? The goal is to sell more product through HTA stores than any other class and to sell more of it. Something the stockholders want to see as well.
Even so, he says, a lot of stores are complaining about the cutbacks but as far as Finest Baseball is concerned, he allocated only 200 less boxes for 2006 than the stores even ordered in 2005. In real terms, since those boxes were eight box cases, this means the new allocation is only 25 cases below what the HTA stores ordered a year ago.
“We want to step that up, the number we want is a lot more than it is today because right now it’s low for a lot of obvious reasons,” he pointed out. “I hope that six months from now it won’t be that big of a deal because everybody will be getting what they need and distribution is a lot smoother.”
One of the key elements to Gardner’s program is the master distributor network. The nine distributors are being faced with strict guidelines on what they can charge when stores place pre-orders. They won’t be able to dump the product to get rid of it, nor, will they be able to gouge stores if a product is anticipated as a hot commodity.
“I manage my distributors probably harder than anybody and I have strict guidelines on what they can sell it for,” said the manager of the hobby sales division. “If a guy’s out there under cost or gouging you at 10-12 points over, and I’m talking on a pre-sell, you need to give me a call. I’ll get rid of them quick.”
With the new landscape being 20 baseball brands per company (Topps and Upper Deck only) down from a total of 87 baseball brands in 2005, the challenges will be significant. The bottom line for Topps according to Buscaglia is making the stores profitable because if the hobby stores are making money on Topps products, chances are so is Topps.
“Last year was a very difficult year for Topps as we literally lost a tremendous amount of money on some releases simply because the response rates were so low,” he told the dealer group. “We have no room for putting bad products into the marketplace; we can’t afford to stub our toe at all.”
Tomorrow we’ll update more on the Topps program as it deals with retail distribution through mass market retailers and we’ll detail how Topps officials are handling the latest bad news around Barry Bonds who is exclusive with Topps. Plus later in the week we’ll go over some of the new Topps promotions planned through the hobby and elsewhere.
**
**
March 14
(TOPPS OFFICIALS SET NEW DIRECTION, APOLOGIZE TO DEALERS FOR FAILURE TO COMMUNICATE)
Saying they have done a lousy job in the past Topps officials issued an official apology to a large group of hobby dealers in Las Vegas over the weekend and turned what was a potentially hostile crowd into a group of dealers willing to give them the benefit of the doubt. The day long session (Topps sponsored Retailing for Success Seminar) was the battleground which failed to materialize as direct hobby dealers, angered by drastically cut allocations, were ready to attack. That which irritated dealers the most is they were never told of the upcoming changes except by seeing new order forms with allocations as low as just one case. It was not a good start for a brand new management team and the question was why?
“This could be a bad answer but we were absolutely petrified we would get so inundated with emails and we felt quite frankly that the worst thing to do was to get a response and not be able to handle it,” Topps Vice President John Buscaglia told the assembled group. “We apologize for that, it’s just we thought if we came out with some form letter ‘here is what we are doing, take it or leave it, we love you guys’ that would be the wrong thing.”
Buscaglia acknowledged the entire sales group realized they made a mistake and they did not do the right thing in the way it was or wasn’t communicated to the dealers whose lives are directly affected when such drastic changes are made. Topps had hoped to get the news out at a roundtable at the Hawaii conference and gain some publicity but it all came far too late for any positive publicity.
“I guarantee you it wasn’t because we just didn’t care, that was not it,” Buscaglia added.
Dealers pretty much felt the team showed it was sincere about the situation and were willing to wait and see what transpires over the next several months.
Basically Buscaglia and Hobby Sales director Mike Gardner laid out the plan which has been somewhat misunderstood due to the lack of information and timing of the product solicitations. The Home Team Advantage Program (HTA) is the backbone of the hobby store sales program for Topps which features guaranteed allocations, ordering systems, store promotional support and more. The problem was however the company’s products have been underperforming so HTA stores were ordering less and less. HTA stores were ordering only as high as 20 percent of what they were allocated in many cases. The fact was why order direct when in a week or two the same product could be purchased on the secondary market much cheaper. It was Gardner’s job to fix that.
