Mar
04

Upper Deck Answers Questions on New Streamlined Distribution Program

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Earlier this week Upper Deck shared with its distribution partners and direct accounts a new distribution program on how current hobby products will be sold starting in April 2011. Upper Deck determined this course of action was important in order to strengthen and protect the company’s brands, while also streamlining and better-defining the company’s channels of distribution. UD crafted this program by working in collaboration with our Certified Diamond Dealers (hobby shops), Authorized Distributors and legal team.

Sports Images, Southern Hobby, GTS and Magazine Exchange are UD's four US Authorized Distributor partners while Universal and Grosnor will serve as UD's Canadian Authorized Distributors.

The best way to make improvements in distribution is to make sure that each business partner is doing what they do best. Authorized Upper Deck Hobby Distributors are expected to only sell current sealed product to brick and mortar hobby shops that agree to only sell it to end-user collectors. These Certified Diamond Dealer brick and mortar hobby shops are NOT permitted to wholesale the product to other retailers, to sub-distributors, or any other entity other than the end consumer. Upper Deck is also creating a new class of trade called UD Authorized Internet Retailers (AIR’s), for a select few customers that operate a brick and mortar hobby shop, and also have a presence on the internet. Upper Deck Authorized Internet Retailers have been hand-picked by Upper Deck to represent our brands online, and may be identified by looking for the Upper Deck AIR logo.

For those collectors who purchase online, you'll want to look for the Upper Deck Authorized Internet Retailer Logo when purchasing new UD products.

We STRONGLY suggest collectors purchase ONLY from Upper Deck Certified Diamond Dealers and Authorized Internet Retailers in the future. We will be profiling Authorized Distributors, Certified Diamond Dealers and Authorized Internet Retailers here on the Upper Deck Blog in the coming weeks so you can get a better feel for what services they have to offer.

Brick & mortar hobby shops that partner with Upper Deck are known as Certified Diamond Dealers.

As with any change there are obviously going to be some questions. We sat down with Mike Phillips, Upper Deck’s Director of Hobby Sales on what these changes mean to the industry.

Mike Phillips (middle left) talks to two hobby shop owners along with UD's Jason Masherah (middle right).

Question – Why did Upper Deck decide to make this change?

Answer – We are always striving to get better in every aspect of our business. We feel we have made some great strides in strengthening the content of our product lines. It was time to look at how those products are distributed and work to strengthen that area of our business as well. Our industry has always had extremely blurry lines and channels of distribution, and it was long past due that we clarify them.

Question – You had a similar program like this before, why did you stop it and what makes this program different?

Answer – Upper Deck was the first in the sports card industry to create a distribution program where we tracked the sale of product using codes in boxes. We were able to see where it went from leaving our warehouse, on to our distributor and then on to their customer. By purchasing back product we could track back how it was distributed and work to keep it in the hands of our partners. It was a program that worked very well for a lot of shops, but it had some holes in it where people could work around it. I can’t share all the ways we’ve filled in those holes with this new program, but we will be sharing more and more in the coming weeks with our partners. The success and enforcement of this program is one of our top priorities at this time, and I can assure you that there is a deep commitment to this current program going forward.

Question – Many of your best products are coming out over the next few weeks, what is the cut off for when this program starts so I know where I can get product from?

Answer – This program will start with the release of 2011 Upper Deck Football on April 12th

Question – I’m a collector and I have been able to purchase through a distributor in the past. Is that going to change?

Answer – Yes. The job of our distributors is to help keep shelves stocked for our hobby shops and authorized internet retailers. Any of our distributors found selling to collectors will be removed from our distribution network. As a collector however, you will still have plenty of resources to purchase product.

Question –I sell singles on eBay. How will I be affected?

Answer – You likely will not be affected very much, except with regard to where you get your sealed product from. You would need to purchase through a Certified Diamond Dealer or Authorized Internet Retailer.

