A while ago, I was asked a couples of questions on a different forum:
How can an online retailer manage to compete in such a tight market? …So how do you rise above the crowd? Or is the market large enough that it supports all these retailers comfortably?
I promised to answer them once I had some time and did so on that site. So I thought I’d rewrite the answers for the blog to deal with the questions.
Let’s begin with the last question first – is the market big enough to let us all survive comfortably?
That’s a very difficult question to answer, simply because no one has an idea about how big of an industry we actually are. And when mentioning industry, I’m discussing gaming as a whole – there’s just no reliable statistics out there. I’ve seen numbers fly around, but none of those numbers are at all reliable. So if we don’t even know the general idea of the industry, there’s no way I can discuss a smaller slice of the pie – the online game retail industry.
That by the way is also why I don’t get into discussions about market share and the impact of online / b&m stores. Without actual, reliable numbers for the industry, it’s all opinions.
It is simple enough to state that the industry is large enough to support at least 3 to 4 stores. That’s the number of both Canadian and American board game stores that seem to have survived at least 5 years. It’s what given me hope that we can, eventually, carve a niche for ourselves.
The other part of the question is just as difficult to quantify – comfortably. What is comfortably? How many are full-time online retailers and how many are part-time? Again, we come back to the lack of data issue here, but I suspect that a good percentage of online sellers aren’t working full time as an online retailer. That includes both individuals who have a full-time job elsewhere (yes, I’m looking at you eBayers) and b&m stores supplementing their store income via an online store.
The biggest problem (if you’ll call it that) with the Internet is how cheap it is to set-up and run a business. Since owning a game store is an avocation – a wish by many – it might not even matter if the business is losing money when it’s only $500 a year.
That of course makes the first and second question much more important to solve.
For the first question, the generic answer would be to create a marketing plan that works. Look at all 4P’s, review where you and your competitors are and figure out, most importantly, what is your competitive advantage. Then exploit that to the fullest extent.
The second answer almost assumes that there is only one market and one ‘crowd of competitors’. If you go with a different marketing mix; as FunAgain did, you’re competing in a different market for different customers.
If you do go for the alpha gamers; it’s worthwhile knowing that it’s very, very hard to ‘steal’ customers. There’s just too little difference in most cases to make it worthwhile for customers to change their routine once they have a good retailer. Occasionally, it might work for an order or two but the cost of doing so is really high. A good example of that is the current ZMan special we’re running. Even with a really low price point; and the best deals in Canada for it, we’re still generating very low interest outside of our regular customer base.
As such you really have to develop your own customer base. To do that, you’ll need deep pockets and a lot of patience. Standing out of the crowd then seems to be a matter of lasting long enough to actually build the customer base to keep you afloat.