First he cut the Internet dealers (those without store fronts) from the program, second he looked at accounts who were considered product dumpers in the industry. Those accounts which bought heavy and sold at a wholesale price or lower to the public.
“The largest volume account in the HTA Program was Dave and Adams Card World and we cut them,” Gardner told the group which responded with a loud cheer and round of applause. “Next we revamped the Master Distributors and kept the good ones and last we did the HTA stores.”
Topps old allocation system was based on volume. The more a company bought the more it would get the next time they ordered. Hobby stores who reached certain dollar figures were often offered much more of certain products than they could ever use and therefore did not order the entire allocation. Distributors who play the “flipping game” would take their increased allocations and sell them well below reasonable levels but make their money on volume. Buscaglia said this had to change and turned to Gardner, who left Upper Deck to revamp the Donruss distribution program.
“The allocation system we were utilizing did not work and our response rates were less than 20%,” said Buscaglia. “The stores passed and distributors were not selling it because they were going to the stores who already passed on direct programs after being offered 8 cases direct, and passed on it.”
The stores were choosing to wait for the product to drop on the secondary market before buying. This became the typical situation with Topps the last couple of years. The problem was if this continued Topps probably wouldn’t be making sportscards for too many more years.
“We’re holding on by our fingernails like everyone in this room to succeed, and if the company is not successful as a business entity we are not going to succeed for you guys,” he charged adding a tremendous amount of account cleansing had to take place. “Our first goal was how we distribute the product to protect the stores. We wanted to make sure the people who are getting and selling the products are doing the right thing so it wouldn’t affect you guys who are doing it right, in a negative manner.”
With the lack of communication and some confusion as to what was going on dealers who normally were getting a 60 box allocation of higher end products such as Topps Finest were seeing those offerings cut to just four boxes! Talk about sticker shock.
“Initially we put out an allocation system that was somewhat aggressive and didn’t necessarily take into consideration all of those top end stores which should have received higher allocations,” Buscaglia admitted to the gathering. “Our commitment is we are involved with looking at every single account, understanding that account and using every single resource at our disposal to address and make sure we are supporting our good guys. In moving forward we will support our good guys.”
With that Gardner told the collective dealers to call him if they have questions since many of the key stores did not buy higher end products because Topps didn’t make them very well. This is something which is changing and which TBR will cover in more depth later this week.
“If you were one of those people who wasn’t on board because we weren’t doing good high end, please come see me because I want to move you into the category which makes sense for you,” Gardner stated. “I’m going to reclassify that as I get to know every store and every location within the high end of the HTA program.”
The key for hobby dealers in the new era of Topps is be a company person. Support the company and you will get higher allocations. He said if you support the entire line chances are you won’t need a distributor relationship, but if you do not support the full portfolio you probably will need to supplement from a distributor.
“We are going to look for people to support this entire portfolio, that is what this company needs,” Gardner said. “We are doing 20 baseball releases, 13 in football and 12 or so in basketball…you are going to have to get behind the Topps Company in a big way.”
Gardner promised the number of allocated cases would go up, because he wants it too. Who wouldn’t? The goal is to sell more product through HTA stores than any other class and to sell more of it. Something the stockholders want to see as well.
Even so, he says, a lot of stores are complaining about the cutbacks but as far as Finest Baseball is concerned, he allocated only 200 less boxes for 2006 than the stores even ordered in 2005. In real terms, since those boxes were eight box cases, this means the new allocation is only 25 cases below what the HTA stores ordered a year ago.
“We want to step that up, the number we want is a lot more than it is today because right now it’s low for a lot of obvious reasons,” he pointed out. “I hope that six months from now it won’t be that big of a deal because everybody will be getting what they need and distribution is a lot smoother.”