Question – Who are these Authorized Internet Retailers or AIR’s and how were they selected?

Answer – First and foremost every Authorized Internet Retailer owns and operates at least one brick & mortar storefront. We looked to partner with those who were already successful in the online sale of trading cards, and also looked to work with great shops that are looking to expand to support customers online. Our inaugural group of AIRs have also been selected because they have shown a tendency to promote the industry in a positive way, have been loyal partners with Upper Deck over the years, and have a stellar reputation in the hobby as a whole.

Question – Where is the list of Authorized Internet Retailers?

Answer – We will be publishing it in the coming weeks. In the meantime, collectors should start to get familiar with this Authorized Internet Retailer logo and look for it on the websites of those who are participating in the program.

Question – How can I become an Authorized Internet Retailer?

Answer – Certified Diamond Dealers looking to become an Authorized Internet Retailer need to submit their request in writing to the following address: The Upper Deck Company, Attn. Hobby Policy Enforcement Specialist, 5909 Sea Otter Place, Carlsbad, CA 92010. We will be reviewing the program frequently and making changes as we see fit. We will likely not look to expand this group until Fall 2011 at the earliest.

Question – What about show dealers, will they be able to get your product?

Answer – This is a work in progress. We will be revealing more detail of this aspect of the program in the coming weeks, but I can certainly tell you that in order to sell at any show you will have to be a Certified Diamond Dealer which means you will need to be a full time shop owner.

Question – What about older products? I heard something in the agreement about 90 days?

Answer – Correct, this distribution program is designed only for “current” Upper Deck products. After a product has been in the market for 90 days, shops can sell it at their own discretion. We are only monitoring and enforcing this program on current Upper Deck releases so those who specialize in selling vintage Upper Deck product will not be affected with these changes.

Question – I’m a shop and if I purchase three cases of a product and can’t move two of them, what are my options for selling off the other two cases?

Answer – Shops will need to wait the 90 day period before they look to move product through alternate methods. Any shop found doing so before the 90 day period is subject to removal from the program. It is imperative that shops understand their needs and buy responsibly. Additionally, as an industry we need to get away from this sort of thinking. In what other industry do you plan where you are going to get rid of product before you even take possession of it? Let’s let the collector ultimately determine the fate of products!

Question – As a shop owner, what can I do if someone who is not in the program attempts to buy from me?

Answer – We are investing a lot of resources in tracking where product originates from that is sold online and through unauthorized channels. Shops bear responsibility in knowing their customers. Shops are expected to let buyers know they cannot sell boxes online or to other shops. This program is designed specifically to help shops grow their business so we expect our partners to take responsibility for how they sell Upper Deck products and who they sell it to. We all have to take some responsibility in order for this program to succeed.

Question – As a shop owner, what will happen if I choose not to sign this new agreement?

Answer – You will no longer be able to purchase new Upper Deck products direct or through our distributor network. Additionally, you will not be able to take part in the various programs we will be helping to support our brick & mortar store locations. Lastly, you will no longer receive product information and marketing support for new Upper Deck products and programs. And finally, if you choose not to be a Certified Diamond Dealer your customer’s purchases of Upper Deck products will not be covered by any “warranty” which will significantly limit their ability to receive customer service on issues like damages, collation, etc.

Question – Will shops with a direct account with Upper Deck still be able to purchase direct? Will their allocations be increased since there are less places to purchase from?

Answer – Yes, shops will still be able to purchase direct without issue. Allocations are looked at on a case-by-case basis, so there is no way to yet say whether allocations will increase or decrease.

Question – Will my local card shop be able to purchase from any of the four US distributors?

Answer – Yes, and they can also purchase from Upper Deck directly. Many of our distributors will be offering different programs to help Certified Diamond Dealers grow their business.

Question – Is Upper Deck setting a price that Authorized Distributors, Certified Diamond Dealers or Authorized Internet Retailers can sell products at?

