Resiliency & Risk Management In Times of Uncertainty
Sy JohnstonThis week we have a guest author, who is a long-time seller on TCGplayer - we hope you enjoy the shared knowledge from one of your peers. If you are a TCGplayer seller and have an idea for a seller-education article, please email us at success@tcgplayer.com.
Team TCGplayer
There are many things that are out of our control when it comes to vending TCGs. Will someone bring in a collection to sell today? Will there be a pandemic forcing my store to close this year? Setting yourself up to be resilient to factors like these will give you security and the ability to seize more opportunities, and that is what I want to talk to you about today. My name is Sy Johnston, and I own the card store inside Giga-Bites Cafe. I am not the biggest risk taker, but there are several things that you can do to minimize risk and maximize your chances for success.
First of all, having a well trained staff that you can trust and well defined and efficient procedures are great ways to minimize risk. If at least one person on your staff is someone that has got your back, you can concentrate your focus on the areas that will provide your company the deepest impact, such as planning, thinking, and making the best decisions possible. This is much easier, when you have the fundamentals covered by more than just yourself. But staffing costs money, and to minimize risk, I always like to have a solid source of revenue with low costs-of-sales to ensure that I can more than cover the costs of staffing.
When I talk about minimizing risks, I'm really just talking about keeping your expenses low and not over-ordering products that will tie up too much of your money. This will allow you to keep some cash available for discovered opportunities. Many doors are opened, if you have cash in the bank. A customer with a big collection could walk in the door, a distributor might be looking to cut a deal, or a new set could be announced that is sure to be gangbusters and you know you should go deep!
Getting to the point where you can order what you need for your store and having extra cash on hand is no easy task. It takes dedication. If you're starting off well funded, then that's great! But if you are grinding from the bottom, you have to be willing to work 70+ hour weeks, only pay yourself enough to cover your bare essentials, and save up! Having the discipline to save consistently will give you an advantage over those who do not. Establishing a line of credit with a bank is also good for keeping opportunities open, but remember, if something should go wrong, you're still on the hook for what you borrow!
I have personally made some of the commitments described above for about 6 years, but not everyone is in a position to do that. In order to manage cash and risk when I first started, I only stocked sleeves 4-deep; I just restocked often. Of course you want to get free shipping from your distributor, so it is important to plan for reshipments of different products to be delivered at the same time, so that you don’t waste money on shipping! You want to be as efficient and cost effective as possible without sacrificing too much quality, for example, making use of every piece of a product is important for your ability to scale, while containing costs.
Another way to boost your efficiency is to make use of Direct by TCGplayer. With Direct, you can move cards in large volumes that you could not otherwise move. It can almost be considered free money, considering that I would never be able to move hundreds of copies of some common locally. As long as you are able to efficiently sort cards and fill the Direct Reimbursement Invoice, it can really give you the cash to grow.
Once you have some financial cushion in the bank, you can afford to take some calculated risks and maximize your chances for success. Once an opportunity comes along, you have to have the strength to pounce! Back in late 2018, Wizards of the Coast spoiled all of the box toppers for Ultimate Masters before we had to lock in our preorders. This followed Iconic Masters and Masters 25; both duds that left our cash tied up for a year. But with full knowledge of the box toppers, I felt that this time the set would be gangbusters, so I went in hard and hit big! It was definitely scary, but I had enough cash saved up to buy what I considered a lot of Ultimate Masters and did not have to risk putting the business in a precarious position should I be wrong. The lesson here is to take calculated risks and be willing to bet big when doing so. If you're into Magic, a good rule of thumb is to look closely at sets that are WPN exclusive and not print to demand. Mystery Boosters was an obvious hit to me since we got to see some excellent reprints before having to lock in preorders and knowing it was WPN exclusive and likely only one print run. The distributor cost was also surprisingly low.
There is definitely a cap to how much product any one store can move. There is only so much labor, so much space, and so much demand. Once you figure out how much cash you need to buy as much of the newest set as you can handle, any remaining budgeted cash can be invested into other products. Ideally that would be sets like Ultimate Masters or Mystery Boosters. Odds are good that eventually, one of those “left over” products will shoot up in value pretty significantly and all-of-a-sudden you've got extra profits on your hands! That's the fun part. The yearly commander products are a very safe bet to increase in value. I purposely buy extra Commander every year as long as I have the required amount of liquid capital to continue operating the business. I started that with the 2018 Commander product; I think it's the worst Commander set and it has still appreciated at a fantastic rate!
You may not be able to do much to control when a collection will come in the door, but you can order product from distributors almost any time you want. Presales for TCGs are usually profitable, but sometimes preselling everything for the going rate will not yield a profit. It takes pure guts to hold a card that you feel the entire market is undervaluing and watch its value drop every day while you hold a hundred copies. Throne of Eldraine presales were terrible for us and definitely tested my ability to stomach the risk for holding cards in a dropping market. Fortunately, my instincts were correct and several cards that I refused to let go of increased in value and enabled me to make a profit. There are also times when presales are strong and the correct move is to presell quickly. Theros Beyond Death was certainly in this boat. The foil full art Nyx lands were going for about $10 each, and knowing that you get 2 in every collector's pack meant that this value could not hold; so I presold every copy I could reasonably expect to be able to open. It takes a lot of experience to make calls like this, and is probably the biggest risk I take operating the business.
I hope you found this discussion useful. Thank you for your time, and I hope you find the motivation you need to make it happen!