One of the key elements to Gardner’s program is the master distributor network. The nine distributors are being faced with strict guidelines on what they can charge when stores place pre-orders. They won’t be able to dump the product to get rid of it, nor, will they be able to gouge stores if a product is anticipated as a hot commodity.
“I manage my distributors probably harder than anybody and I have strict guidelines on what they can sell it for,” said the manager of the hobby sales division. “If a guy’s out there under cost or gouging you at 10-12 points over, and I’m talking on a pre-sell, you need to give me a call. I’ll get rid of them quick.”
With the new landscape being 20 baseball brands per company (Topps and Upper Deck only) down from a total of 87 baseball brands in 2005, the challenges will be significant. The bottom line for Topps according to Buscaglia is making the stores profitable because if the hobby stores are making money on Topps products, chances are so is Topps.
“Last year was a very difficult year for Topps as we literally lost a tremendous amount of money on some releases simply because the response rates were so low,” he told the dealer group. “We have no room for putting bad products into the marketplace; we can’t afford to stub our toe at all.”
Tomorrow we’ll update more on the Topps program as it deals with retail distribution through mass market retailers and we’ll detail how Topps officials are handling the latest bad news around Barry Bonds who is exclusive with Topps. Plus later in the week we’ll go over some of the new Topps promotions planned through the hobby and elsewhere.
**
**
0
Comments
Bosox1976
No shock why i stopped buying cards after 86'... Go Vintage!!
From what I'm getting from the story, Topps feels that Hobby Stores do a lot to promote their product.
So in turn, Topps is going to try to protect the Hobby Stores
by not allowing large outfits like Dave and Adam's to buy cases in bulk and sell boxes at a discount.
Bottom line ... higher prices for collectors ...
"How about a little fire Scarecrow ?"
They're also supposedly stepping up their high-end products.
I'm sure hobby enthusiasts that like modern junk will be thrilled that they can't get the best prices at Dave and Adams any more.....it's like telling wal mart you're not going to sell to them anymore, because they're prices are too low. ridiculous!
lsuconnman@yahoo.com
From the above article :
“We are going to look for people to support this entire portfolio,
that is what this company needs,” Gardner said.
“We are doing 20 baseball releases, 13 in football and 12 or so in basketball…"
That doesn't sound like less junk to me.
It sounds like forcing the dealers to buy a bunch of junk inventory that may or may not move.
"How about a little fire Scarecrow ?"
Since only two companies are going to do baseball, they can probably do whatever they want to make their money.
<< <i>I'm sure hobby enthusiasts that like modern junk will be thrilled that they can't get the best prices at Dave and Adams any more.....it's like telling wal mart you're not going to sell to them anymore, because they're prices are too low. ridiculous! >>
That's a good analogy - I'm not exactly a big Dave & Adam's fan to begin with, but this move by Topps sounds like it's going to cost modern collectors more to buy Topps products now. Thanks Topps!
This may just be an attempt by the card companies to fix the 'big picture' of modern card collecting.
I'm just gonna sit back and watch.
At least chopping the production of baseball sets by 50% is a start. But to be honest, 40 is still a lot!
mike
Example: Dealer XYZ buys a box of topps for 20 his cost,
Topps then says you can not sell this box below 30 dollars
anything you sell it for above that is fine, most pricing will be
set between MAP & MSRP so if 20 dealers out there decide to
sell it at 30 dollars then business will fall back somewhat on
customer service and other areas. If they find you advertizing
below that they drop your account. You'll find a lot of hobby
stores will like this concept.
IMHO its actually a good game plan it works with a many of product on the market, I myself will pay a little more for the same product if I know I'm getting good customer service. Thats my 2 cents on where Topps might be going. and if it works expect UD to follow suit.
What do you want Topps to do? Let its business keep falling until it declares bankruptcy like Fleer? Topps is taking a risk here because a lot of big accounts won't be ordering anymore. Topps is not price fixing, they are limiting distribution just like any manufacturer is allowed to. Dealers are still free to charge whatever they want.
sobriety sucks
Julen
RIP GURU
ndleo -"We need fewer products of higher quality, not a bunch of garbage."