Answer – No. Upper Deck cannot set a price on what products are sold at.

Question – How is Upper Deck going to enforce these policies?

Answer – We have hired a Hobby Policy Enforcement Specialist specifically to handle enforcement of these policies and to work on tracking where the product goes after it leaves our hands. They will be working with our network of customers to make sure they are selling our product in accordance with the program.

Question – Will Upper Deck be monitoring auction sites like eBay for sales of boxed products?

Answer – Yes. That doesn’t mean you will no longer see current Upper Deck boxes available on eBay, but there will likely be much less available there for new Upper Deck products. Upper Deck will actively be purchasing product through these channels as well and tracking it back from there. Partners found in violation of the agreement will be removed from the program. Make sure that when you buy sealed product on eBay or an online site for that matter, you look for the Authorized Internet Retailer logo.

Question – As a collector, what happens if I purchase current Upper Deck boxes from someone who is not a Certified Diamond Dealer or Authorized Internet Retailer?

Answer – Collectors need to understand as well that if they purchase sealed product from someone on eBay rather than a Certified Diamond Dealer or Authorized Internet Retailer, then they are purchasing the product as is. If there are issues with that product, our Customer Care group will likely not be able to assist. The focus of our support will go to our approved network of Certified Diamond Dealer and Authorized Internet Retailers. We will share more about this warranty aspect of the agreement in the coming weeks.

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Categories : Ask UD, Uncategorized

26 Comments

1

As a brick and mortar owner, I think this is positive move for our industry. Bravo!

2
Vinny Monteleone
March 5th, 2011 at 9:20 am

Thank you for taking an interest in the distribution & selling of the Upper Deck Products. I have been in business (Store Front) for over 14 years…Probably the #1 issue I would have is the Pre-Selling of items on E-Bay. I have never understood how people can pre-sell cases of card at cost & somtimes below cost. Are they stealing the products??? Is it just a scam??? Or are they lucky enough to just get too many cases and have to move them quickly!!! If that’s the case, please cut production.

Question: If this works and you some how clean up the distrbution process, could it possible mean we can see a higher allocation in some of the higher end products?

Thanks,
Vinny

3

I love how all of the B&M stores want to totally push out all of their online competition.

Consumers dictate the market. UD can try all they want to control the market, which they can do to a point, but the ultimate deciding point will be the consumers. If this somehow affects how they receive their product and stops the flow to them, these policy changes will be what I have a feeling they are, nothing but pure BS.

4

I don’t see where B&M Shops want to push out any competition. All I am looking for is a level playing field and and end of the oversized ordering of product to sell at low margins which cause too much product ultimately on the street as displayed in the 90’s. I understand that customer service and shopping experience is what makes a business grow. Have you not noticed the steady decline in prices on the secondary market steadily decline for many products. You can’t keep driving prices down or you will loose the low and middle market as happened in the 90’s and wonder where all the collectors went. Are you still paying your bills selling $4 boxes of 1988 Topps Baseball? All we’re asking is let the customer see and touch the product before dropping prices. How does anyone know during the presell phase where the product will go, but many are selling it at silly margins at that time. Even Walmart doesn’t put Summer clothing on the clearance rack in March. The only reason these online retailers give stuff away is to keep their allocations growing due to their need to sell so many boxes to pay the bills. Manufacturers could just sell direct to the public and eliminate all of us but they know that it is not in their best interest. Supply and demand must constantly be monitored and adjusted. So Upper Deck is trying to adjust and control an out of wack distribution system to better control supply to be in line with demand. You have to start somewhere and most of the time you start with the basement, in-house, distribution and finally retail. If the demand increases you can adjust accordingly. Someone has to step in and turn this around and it takes broad shoulders and as far as I’m concerned I plan to support them and eventually there should be room for everyone. B&M’s have drastically had to adjust business practices now online retailers have to do the same. Somewhere there will be a middle ground, but someone has to mediate us to that point. The consumer is not always the deciding point, they also have to be led to the common ground.

