Earlier this week, Wizards of the Coast announced they will be teaming up with Amazon to sell product direct to the consumer online. You can check out the official announcement yourself.
I’ve spent a lot of time (on both sides of the counter) at LGSs (local game stores) and am always rooting for these establishments to be successful, so I was surprised by the announcement. All week long, people have been discussing the effect this announcement is likely to have moving forward, and I’d like to share my take on the situation.
The "Experimentation" Article
I found this article to be a little bit confusing and perhaps a little bit bizarre. In particular, the article does a weird thing by burying the lede about the Amazon partnership by introducing it as one of many "experimentations" in terms of Magic promotion and branding.
Here’s what we do know:
Magic has long been available on Amazon from various stores and distributors, but we've formalized a direct relationship with Amazon in the United States to give players who order their product through that channel a better experience. (In many parts of the globe, Magic has already been available directly from Amazon and other online retailers). To that end, Magic will also be available directly online from Walmart and Target in the United States as well.
–"Experimentation", Wizards of the Coast
Is this an experiment or a fundamental shift in the way Wizards plans to sell Magic in the future? I feel like this deserves an article of its own!
The article does stress that the transition shouldn’t effect LGS negatively and that they are going to continue to support the various promotional programs that are already in place. Which is great news for stores and players alike. The article also points out that consumers can already buy $90 boxes online, and so Wizards throwing their hat into the ring likely won’t change too much for the average LGS. The article also suggests that Wizards is targeting customers who are already buying online and not targeting the customers who are playing at brick and mortar stores.
How Will This Impact Retailers?
Well, we don’t really know how this will impact retailers just yet, because the Experimentation article doesn’t provide a ton of concrete information about exactly what and for how much Wizards will be selling on Amazon. So far, it looks like they have primarily confirmed booster box sales, but haven’t locked in a price. I assume that must be coming soon, since Guilds of Ravnica is about to hit shelves worldwide.
The lower Wizards sets its price, the greater the pressure put on retailers to also lower their prices. If Wizards is selling boxes for $90.00 (with free shipping from Amazon Prime), the LGS will likely have to follow suit or risk losing customers to the web. The margins are already razor thin, as retailers typically expect to pay between $75 and $85 per box depending upon distributor. Obviously, retailers make the most money selling packs at the register because the markup is higher, but still, every box counts toward the bottom line.Quick
Quick Interview with Pam Willoughby
I’ve spoken to several individuals involved with LGSs, and there is some nervousness about how things are going to play out. The person I trust most when it comes to these things, Pam Willoughby (the owner of RIW Hobbies, the LGS I typically game at) had some calming insight into the situation. She basically did the equivalent of the Aaron Rodgers’ “Relax” presser.
Brian DeMars: Does the announcement change the amount of sealed product stores are likely to sell or order moving forward?
Pam Willoughby: “I don't think so. I'm fairly confident our current customers are not going to order from Amazon. It does cap our price at $100.00 in store. Our midnight price will match Amazon, we've done midnight at $90.00 for a while. I believe their theory might be spot on. People who don't have regular access to the product now will. When we went to GP Lincoln years ago, we sold a ton of product to local people as they didn't have an LGS nearby. Granted, it was mostly the boutique items – Commander, Duel Decks, Fat Packs, and so on. Their only source was the local Walmart.
We really need to know more. Does Amazon have an endless supply? I haven't asked about distribution since wizards stopped dealing directly with us. Is the product still all being shipped to the Wizards warehouse or is it going directly to the distributors? We'll see right out of the gate with Guilds of Ravnica. It's looking like a strong set, so it will be interesting to see if Amazon sells out. Remember, people were allowed to sell Magic on Amazon before, you had to give WOTC your user ID and the gave you the logo stating you were an "authorized" online seller (same with eBay). We have the logo at the bottom of our website as does SCG and most of the big guys.”
It is also worth noting that RIW Hobbies has a strong and very loyal customer base in Southeast Michigan where they get large tournament turnouts on a daily basis. If any LGS is set up to weather this type of storm, it is this one. However, smaller or newer game stores with less-established customer bases could potentially be in a riskier position, which is something to consider when thinking about the potential effects that could come down the road.
BD: “Do you know if the Amazon Online Sales applies to other sealed products, such as Commander Decks or FTV releases?” (I understand this information is not yet known - but I was hoping she had heard something. Her response was interesting and I wanted to share.)
PW: “They haven't made any announcements about the other items. They are usually short-printed and allocated, so I doubt it. Commander Decks are always short and FTV's were X per store, usually around 20.
As a side note: WOTC has been at this for many many years, and they understand the need for the LGS. They aren't going to cut off their main suppliers of Magic to the general public. At last count, they had roughly 4200 stores in the US. I believe most people are overreacting to the situation. Come on, Brian, is someone like <local player> going to leave us for Amazon? My only concern is that boxes are now capped at $100 until Amazon runs out (if they do)? I'm a little more concerned with the items Hasbro is selling. Their products are available directly to the public and not to us. The Comic Con boxes were the first thing and now Mythic Edition. We plan on purchasing Mythic Edition at full retail, as we believe the breakdown value will be absurd.”
Mythic Edition has been confirmed as a Limited Print Run item available for sale through CFB at Grand Prix through the end of the year.
I agree with Pam, 100 percent. What we know so far doesn’t change much going forward. $90 boxes already exist, so WOTC offering the same service doesn’t change much – as long as they don’t start offering too many new services that LGSs can’t provide.
New premier-level products coming down the pipeline that would only be for sale via Wizards Amazon Online and not through other retailers would be concerning since items like Commander decks and From the Vaults are always such hot sellers.
How much sealed product Wizards plans to make available directly to customers is also left to speculation at this point. Will availability of new sets remain an issue (as was the case with Dominaria) or will boxes always be available through Amazon?
It certainly makes sense for Wizards to dip its toe into the water and begin selling product directly to consumers. Game Workshop, for instance, sell miniatures online through both their website and at the LGS, and it’s a perfectly fine relationship for everybody. While we still need more details, the only thing that will really inform of us of the impact of this move is time.