Panini Sales VP Mike Anderson Addresses New Distribution Policy, ‘MAPP’ Pricing

[blowoutcards]

Panini Sales VP Mike Anderson Addresses New Distribution Policy, ‘MAPP’ Pricing

March 21, 2011 at 3:44 PM


LAS VEGAS — Aside from Panini America’s trademark Black Boxes, arguably the single most anticipated aspect of the 2011 Industry Summit came Monday afternoon with the long-awaited public unveiling of the company’s new distribution plan and pricing policy.

Mike Anderson, Panini America Vice President of Sales, sat down with The Knight’s Lance to provide an exclusive first look at some of the pertinent details, just minutes before addressing the more than 130 retailers in attendance.


Panini America has called 2011 “the year of the hobby shop.” What exactly does that mean to you?
We have always believed the brick-and-mortar store to be the lifeblood of our industry, but the hobby stores have been under siege by internet sellers that have no overhead and can undercut the hobby store prices. We are implementing some distribution changes that will give hobby stores the advantage and start to direct traffic to and through storefronts.

“The year of the hobby shop” is not a simple campaign slogan but a very real commitment by Panini America.

What factors led Panini America to make such major changes to the way it distributes its hobby products?
Current distribution models offer no incentive for people to open new stores or expand their existing business and we have to reverse the trend. Without some intervention by Panini and a change in our distribution model, we could only expect more stores to close and begin offering products online.

Manufacturers have been hesitant to address the internet issues because of the significant revenue generated by the internet sellers, but it is now critical we take a stand. We finally feel we are in a position to make a difference. Panini America is a leader worldwide and as a true leader in the category, Panini America is willing to risk losing short-term internet sales to preserve and protect our true retail partners – the hobby store.

What are the key long-term objectives of the new plan?
To give hobby stores the opportunity to thrive again. To rebuild the community that used to surround the store. A place where people could come by the store, open packs with their friends, brag about their treasures and have an enjoyable experience.

We hope the store owners will make better profit margins that will enable them, with Panini America’s support, to reinvest in their business and, simply put, grow again.

What are the key differences between how Panini America will distribute going forward and how the company has been doing it?
There are several key differences, starting with our minimum advertised price policies (MAPP). We want to protect the stores that have overhead costs by making sure no other competitor (primarily internet sellers) offer the same Panini America products at a “cost plus” price point that prohibits or prevents. We are also providing a seven-day window for the store to sell product without interference from internet sellers. If a consumer wants the latest Panini America product, they will have to find their nearest hobby store, at least for a week.

As a 30-year industry veteran, what aspect of the new plan most excites you?
It is fair! We have watched a lot of changes take place but not always for the benefit of everyone in the industry. I think it is clear to anyone that has ever purchased a Panini America product that we are trying to deliver good values at fair prices. No games!

We now have the opportunity and enough support to make a difference in how these products flow through the marketplace.

Good products, fair prices and a solid distribution plan is a recipe for success. We recognize if our consumers, retailers and distributors win, we will win.

What do the new policies mean to traditional brick-and-mortar storefronts?
It means they finally have a friend in the industry. They finally have someone who understands their situation and is willing to take a stand. It means they have a reason to be optimistic again.

What feedback have you received thus far from those most affected by the changes?
I have heard from countless stores that were “on the brink” of closing their stores. Our commitment has made the difference in their decision to renew leases, commit advertising dollars and involve their family in the business. We are so excited to see this renewed enthusiasm. It is a reward in itself.

Perhaps more than any other group, online retailers are the most impacted by these new procedures. What does the new program mean for them?
We have talked with many online retailers and every one of them has been supportive. Everyone recognizes the need for change and if we strive to be fair to everyone and everyone can start to profit again, everyone will win. Even the internet sellers have been caught up in price wars and they welcome the relief. A “high tide raises all boats” and a fair distribution plan will definitely raise the tide.

I believe we have been supported by everyone in the entire food chain because we want to insure a place for everyone. We are not trying to eliminate anyone. We’re trying to level the field. MAPP will allow internet sellers to be profitable again because they will no longer compete solely on price. We hope everyone will compete on the service they provide rather than who can sell the cheapest.

What does this new plan say about Panini America’s commitment to the long-term viability of the hobby shop and, as a result, the hobby at large?
This is a major commitment to the hobby store and to the industry and I am grateful the senior management (Mr. Sallustro, Group CEO in Italy, and Mark Warsop, CEO at Panini America) has encouraged these changes. Programs similar to ours have failed in the past because it takes some time for everyone to adjust to the new flow of product. We are already hearing of some large “buyers” frequenting hobby stores and getting re-acquainted. We hope everyone will help make this a smooth transition.

We need everyone to support our products now more than ever.

What will the industry be saying about this program one year from now?
I hope they will be saying they are proud to be in this industry. I hope they will recognize our intentions were honorable and Panini America made a difference. I hope they will be suggesting to friends and relatives that they should take another look at our hobby. It’s safe to come back in the water again.