5

I do not necessarily agree, but something had to be done. Is this the right move? Only time will tell. Somehow in this Hobby the burden of responsibility always fall on the shoulders of Brick and Mortar stores. I am so sick and tired of these big internet dealers taking business away from me and other Brick and Mortar stores. Without us the Hobby is dead, not the other way around. Let these clowns on the internet see how it feels to make an adjusment. If these guys were not so irresponsible by selling product at or below cost before it comes out, then they would not be the ones crying. Like most things in life it is high time that these wholesalers look in the mirror and own up to the mess they made. We have been doing it for years, so quit your crying and move on. I do believe however, that you cannot force a product to sell by default, but rather by quality and content. Until the licensors reduce these ridiculous fees, then unopened product will continue to be no better than purchasing a lottery ticket.

6

Is breaking packs/boxes gambling?

7

Here is my problem, I do not sell boxes or cases, but what I do is buy cases and break them and sell team sets, rookies and singles. I have a resale tax Id and a Federal Tax Id, I’m a fully licensed retail business, minus the Store Front. With this new Program People like myself are getting frozen out.

While I understand that B and M’s need to be in place, for example there are none with-in 40 miles of my home, and I live a pretty highly populated area. The majority of card stores that were here, have switched years ago to Gaming stores.

All I’m saying is just because a few bad apples have blown out product, why punish the guys like myself from buying wholesale which we do so legally right now because again we are actual retail business minus the storefronts.

I’m really curious to see if upper deck can make up our lost revenue, I honestly do not think B and M’s will see the increase in business, why would I buy from them when they will be charging upsurd markups on the product.

For example UD series 2 wholesale at the pre-sale pricing was 650 a case, from a B and M your more than likely looking at 800 for presale if not close to 1000, which would absoulty kill my profit margins. That is just plain stupid.

8

Guess this explains the $20 price increase for a box of series two in the past couple of weeks

9

I’m not sure of trade laws in the US, but are UD allowed to dictate to their suppliers who they on-sell their product to?

Is this not a restriction of trade?

If UD have concerns about distributors selling product to online retailers, they need to look at their pricing/distribution structure currently in place with existing B&M retailers, to ensure they can compete on price.

This may sound good in theory for B&M retailers, and Im sure theres a lot of smart people at UD who have thought this through – but wont this ultimately slow demand of new products, if customers know they will be able to get it cheaper in 3 months time?

Make it more profitable for B&M UD – and everyones a winner.

10

Lol, WWTFD (What Will Tom Fish Do?)

11

I agree with chris. I started selling singles and sets a few years back when I cold no longer get from a local hobby store as it folded. The comic / gamers store we do have charges $50 plus we have 13% tax so $56.50 for 1 pack of SP game used. I cannot afford that for myself let alone buy and try and make any profit what so ever.

12

This idea sounds great but if the AIR’s can sell it at whatever price they want including preselling then isnt this basically the same thing as right now. As for the person who buys direct to make sets and sell singles, if you dont have a store then you shouldnt even be allowed to purchase directly anyways. Whoever set you up a account should be fired! Accounts for people with B&M’s or dare I say Internet sites. You should open you up a store and then see if these B&M prices are high. I’m guessing your thoughts on the matter would change.

13

Hello
For the past 10+ years Blowoutcards.com has strived to provide its customers and the collecting community with competitive prices,excellent service and an informative and fun place to shop on-line for sports cards and supplies.

