Saturday, December 4, 2010

Online Sales (or lack thereof)

A blog reader asked me why we don't do online sales. There are a lot of reasons I could give for that:
  • Profit motive. The only reason to do online sales, as far as I can tell, is to make money, and there are far easier ways to make money than to sell boxes of Magic at $5 over cost or D&D books below Amazon's insanely low price. I've got nothing against money, but in a big store like ours, we could see the same level of profits by adding a new product line. There is actually some money in brick and mortar stores, and if you have a profitable one, it's easier to be more profitable by just focusing your efforts.
  • Market saturation. The opportunity to open an online store to sell games successfully has passed. The sweet spot is to offer product at a 20% discount. Below that discount level nobody will buy from you, ever. We've tried that. Above that level and you will fail, or so says the common wisdom. There are already superb places to buy online at that mid-level (Paizo does it perfectly, I think, with a vibrant online community). There are other models, like the Troll & Toad version, where you buy up used stuff and sell it along with new stuff (used stuff and collectibles get really high margins). Opening an online store is no longer the thing to do when you start your brick and mortar business.
  • Impersonal. The goal of our brick & mortar store is to build a community who will then buy our products and support our store. Talk to me in the early afternoon hours when I'm selling Cokes and Pop Tarts to our unemployed regulars while multi-tasking, and I might get a little surly about the value of community, but it is what we do and we do it fairly well. Online sales are about the money and the online customers don't care if you live or die. And I can tell you from my Ebay sales with some of the most idiotic customers on planet Earth, vice versa. Again, there are exceptions (see above).
  • We do. Oh yeah, we do online sales. It's mostly on Ebay and primarily overstock items. We used to be more invested with an Ebay online store, but that was before Ebay got too greedy. We're experimenting with a shopping cart on Facebook, but we've had few sales, even at ridiculously low prices. People don't buy things on Facebook.
The real reason we don't sell online is I believe the effort it takes to do it right and the risks involved are not commensurate with the rewards. In other words, I haven't figured out how. I have a plan on how I would do it, but it makes only a small amount of sense. I don't understand what value I'm adding to the experience. Also, it would require a significant investment, a huge, distracting amount of time, and skill sets that I possess, but couldn't possibly divide between my current business and this new endeavor (again, if done right). It would require lots of labor. If I really wanted to do it, I would consider buying an established, marginal online retailer rather than starting from scratch.

Finally, since it would be mostly for the money, I would rather do something smarter with my resources, like opening a Subway sandwich franchise, or buying foreclosed properties, or heck, investing in the stock market. If it's about the money, and you have skills, why screw around with the game trade?*

*And that is why opening a game store is called a "lifestyle job" and not a serious start-up with the proper new business intention of making money.

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