Finally, in the 24 months since Panini has entered the U.S. market, what one thing has stood out to you the most?
Wow, great question. It’s hard to point out just one thing because the energy and everything that we’ve been doing has been moving so fast when you look at where we are today. I’d say I’ve been impressed with the adoption in the mainstream to our U.S. sports sticker collections. But as an insider, the one thing that stands out the most is how we went from one exclusive NBA license to securing one of two licenses with the NFL and NHL, and how fast our production teams have had to ramp up to produce another 40 collections — and that’s just on the sports side. That’s a huge undertaking when you talk about the products we are building.


Panini Sales VP Mike Anderson Addresses New Distribution Policy, ‘MAPP’ Pricing The Official Panini America Blog

[ColtsCrush86]

This news makes me happier to be able to go to the local card shop and get product first, however i will not be paying $100 + for products like prestige , R&S, Threads etc. I wonder what the pricing will be?

[kajshack]

Where's the "like" button?

[Brad]

I feel sorry for those of you who have LCS's that rip you off on wax.

[pmannings#1fan]

Originally Posted by Brad

I feel sorry for those of you who have LCS's that rip you off on wax.

Or those like myself who don't have a LCS close by or even a couple hours away!! Will this affect BO or the other big onlines retailers? Are we, the ones with no LCS near by, screwed except for Wal-Marts & Targets??

[pac213up]

How about addressing the real problem and stop overproducing crap product?

[ld8759]

Originally Posted by pac213up

How about addressing the real problem and stop overproducing crap product?

+1...totally agree with this

[IndySportsCards]

I won't mind waiting 7 days for my box of redemptions

[allhockey]

Originally Posted by ld8759

+1...totally agree with this

Ding, ding, ding...........me too!

Panini no one knows they are now doing hockey- who cares? I don't.

[mindbinge]

is "price fixing" allowed in the USA? Whatever happened to free enterprise.

[cruiserdaddy7]

Still alot of questions, such as when will this start? Also, what are the price requirements? How long are dealers required to hold these price requirements?

[kajshack]

Originally Posted by mindbinge

is "price fixing" allowed in the USA? Whatever happened to free enterprise.

It's not price-fixing at all, not even remotely close. Many industries have minimum SRP's and strictly enforce them. Hell, even the Magic and Pokeman crap enforce minimum prices, which helps explain why that market is so much healthier than the sports card market.

This is a good thing. The LCS is the most important component of this industry, and I will support 100% any initiative that strengthens them.

[grayrob8178]

I'm no expert when it comes to the sports card business model...but my instinct tells me that this will only increase the cost of hobby box. I have always bought from Blowout because they seem to always have the best price and I don't have any readily accessible local shops.

[pmannings#1fan]

Originally Posted by kajshack

It's not price-fixing at all, not even remotely close. Many industries have minimum SRP's and strictly enforce them. Hell, even the Magic and Pokeman crap enforce minimum prices, which helps explain why that market is so much healthier than the sports card market.

This is a good thing. The LCS is the most important component of this industry, and I will support 100% any initiative that strengthens them.

I agree & I myself don't mind a SRP but I still want it shipped since I don't have readily available LCS to support.

[BAMBAM]

While there are a lot of honest LCS guys who have been screwed by internet dealers dumping products at cost or less to anyone with a credit card, there are honest internet dealers and wholesalers who this screws over as well. That line about everyone outside of LCS owners being on board is a bunch of BS.

Don't they realize there are some real shady LCS owners as well ? Why lump everyone in together. There are plenty of people who don't own an LCS but play by the rules and don't dump product. Maybe instead of taking the lazy way out, take the time to research who is shady and get rid of them instead of lumping everyone together and rewarding SOME of the biggest crooks in the hobby.

[anusinha]

So if someone puts a box on ebay and it doesnt get bid up to MAPP, then what?

[natbornkiller]

oh what i difference a week wait will make

[jeffmu]

For what it's worth, I spent almost a decade and a half with Circuit City and Best Buy, and vendors have and probably still have MAPP pricing in effect. Keep in mind, by the literal definition, it is ADVERTISED price.

Sony was the most notorious for enforcing it, in the Sunday circulars, a certain TV couldn't be advertised less than the agreed upon MAPP pricing, however it could be sold for whatever the store was willing to part with it for. Competition would play in to that, if a local mom and pop store was willing to sell it for less than MSRP (and who actually charges that in ANY industry anymore), we had the ability to price match, etc.

Most vendors simply put MAPP pricing in effect to "protect the prestige of their brand".

If this works anything like it did in consumer electronics, there shouldnt be much change in the cardboard landscape. I have only 1 real LCS here, and in the last few cities I've lived in, I have had as many as 3, guess how many I've seen "advertise" in any shape or form? ZERO.