Upper Deck recently announced a new distribution program. A requirement to sell their products on line as an Authorized Internet Retailer (AIR) is that you must own and operate a retail store. We are currently remodeling an area of our facility and will be operating a retail establishment. The date of our Grand Opening will be announced shortly. According to the new policy owning and operating a retail store does not automatically permit one to sell online as an AIR. We can only assume that Upper Deck’s intentions for this new program are continue to promote and maintain fair free market competition throughout their distribution network. Blowoutcards has had email correspondence with Mike Phillips,Director of Hobby Sales, over the past week and we are planning on discussing the program and learning more about the details at the annual Industry Summit in Las Vegas next week.
We want to thank everyone for their emails and interest and ensure our community that we will continue to do all we can to provide you with the same level of service,selection and information that you expect from Blowoutcards.com

14

hey kyle, isnt the 13% tax what the govt gets, why blame the b&m store for that? Blame the govt! If more people actually bought all their stuff from Hobby shops instead of fly by the night website, or walmart-style Leaders in online sales then b&m stores would be cheaper.

For Blowoutcards.com, how is converting some of your warehouse actually opening a retail store? Thats seems like a cop out trying to get pass UD’s rules. I would hope that UD strictly enforces the stores have to be standalones. maybe I should ask my local Micky D’s if I can open a store in their lobby so I can get approved!!! LOL

15

I agree with previous post. Blowout cards is doing exactly what Upper Deck is trying to stop. I will convert my garage into a store and sell to my neighbors 5 year old a card for 10 cents.

I understand why upper deck is doing this but let’s all be real. There is no way upper deck can control the market the way they want. They Want to control cross border selling aswell. Last time I checked that’s illegal on upper decks side. They have NO power to authorize that.

In regards to eBay. That site us a joke. It’s great for buyers and horrible for sellers. The idiots who sell boxes and cases for cost are stupid and they are the ones killing the industry. I have no problem with online retailers but selling at cost??

If is now 2011 and majority of people sell/buy online. I myself sell online but charge retail prices for boxes and sell plenty. If people just stick to the retail value and stop blowing boxes out like Blowout cards and Dave and Adams the industry would be better.

16

(In regards to eBay. That site us a joke. It’s great for buyers and horrible for sellers. The idiots who sell boxes and cases for cost are stupid and they are the ones killing the industry. I have no problem with online retailers but selling at cost??

If is now 2011 and majority of people sell/buy online. I myself sell online but charge retail prices for boxes and sell plenty. If people just stick to the retail value and stop blowing boxes out like Blowout cards and Dave and Adams the industry would be better.)

Why are they stupid? Because they choose to make only a little profit on each box instead of a lot? Because they have to sell plenty of crap before they can get a decent allotment of the high end product? Because they provide a service for some of us who don’t want to pay inflated prices for cards? I have no problem paying fair price but I am NOT going to be guilted into paying too much just because someone says I must. If I were to buy from a B&M I would have to drive 2.5 hours, real nice. There are a few B&M’s out there that I buy from but they are also on line and their prices are competitive with others online.

17

I invest a lot of time, energy and money in maintaining a brick and mortar store for the convenience of my customers. Not a day goes past that someone doesn’t tell me about some weekend warrior who is pre-selling product 5 or 10 dollars less then me or how some guy on eBay is selling boxes or packs dirt cheap compared to my price. I have additional costs like advertising, warranties and such to cover that these guys don’t. I applaud what Upper Deck is doing and hopefully Panini will come through as they promised when they got there license. To date I have seen nothing from Panini as far as protecting my business or product investment.

18

Understanding what UD is attempting to do is what may lead to a turn a round for this hobby industry. On line sellers may or may not go away, Blowout Cards may or may not get a license, and by the way, did they in the post above advise UD and everyone else how they will cheat the system and the AD script did not work on me. See what happens there. Also, it is not in any way a violation of any regulation etc., to control your distribution network as you see fit. Look at our Auto Mfgrs., Microsoft and any other company that has any sort of direct distribution network. I do not feel bad for the card show or Flea market sellers. We as store owners are in for the long haul, we pay taxes, we may now be able to compete. I also do not understand why comments are made that store owners do or want to make big bucks on wax, we only want a competitive opportunity to put a few bucks in the bank, LOL, we got rent to pay.

