Pucatrade and a modern trading network
For those who know me, I’m a pretty serious Magic: the Gathering player. When I used to live in Boston, it normally wasn’t too difficult to trade for any random rares that I might need for my decks, due to the relatively large playerbase that we had at Pandemonium (The Local Gaming Store in Cambridge). But what does one do it they don’t live in the middle of a major metropolis with a large and established playerbase?
Enter pucatrade.com. Pucatrade is a website that looks to help facilitate trades in Magic: the Gathering cards between players across the world. Should your local community not have anyone offering, say, a Sensei’s Divining Top for trade, chances are that at least someone in the world would be willing to trade you the Top. Pucatrade acts like a sort of clearinghouse of sorts: You would send in cards that you are willing to trade in exchange for “Pucapoints”, which can then be exchanged for cards that you want (100 Pucapoints ~ 1 US Dollar). In theory, Pucatrade should be able to eliminate the necessary double coincidence of wants needed for a trade and improve the card access quality of everyone in the network. Why then, after its initial burst of popularity, has it slowed down?
I believe that at least part of this can be explained through the threshold adoption model. A service like Pucatrade is inherently reliant on building a large user network to drive adoption. Consider: One of Pucatrade’s main selling points: it provides both faster liquidity and better liquidity for one when they are trying to trade Magic cards. In order to do so, it needs a large network of players to use their service to both provide and demand cards. If Pucatrade had a small userbase, then there would only be a limited number of cards demanded, and a limited number of cards supplied. This would result in limited liquidity on both sides of the exchange. For example, if you wanted to get rid of a Pyromancer’s Goggles and wanted a Sword of Feast and Famine, it could very well be an impossible trade on a smaller user network in which nobody wants to trade away a Sword or would like to obtain a copy of Pyromancer’s Goggles. Meanwhile, on a larger user network, these mutually beneficial exchanges are more likely to occur- someone would want your Goggles and you could use the credit from the Goggles to obtain the Sword. So then, why didn’t Pucatrade become the next biggest thing in Magic trades?
One problem with Pucatrade can be seen with its hardline algorithm. If you don’t have enough credits to trade for a card, even if the valuation is off by about ten cents or so, you cannot trade for a card. Compare this to trade negotiations with a player in real life- Quite often I find in personal experience, if you can get the value of an exchange to about within about twenty cents, both parties will accept with positive surplus- the twenty cents of difference in actual value just gets swept under the rug. While this inflexibility enforces fairness, it also leads to some very frustrating moments when you have a card worth 53 cents and want to trade for a card worth 55 cents- it’s two cents of difference which in the real world nobody would care about, but Pucatrade cares!
Another problem with using Pucatrade is the relatively high transaction cost associated with exchanging cards by mail. Let’s consider: Magic cards are made of cardboard. They tend to be somewhat flimsy, and certainly won’t be able to stand up to the rigors of the American mail system without some form of protection. The industry standard for shipping Magic cards is to use stiff “top loader” sleeves, which protect the card against both weather and creasing. However, toploaders are bulky and not relatively cheap- they go for about 15 cents each. This is in addition to the costs incurred by shipping cards- which are normally sent with tracking so it costs about 1.50$ to send a package. Consider that many players are only looking for bulk cards- worth 50 cents or less. Couple that with Pucatrade’s inflexible value trading, small trades would tend to result in the traders losing value on each exchange. These factors would all tend to drive people away from using the Pucatrade system.
How did Pucatrade try to remedy these issues? Pucatrade instituted a policy of gifting every new account with 500 Pucapoints (About 5$). Ostensibly, that 5$ could be used to cover the nickle and diming for exchanges that the Pucatrade system enforced over many exchange- and if someone were to trade fairly, we would expect over the long run for them to net about zero value or less in the long-term exchange. It would also provide free value for any exchanges people might want to make- or provide them with a nice 5$ card as a sign-up bonus. Ostensibly this would be to expose more people to Pucatrade and encourage them to become part of the network. However, in my personal experience, Pucatrade has been more of a passing fad than a permanent fixture in our card acquisition networks.
What might I suggest that Pucatrade do moving forwards? The 500 Pucapoint signing bonus has a side effect of people just making an account, cashing it in to get a single rare, then never using or only sparingly using their account afterwards. This also has the side effect of costing the main company money for each new user- it has to absorb the 5$ cost for every new user. It is having issues with user retention, which is a major problem when it is marketing a network-based good like Magic trades. I would suggest the following actions to try to drive up user retention, which would help foster a larger user network which might get it to go about the adoption threshold and be more heavily used. First, I would institute a 5-10% bonus on trade-in value. This would serve two benefits- it would encourage people to post trades up, which would simultaneously encourage people to trade their own cards to obtain these cards, bolstering the exchange network. Furthermore, this would cause the prices of the cards to skew slightly towards the lower market prices, which would motivate people to go to Pucatrade to obtain cards instead of paying real money to other resellers. Finally, this provides a sort of allowance that covers for minor fluctuations in card prices and the nickle and diming that happens during normal trade exchanges.
Second, I would suggest providing a 1$ bonus at the end of every month for people who have accomplished trades- this helps offset some of the cost of carrying out exchanges, decrease the flt cost, and would hopefully lower the threshold for adoption, for more people to get onto the network, which would lead to a more robust trade network that would attract more people in and improve the liquidity which is its main selling points.
I would suggest these improvements, which ought to attract more people into the Pucatrade network and lower the adoption threshold, which should change its current status of bleeding users as it approaches the zero equilibrium, towards passing the tipping point and achieving the higher equilibrium, improve its user network and its success as a company.