I'm all for protecting brick and mortar, but as a consumer, and as MOST consumers, when surveyed, will tell you, PRICE is the #1 factor in making a purchase.

[stumpfreeman]

I luckily just found a new LCS in the area, only been open 8 months. They are still small and would like to increase sales. The most honest prices I have seen in a LCS yet. 2011 Topps hobby box $50, 2010 Topps Chrome hobby box $50, 2010 Bowman Platinum hobby box $95. This guy will flourish in this kind of environment. The price gougers will fall by the wayside if they continue on that path. It all comes down to what the prices that Panini sets are.

[brado8236]

The biggest problem I have with MAPP pricing is the elimination or severe truncation of internet pricing competition. If everybody buys into this socialist idea of "one product, one minimum price," two things will happen:

First, the price of popular products will go much higher, much faster without significant internet competition to keep them lower. Everybody wants to make money and yes, internet retailers don't have to raise prices higher than brick-and-mortar shops as long as the price stays above MAPP. But nobody's saying brick-and-mortars can't gouge customers for the first week of a new product before internet sellers can jump in, and nobody's saying internet sellers wont get greedy and match brick-and-mortar prices or go just slightly below them. MAPP is a minimum, not a maximum, and the good products will potentially see prices shoot through the roof. This is a big loss for consumers in particular and the hobby in general.

Second, and most importantly, retailers and distributors are going to have their shelves and warehouses packed full of bad products they can't sell below the MAPP cost. The biggest reason bad products continue to sell is that prices can be dropped below the initial pricing. But if a junk product, like 2010 Topps Chrome football hobby, couldn't be sold for less than its initial $85/box, it would be gathering dust till doomsday. At $50-55/box, it's reasonable to shoot for a decent hit, but we'd never see it drop that low if Topps currently enforced a MAPP policy. This is a big loss to consumers in particular and the hobby in general.

Keep in mind that none of this is saying Panini will do anything other than keep on increasing its product pricing, which means we'll continue seeing proportionately higher prices on the other side. And now, since Panini is trying to remove one of the checks-and-balances on the retail side, the biggest losers will ultimately be consumers.

[mindbinge]

SRP = Suggested Retail Price

Suggested being the key word...what is described above by the VP or Panini sounds like price fixing to me...but, may be wrong...wouldn't be the first time.

[brado8236]

An Suggested Retail Price is one thing, a mere suggestion doesn't keep retailers from selling below a certain price.

A Minimum Advertised Price Policy is different. If Panini requires retailers to sign a distribution policy that states they cannot sell below a preset minimum "advertised" price, then they can't sell below that price if they want to continue selling Panini products. If the policy just says retailers can't advertise a particular product below a certain price but doesn't affect how they actually sell the product, that's another thing.

It will be interesting to see if Panini starts putting Minimum Advertised Price on their sell sheets (an advertisement), because if retailers have to sign MAP policies and they can't sell below that MAP, Panini will be pricing the own marketplace.

[ToHockey]

I think many of you are not looking at how little this will change the internet side of things. MAPP strictly enforces minimum advertised price. I am sure that many of the bigger places will begin having messages like "contact us for discounted pricing". Another common practice is to setup the website to advertise at the Minimum advertised price but have a discounted rate when added to the cart. Depending on how Panini sets up there policy it may only mean you have to advertise at X price but once in the shopping cart it is no longer being "advertised" so it can be whatever price they want.

MAP policies are a good thing in most cases as it maintains the value of a brand and allows businesses to make money. Repeat customers should be able to get discounts from there LCS and online retailers to buy below MAP. The LCS and Online retailers can then also turn a decent profit from non-regulars who don't spend hours a day trying to find a box for $1 cheaper than the next best place.

[cruiserdaddy7]

Again, I just dont see customers wanting to pay these higher prices. Same as when UD tried this in 08, the products are going to back up and then the same LCS complaining about online retailers will complain about not being able to move product. The game will then end. Its hard to compare Magic to sports cards considering we have FAR more releases than Magic gaming.

[garpike]

Originally Posted by kajshack

This is a good thing. The LCS is the most important component of this industry, and I will support 100% any initiative that strengthens them.

100% Agree....I remember back in the early 90's there were Sports card shops all over the place. Now they are down under 500 across the USA.
And we have lost 1 or 2 here in the Cincinnati Area this past year alone.

I am not saying that there is anything wrong with buying from online distributors but supporting your LCS is also supporting your local economy. When you buy from online retailers, you are sending your money out of state...possibly out of the country...who knows. I have always been a fan of the LCS even if the product is a bit higher cost. It is just more fun for me to break packs with other people. Just like evryone likes to post the box breaks on here. Having your fellow collectors root you on is part of the fun.

So...I am really happy that Panini is making the "1 week ahead of time" commitment to the Hobby Shops. I think the people who "gotta have it now" and those who like to "rip n flip" will help the LC Shops from going under because they will have to get the products there for that 1st week.

just my 2 cents.