19

@pete Sr, and Doug,

I might not have a Brick and mortar but just like you I’m a LLC. I have my resale tax ID and FEIN. I put in just as many hours as you do if not more I work 40-60 hours a week, pay sales tax, keep insurance on my product, your overhead is not that much higher than what I’m paying in fee’s, insurance, incidentals and other assorted costs. There is no possible way you guys can keep and stock every possible card in existance, there is a need for people like myself to sell online. But instead you guys Cry and Cry and Cry.

I’m sure Upper Deck will remove this post though…Because they are like Censor Nazi’s.

20

Also lets say there are 1000 people like myself Buying wholesale right now because we have retail sales tax Id’s. Now if us 1000 people are spending $8000 a piece on new product the day it drops. Now we will not be able to buy for 90 days. So for 90 days that is a 8million dollar product loss.

I highly doubt that Brick and Moratrs will be able to make that up.

21

The main problem with this plan is that Upper Deck is failing to realize how much the “case breaking” dealers support each and every release. The better idea would have been to continue open selling to all true businesses whether they are Online or B&M. Then institute a Minimum Sell Price agreement, and then use the same employee(s) that they are using to monitor internet traffic, to monitor the Sell Prices, and then flag violators on the distributor level. This would stop dealers from dumping product on the internet, while allowing the rest of the market to compete on service. It would also allow hundreds of dealers that purchase product in bulk to break, to continue having singles, sets, team sets, and high end cards ready for collectors to check out and purchase shortly after release. The online singles dealers are the ones that create the buzz for products, they also allow collectors to see that there is acutually value in a $100 unlicensed or NCAA hobby box. No amount of release parties, box breaks, or pack wars at a local card shop will fill that void. If collectors don’t see hot singles in a product they will move onto the next product.

22

My brother buys about $15 to 20 thousand dollars evry year on upper deck wax that he gets from a company out of Toronto and now they told him he wont be allowed to get no more or he can wait for up to 3 months to get it now this really sucks bad for him, What kind of answer do you have for him, just go out of work maybe, we will find a way around this some how.

23

Chris I agree with you, I open cases I don’t sell wax. I spend over $20,000 a year on wax. I only sell hockey and now I’m shutout. I will not be spending that money anymore. B & M people open your eyes, guys like D & A will still be selling online and you have to hold products for 90 days before you can sell outside your B & M store, while they can sell the entire 90 days online. This is what I forsee happening, products will be dumped after 90 of their release. If I was a collector I would just wait for 90 days and pick up boxes being dumped.

24

Its been five months since Upper Deck announced their new distribution program, and from my vantage point as a B&M Storefront, all aspects of the hobby with regards to Upper Deck products have significantly improved and are going in the right direction.

When I opened my storefront nearly 20 years ago there were more than 50 Sports Card Shops in San Antonio. Today there are only two true Sports Cards Shops in San Antonio. Some people say its because of poor business practices. There is some truth to that, but the fact that fewer people collect today, and manufacturers produce 67% less product than they did in the late 90’s, points to a bigger problem than shop owners don’t know how to run a business.

Over the last 12 years overall hobby sales have continuously gone down with minor exceptions. There are many reasons why the hobby has declined, but the major reason I hear for collectors leaving the hobby is lost value of single cards. Most point to over production as the cause for loss of card value, but I point to lack of demand/collectors as the main cause. We must bring in new collectors and keep them.

B & M Shop owners are the face of the hobby to new collectors. We answer their questions and try to make their introduction into the hobby a pleasent experience. I see my store as an extention of the Upper Deck Company (and the other manufacturers). I believe my job as a B & M Hobby Store Owner is much more than selling product; its making all aspects of collecting/trading/selling a pleasent experience.

I just want to say, “Great job Upper Deck. You had the guts to do the right thing with your distribution policies. The Hobby is improving and will continue to improve.” My customers are happy and continue to walk in my doors.

25

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26

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