Wednesday, June 18, 2008

Selling Online (Madison V)

You can get advice on every aspect of your business from other game store owners, but there is one topic that few are willing to discuss: selling online. This is because I can give you advice on just about anything and even share my sales numbers, because you're not a threat. You don't compete with me. Even if you opened up shop across the street from me, you would still have an uphill battle to take away my customers. That's just the nature of retail. Selling online competes with everyone and the barrier to entry is so low, and the competition so high, that few stores want to see someone else get involved. Therefore, you can often hear crickets chirping when you start asking questions about online selling.

I'm going to go over two methods of selling online: you're own online store and dabbling with the "secondary" online market.

The reality of selling online is that it's a business, like any other. Creating an online store requires a plan, marketing, in-depth product knowledge, and a huge amount of time. Customer service is just as intense as with a brick & mortar store and I think requires even more organizational skill and planning. It requires a brick & mortar presence to obtain merchandise from distributors, so it's not an alternative to a "real" store, although a "real" store can often be a front for a successful online store. Doing it right is very difficult. Doing it wrong is easy and relatively cheap, and because of this, online stores come and go at a dizzying pace. My main advice for considering an online store is to create a business plan with the primary question being: What value am I adding to the experience that is not already covered by my online competitors? Build your store when you can answer that question. Building a store with an eye towards a small amount of supplemental income for your brick & mortar store is probably a waste of time. Your online store business plan shouldn't be a paragraph in your brick & mortar store plan; treat it like it's own entity, because it will be.

Selling in the secondary market. The secondary market is an industry term for places like eBay and the Amazon marketplace. These are great places to "dump" merchandise that you've been unable to sell. Used with in-store sales, the secondary market allows you to liquidate slow-turning merchandise and free up capital for additional purchases. However, you'll find you usually don't come out ahead and only occasionally break even on these transactions. You'll have a rough time making money selling this way, but at a certain point you need to cut your inventory loose and move on. As a new store, my main caution is to make sure your a product line is truly dead for you before dropping it. This could take a year or so to figure out. Also consider alternatives to the secondary market, such as in-store sales, auctions, and charitable contributions.

1 comment:

  1. Gary, the only thing I would quibble with you is the contention that eBay is only for dumping. Ebay stores can and do generate good cash. Especially if you can find a niche that you can sell things in - say used RPG books. I have found that items in my eBay store sell for almost double what they sell for at auction (I sell single cards for the VTES CCG). You can put your inventory, even if it is your overstock, into your online Ebay store, and do pretty well.

    But I think it is key that you have your online store inventory seperate from your Brick store inventory.