Fanatics Place New Limitations On Hobby Shops
Hobby shops that buy directly from Topps must sign on to brick-and-mortar retailers’ terms and conditions. This is a standard procedure. However, the terms have reportedly changed.
Now Fanatics now demands that card shops agree to new terms, which many owners find upsetting. The new six-page contract includes stipulations limiting their ability to sell unopened wax to retailers and to run breaks online.
So now we see Fanatics place new limitations on hobby shops. What does this all mean?
Topps’s new agreement requires brick-and-mortar card shops to sign on to 17 terms and conditions. Some of them are pretty standard. However, certain elements will reshape the relationship between card stores and Topps. They seem to have been crafted to facilitate direct sales between Topps and consumers. As such, they limit the ability of hobby stores to use Fanatics merchandise as they have done so far.
It is worth noting that Topps can deprive card stores of service at any time if they do not abide by these terms and conditions. The agreement states: “As a condition of receiving and maintaining access to an account, retailers shall comply with the terms and conditions of this agreement, including the code of conduct.”
Fanatics place new restrictions on hobby shops regarding business-to-business sales
Many card shops sell their boxes of unopened wax to other retailers, whether brick-and-mortar ones or online card shops. But Topps now aims to put a stop to that activity. According to the agreement:
“Products purchased through an account are for distribution through the store(s) identified in the account information attached hereto only. For clarity, products are for resale directly to consumers in physical retail, brick-and-mortar environments only, in their original, unopened form -i.e., no business-to-business sales unless otherwise agreed by Topps in writing. Retail shall not use its accounts for personal shopping, and products shall not be used for repacks unless authorized in writing in advance.”
“Retailers may use products for in-store breaks, provided that; breaking slots may not be sold or solicited online or to anyone not present in the Retailer’s store at the time of the break. Further, the direct buying program is for established brick-and-mortar stores only, which have four walls and are not contained within a larger store or environment. Online-only retailers (including retailers with a majority sales volume derived from online sales) are not eligible for this direct buying program.”
Just so you know, Fanatics means business; they added to this clause the warning: “Any account found noncompliant with the foregoing may be terminated immediately.” And with extreme prejudice, no doubt.
Fanatics place new limitations on hobby shops and micro-manage them
Aside from the more controversial elements in this agreement, as presented above, we were also surprised to see the lengths to which Topps will control the day-to-day operations of card stores. Here are a few examples of that:
The company has strict regulations for displaying its products in its detailed Retail Standards section. That includes their unwillingness to show products adjacent to those from other companies. “Topps products must be neatly organized and displayed to customers and sold in a Topps-only section unless otherwise approved by Topps.”
Therefore, if a retailer wanted to display, say, the new 2022/23 Topps Chrome Overtime Elite Basketball boxes near the Panini basketball cards, as one would expect, they would be violating the code of conduct.
You might wonder how Fanatics would know how their products are displayed. Well, they thought of that. A further clause in their Retail Standards section requires that “at least two times a year or otherwise at Topps request, Retailer shall provide pictures of all Retailer’s retail locations and its Topps retail display.”
What do the new limitations mean for hobby shops?
At first glance, the new rules are meant to crack down on breakers. For many, that would be welcome news after so many scandals regarding their conduct in distributing cards. However, this appears to target brick-and-mortar card shops that also perform breaks.
Therefore, instead of targeting some of the more unscrupulous breakers in the business, these measures constrict some of the business’s most beleaguered and beloved actors: the local card shops.
As we know, many hobby shops have seen a decrease in foot traffic due to changes in the hobby over recent years. It started with the wide availability of retail products, which often offered hits for a lower price.
Then the wide availability of hobby products on eBay and other e-commerce platforms further ate away their profits. Finally, breakers offered spots for many of the most beloved (and expensive) products. It is also worth noting that all of these new actors also ate up the allocations of boxes available to many hobby shops.
