The current regional setup
At the moment, we divide the global market into several regions. When you sign up with your Mage account, you have to choose the region you’re in. After that, you only see offers from the region you chose in order to avoid issues like intercontinental shipping and customs. Allowing only same-region transactions also ensures that shipping times are reasonably low.
However, there are some services that vary by region. Authentication and bulk sales are currently available only to users in the region of Europe. The reason for that is primarily that our only operational warehouse at the moment is located in Kiel, Germany. In addition to that, we have a sales team on the roads in Europe, who regularly helps us get new local partner stores all over the continent to list their inventory on Mage Market. Consequently, the number of offers on the platform is far greater in Europe than anywhere else.
Why this large divide in services?
The primary reason why we can’t set up a warehouse and sales team in North America, like we originally planned, is that after trying for several months now, our visa applications for the USA have been declined. We talked about this delay when it first came up in 2019. Without a company HQ in North America we ran into several challenges: We can’t respond to customer service requests from North America as immediately as we’d like to because all our customer service employees work in European time zones. Without the ability to check orders that would normally go through our warehouse, we have to refund customers for errors made by a seller, causing a number of unprofitable transactions. Due to lack of a sales team and partner stores in North America, we could only offer fewer cards at affordable prices than we would want to. Consequently, our platform lacked unique selling points in North America, given that many big Magic retailers authenticate their cards while we couldn’t offer competing prices.
The Klarna incident
Another problem was made abundantly clear by the initial response from US-based Magic players to our announcement that we now offer Klarna monthly financing as a payment option on Mage Market: A lack of local and cultural understanding of the North American market. While Klarna is an industry standard for ecommerce in Europe (and is not viewed as problematic here), the concept went over very poorly with our US audience, due to a cultural animosity regarding anything resembling a loan.
Are people actually thinking that @magemarket is loaning people money to buy more Magic cards? That’s absurd and as misinformed one can be. The payment service Klarna is nothing the like.
It really takes so little for so many people to start a ruse at #mtgtwitter.
— Joel Larsson (@JoelLarssonGG) February 19, 2020
Watching @magemarket‘s AMA I’m convinced that the loan/financing program had good intention. Apparently Europeans and Americans have a very different perspective on credit. I still think that buying Magic cards (or any luxury item) with money you don’t have is very foolish.
— Saffron Olive (@SaffronOlive) February 19, 2020
Even though Klarna is heavily regulated by EU law, and many precautions against unhealthy usage are in place, the displeased (and partly hostile) response proved a misevaluation of the market response on our part. Our idea of allowing people who’d buy a Magic deck over the course of several months to play the deck on the first day of them spending money on it, instead of on the last, clearly didn’t come through. While we at Mage, as well as our influencers who recommended the use of Klarna, saw the potential for this to make formats more accessible, we clearly overlooked how our idea could resemble less-regulated predatory practices that have occurred in the United States. While our AMA on the topic and the rolling back of interest-based financing options seem to have turned the responses around, the lack of cultural understanding was still made obvious by the incident.
— Peer from Mage (@Peer_Rich) February 19, 2020
Between unprofitable transactions, marketing spendings and an inability to offer the full suite of our services in North America, the NA market caused 25% of our total costs, while only a tiny fraction of our buying users actually came from that region.
As a consequence, Mage is going to pause the expansion into the North American market starting in April 2020. This includes stopping our marketing campaigns that are focused on a US audience, such as influencer marketing through personalities with a large US-based audience. We are proud to have been able to support awesome people like Ben Stark, Ally Warfield, Jess Estephan, Chase Carroll, Aaron Barich and Hurley Burley Art for some time, and we’re grateful they elected to represent our brand. We wish them all the best in the future and encourage everyone reading this to support these creators, as they are among the best people in MTG.
We will also pause our sales towards game stores in North America and instead focus on Europe and especially Germany, where we have a large customer base and are able to offer all of our services in full. During this time we are going to address the issues that lead to this decision and prepare a new market entry in North America when we are better set up for success. This means we will return once our visa has been granted, we can set up a warehouse and sales team in the US and offer our full services and better prices across all regions. In order to give us the time and resources we need to address these challenges, we also have decided to deprecate embedding the functionality of Mage Scanner into Mage Market.
A big thank you goes out to everyone who has supported us so far across the world. It means a lot to us that you believe in our idea of making the best platform for buying and selling Magic cards online, and we will continue to do so. We’ll be back!