It probably will mean higher prices for collectors. The nice thing is that we will only see 40 brands, instead of 87. Topps high-end has always been garbage in my opinion.
With only 2 copmanies (aside from UD's marketing of Fleer products) I don't see why you need that many products. I appreciate the staggered releases and the "specialty" of some of the brands like Contenders, Heritage, SP Legendary Cuts and the base topps brands but do we really need 4 or 5 "low end", 10-15 mid-end and 10-20 high end products from these companies?
I remember when Topps tried the whole "support the entire product line and you get better stuff" strategy before. It didn't work very well or last very long. They did it about 6 years ago. In order to get Topps Chrome for example, you had to buy x# of cases of regular Topps and regular Bowman...if you didn't buy enough then you couldn't get Topps Chrome either...it was a very odd system.
My eBay Store
BigCrumbs! I made over $250 last year!
As much as many have said it is too much, others have said they WANT a lot of product - these are people who like going to the card shop and seeing something new everytime.
So, there's a "balancing" act that will be performed by the card companies.
1. Keep enough variety and "freshness" to serve that arena and...
2. Don't over produce to scare off or confuse the other group.
I will tell you, everyone has their theories why the card "boom" crashed...
We all know of gross OVER-production but also, a major problem was the EXPECTATION of the new 90s collector: they got excited and thought they should somehow make money - see appreciation - off these new shiny pieces of cardboard.
They had the same expectation for the "modern" that was happening in the vintage side of the house.
So guys were filling their closets with cases of what is now junk. That's where some of the bitterness started and the rest is history....
Just some thoughts
mike
However modern collectors know something had to be done. The modern market was being held up by a few products and a bunch of garbage. Fleer and Donruss leaving was a good thing for the hobby. I liked Donruss as much as anyone, but someone had to go (I wished it was UD). The modern market has to take the proverbial step back before it can fix itself.
Upper Deck will probably follow. I hope this carries through to the other sports.
Topps Upper Deck
-------- --------------
Base Brand Base Brand
Finest Fleer Ultra
Bow Chrome Prospects (whatever they want to call it)
Heritage SP Authentic/SPx
1 entry-level Total/MVP set
1 retro set from each
1 ultrahigh end $100/pack product from each company
1 update for each brand (optional)
Wouldn't that be a killer calendar? No junky, unmemorable crap where the big box hit is bat card of Neifi Perez. Rookie speculators would still have their draft pick cards and the value on those would be concentrated within a few or even one set, rather than 20-30 sets, so a single hot card can invigorate a whole product. Gamblers could still pay $100 for 3 base cards and a Rollie Fingers autograph, but with only one such product, a company can make sure that that Fingers is on the card, and includes a nice patch or something. The design departments could slow down and make really nice aesthetically pleasing cards. A return to the 1990-1993 model of just a handful of specialized products that was the basis on how the industry grew so much at the time could be extremely attractive both for the collector and the dealer. Allocations could be set large enough to make sure everyone got some, but not so much that overproduction diluted value, while still giving dealers a viable revenue stream between products.
A pipe dream, I know, but isn't quality over quantity the best way for everything?
2005 Origins Old Judge Brown #/20 and Black 1/1s, 2000 Ultimate Victory Gold #/25
2004 UD Legends Bake McBride autos & parallels, and 1974 Topps #601 PSA 9
Rare Grady Sizemore parallels, printing plates, autographs
Nothing on ebay
I don't see the need for 40 sets either, unless some of those sets are very specialized.
<< <i>The problem isn't the $500 pack. The problem is the $150 box that yields $10 worth of cards >>
nd
I think the problem lies as much with the collectors - card companies produce cards NOT price guides.
Collectors did that to themselves.
As was said, producing cards is a business. They're just trying each year to figure out what to sell and make a profit.
mike
This move by Topps is a first step. We'll see if it stabilizes the market and helps it grow. However one year won't fix the years of damage the hobby has suffered. There are still a lot of usless product out there that needs to be absorbed by the marketplace first.
