Consumers don’t often know all the intricacies of how the product they buy ends up at the store. The logistics and efficiencies of such a process, though, have major impacts on availability and cost of a product.
Fanatics is taking a major step at streamlining the process of card distribution. Some of the bigger and more well-established hobby shops have a direct link to the card companies and order direct from Topps. Other shops and breakers must rely on a distributor to obtain product. Many card shops that do have a direct account with Topps still use distributors to obtain additional allocations of product. The largest distributor is a company called GTS. They have had the longest contract with Topps in the hobby.
Last week, news trickled out that Fanatics would not be renewing Topps’s license with GTS. That means that suddenly the largest distributor of cards won’t be distributing cards for Topps anymore. The news has yet to be officially confirmed by either side, but many reputable sources have reported it as true.
Without a confirmation, we don’t know what direction things will go in, but no matter how things shake out, it is almost certainly a huge win for the consumer. Why? A distributor is a middleman, and the more hands a product passes through, the more people who need to make money, which gets passed on in the price of a box or packs. GTS also holds product back after release day in order to be able to restock stores, but restock costs are almost always higher than initial costs, as they charge the market rate for a product.
There are a few directions this news could lead.
1. Fanatics could handle the distribution by themselves. By setting up rules that dictate who can order Topps products directly, Fanatics can earn more money for themselves, while simultaneously allowing shops to pay less and, therefore, charge customers less. This is a win-win-win scenario for all involved, and it wouldn’t be all that unexpected, as Fanatics has spoken of wanting to control more of the hobby from start to finish.
2. Fanatics could choose to sell more direct to consumer rather than through shops. At its core, Fanatics is a direct-to-consumer company. However, they have discussed the importance of hobby shops many times, so I wouldn’t think shops would be completely cut out of the card-buying experience. However, most people do expect some more direct-to-consumer card options from Fanatics in the future.
3. Fanatics could divvy up GTS’s accounts and give them to other distributors. It’s entirely possible that other distributors have a model Fanatics prefers, or things would make the process better for all involved.
No matter which way things end up, little will change for consumers in the short term. The changes may not have any appreciable effect on collectors at all, or they may have a positive impact on pricing. We’ll wait for an official announcement, but in the meantime, it’s business as usual through the end of the calendar year.