I recently sat down with DJ Kazmierczak, the VP of Sales and Product Development at Panini, for a podcast interview. I have transcribed, abbreviated, and paraphrased portions of the interview below. You can also listen to the full interview here:
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I hope you enjoy the conversation.
The Interview
Mike: DJ, Welcome to the show. One question I often hear deals with a sports card product lifecycle. When do you start planning a product and what is the latest you can make a change before release?
DJ: The lifecycle in total is about 9 months. In starts to pick up speed about six months, and the final sales forecast is due 8 weeks out from ship date. As far as making changes, you’re locked in about 12 weeks out, but there is some flexibility as close as 8 weeks from release. It’s a long process, and that’s something a lot of people in the industry don’t think about. They think because it’s paper you can print it pretty quick, but with the technology we use (optichrome products) it takes longer to manufacture.
Mike: What would you say is the most challenging aspect of getting a product ready? Would it be the autograph content?
DJ: It can vary. Approvals from the leagues can take a while sometimes. With our long term partners like the NFL and NBA there is a comfort level that has been established, but with newer partners like the UFC partnership, we have to find a level of trust.
Autographs are number 1 because we don’t fully control the process. We run 7 million autographs a year through our products, and since we don’t have full control over the process, that makes it difficult to navigate.
I want people to try to imagine the context we’re dealing with. To try and service this growing industry it takes a lot of production elements and investments. These autographs are an investment. The business has grown 5x since 2012. That’s massive growth.
Mike: One of the impacts of that growth is a shortage of product on retail shelves. As hobby prices have gone up, the value proposition of retail products has shifted. Can you help paint a picture of what control of the process you have at Panini?
DJ: There is only one way in to get your product in to Target and Walmart. Excell Marketing and MJ Holdings. We have to partner with them to get product in there. We can sell them product or not, or sell them more product or not.
We are empathic that right now you pretty much have to make an appointment to get product. That’s not our goal or what we want to do, but demand is at the point where people are willing to stand in line to get it. We’ve changed service schedules, we’ve asked that they place product after hours, we try to address reps giving tips on when they will be stocking, etc. We’ve increased production of retail product, but demand is still so high.
Mike: How does Panini attempt to balance meeting the increasing demand by increasing supply without getting to a point where there is too much supply.
DJ: The reality of manufacturer exclusive licenses should keep us from repeating what happened in the 90s. When you have long term exclusive licenses, you know you need to protect the market long term. You have a built in responsibility. One of the reasons we brought product development and sales under the same umbrella is so they don’t end up working against each other. We work together very well to find that balance. Autograph content limitations help with production levels, but the use of parallels has allowed us to still increase production.
Long term, you have to have new users. To do that, it usually occurs in the retail environment when a parent buys cards for a kid. Our core business is the hobby channel, but retail is still important. But keep in mind, based on what we’re seeing on the secondary market, we aren’t even close to meeting demand at this point.
Mike: How do you try to take full advantage of the hot market we have right now without burying yourself if the market starts to pull back a bit?
DJ: I think the long term exclusive contracts force us to have both a long term strategy as well as a short term one. 20 years ago it was pretty much “get what you can now and don’t worry about later”. It’s very different now. At one point not too long ago, many said the internet was “bad for the industry” due to the ease of price comparisons. It ultimately has forced people to adapt and it is stronger. One of the best ways we can protect ourselves is to continue to attract new collectors into the industry.
We also look at the lifecycle of the brand. Certain things are capped. We’ve made the same amount of National Treasures for several years. But we do introduce new brands. We don’t really increase the runs of individual brands too much, but we do increase the number of brands we produce.
Mike: Some manufacturers are dabbling in subscription programs and on-demand products. How do you see that evolving at Panini?
DJ: At the Industry Summit we introduced a “Kid’s Crate” program that will come in the 1st quarter of next year, so that kind of hits the subscription program. We’re looking at a couple other things too. On the Instant and On-Demand side of the business. We’ve been hoping it would gain more traction. It’s bigger than when it started, but it hasn’t jumped to the levels I thought it might. It’s an active part of what we do, but there might still be somewhat of a visibility issue that collector’s don’t know what we do.
Mike: Thank you so much for coming on the show!
DJ: Thanks for having me!
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