The sports leagues would be wise to buy up some of the crap and destroy it.
This won't be popular
Along with a bunch of over produced crap - something else has to go...
People who expect a return on their spending or accountability of some kind.
Many hobbies have no "accrued" cash value - this is an anomaly in the sports card hobby, along with others, that has gotten out of hand.
That's why there's 500$ packs and stuff - people wanting a payday.
One can rationalize this any way they want...but a hobby should, IMO, be for fun and not fund someone's retirement home or grandchildren's education e.g.
Now, I expect to get killed...but hey...I can take it.
<< <i>OK
This won't be popular
Along with a bunch of over produced crap - something else has to go...
People who expect a return on their spending or accountability of some kind.
Many hobbies have no "accrued" cash value - this is an anomaly in the sports card hobby, along with others, that has gotten out of hand.
That's why there's 500$ packs and stuff - people wanting a payday.
One can rationalize this any way they want...but a hobby should, IMO, be for fun and not fund someone's retirement home or grandchildren's education e.g.
Now, I expect to get killed...but hey...I can take it.
>>
It may be unrealistic to think you can make money by buying new stuff, but I don't think it's at all unreasonable to think you'll get more than a 20% return on your dough if you're laying out $40 for a pack of Absolute Memoribilia, or whatever. The whole reason these prices have gone through the roof is because people expect to recoup at least a significant part of the money they spend on the product.
Also, for the last twenty years or so virtually nobody has bought a single pack of cards without the understanding that the contents within will have at least SOME monetary value. That's just part of the hobby-- in fact, it's a big part of what drives the hobby. You can pooh-pooh this phenomenon, but it's there, it's not going away, and therefore it's incumbant upon the card manufactures to create products that will be a) fun to open, and b) will give the purchaser an opportunity to recoup a significant part of the purchase price should they decide to sell.
What's a 'significant part'? I don't know. 40-60% seems fair to me, although that's just off the top of my head. But as ndleo points out 10% is, uh, not acceptable.
<< <i>It sounds like Topps is trying to have it both ways, sell all their crappy products but try to get their products to artifcially retain value the same way they (and all cardmakers) try to inject value into individual cards, through designed scarcity and backing it up with threats to cut off supply. But they can't play both ends. If a product is junk, as most products are, then there's no way to prop up value higher than what the market places on it. The allocations and purchase and sales requirements are contradictory when the majority of the products simply won't be "worth" the price tags. I still see the best way to keep value in all products is to cut the number of products. While it would take a while to retrain dealers and longer to reconfigure the marketplace, if there were only a handful of products from each company rather than 20 (10 of which are completely unmemorable, anyway), then those 5 products would likely be killer, and the focus would be regained. Imagine a release calendar like this:
Topps Upper Deck
-------- --------------
Base Brand Base Brand
Finest Fleer Ultra
Bow Chrome Prospects (whatever they want to call it)
Heritage SP Authentic/SPx
1 entry-level Total/MVP set
1 retro set from each
1 ultrahigh end $100/pack product from each company
1 update for each brand (optional)
Wouldn't that be a killer calendar? No junky, unmemorable crap where the big box hit is bat card of Neifi Perez. Rookie speculators would still have their draft pick cards and the value on those would be concentrated within a few or even one set, rather than 20-30 sets, so a single hot card can invigorate a whole product. Gamblers could still pay $100 for 3 base cards and a Rollie Fingers autograph, but with only one such product, a company can make sure that that Fingers is on the card, and includes a nice patch or something. The design departments could slow down and make really nice aesthetically pleasing cards. A return to the 1990-1993 model of just a handful of specialized products that was the basis on how the industry grew so much at the time could be extremely attractive both for the collector and the dealer. Allocations could be set large enough to make sure everyone got some, but not so much that overproduction diluted value, while still giving dealers a viable revenue stream between products.
A pipe dream, I know, but isn't quality over quantity the best way for everything? >>
Wow. Great post!