How local card shops have adapted
Therefore, local card shops have done their best to fit into the new landscape. They started offering breaks online. Others offered repacks to their customers with promised hits. The more established and trustworthy local card shops had an advantage in this area. Instead of buying repacks and break spots from abstract strangers on the internet, customers could purchase these services from people they know and trust.
We don’t know how carefully Fanatics will enforce this law. But one thing is sure: the threat of cutting off shops from supply is massive. It was bad enough if Topps cut you off a couple of years ago, and your local card shop couldn’t stock any licensed baseball products.
But now, Fanatics is set to have a monopoly on basketball and football as well. That means that any card shop cut off from the supply is basically dead in the water.
The Dealer.Net angle
Another beloved hobby institution that may be affected by these changes is dealer.net. If you don’t know, the website serves as a “leading online e-commerce site for thousands of sports card, gaming, and collectibles businesses as both a marketplace and a source of timely information. If you actively participate in these industries, we are confident that the information available will enable you to make more informed decisions for your business. Since product prices fluctuate daily based on secondary market supply and demand, having this information can make your business more profitable.”
The platform specializes in selling boxes at almost wholesale prices. One of their primary sources is card shops offloading extra products. If carefully enforced, the new laws could jeopardize their entire business structure. Of course, Fanatics may prefer to remove this vibrant market place which it cannot control.
What are reactions across the hobby of Fanatics’ plan
Reactions are clearly divided between customers and card shop owners. Many customers are happy to see limitations on breaks and repacks. However, it is unclear if these will be cracked down on meaningfully outside hobby shops.
Meanwhile, this could have devastating effects on some hobby shops. Especially those that rely heavily on breaks. Some of the biggest and most beloved breakers in the business combine brick-and-mortar shops with online breaks. Some examples that come to mind include Layton Sports Cards and Minera Sports Cards. Will these mainstays in the hobby space, and many like them, have to choose between breaking and operating a brick-and-mortar shop?
Why is Topps placing new limitations on hobby shops?
Because of the problems these new regulations will cause card shops, it has fed into a long-standing suspicion that Fanatics aims to kill off some of these traditional hobby middlemen.
The company has made clear that they intend to provide cards directly to the consumer and cut out the middleman. Of course, Topps has been doing this for many years through this website. But as anyone who tries to buy through it knows, the allocations are traditionally quite limited.
It doesn’t take a genius to link this development to the unveiling of Fanatics Live, a live-streaming platform. The ambitions of this company to make inroads into the break space and perhaps monopolize it was always likely to place it in a conflict of interests with the smaller card sellers.
When Fanatics announced the launch, this writer lamented that: “Fanatics will undoubtedly be able to out-promote their competition. And having a one-stop shop for breaking is much easier than looking around for the best deal. Fanatics also has another massive built-in advantage. A database of sports, well, fanatics, that it can leverage to its advantage. Between all the people who have purchased Fanatics apparel and Topps products, they have the details of close to 100 million relevant consumers.”
The new standards are probably a step towards realizing their goal of bringing a majority of breaking activity onto their platform. Knowing the ruthless but effective practices of this company, it will likely not be the last. It will not help matters that eBay has also launched its own streaming channel, eBay Live (yes, seriously original). Therefore, Fanatics is motivated to use all means at its disposal to cement its share of the breaking market.
The final word on new Fanatics limitations
The steps Fanatics is taking to regulate breaking and repacks could go either way. They may benefit the hobby, hurt it, or quite possibly both.
We have already extrapolated on the potential harm here. It could remove many beloved institutions from the pursuit. The local card shop is really what turns this hobby into a community. You know, a real one rather than a virtual one. It is where most of us have our roots as collectors. If Fanatics is undercutting these stores, intentionally or unintentionally, that is bad.
On the more positive side, this could be a move towards regulating the wild west world of breaking. eBay recently announced it would only allow approved sellers to sell break spots on its platform.
Now Fanatics are limiting the actors who can break their products. Suppose there is a general move to regulate that problematic space.
In that case, it will be suitable for everyone but the bad apples as long as Fanatics does not throw out the baby with the bathwater and kill essential actors in the hobby.