Community & Co-Operation

It’s interesting watching B&M stores and online stores in this space. There’s definitely a difference in the way community & co-operation happens between / among each other and competition.

Brick & Mortar Stores

Brick and mortar stores, for the most part, are quite friendly to one another – especially if said competitor is in another city / state.  It does little harm to them if another competitor opens up in a city an hour away – most stores draw their clientelle from within 20 – 30 minutes drive.  So, you have things like GAMA happening, where talks on how best to run your store occurs.

Best practices in one store shared among others makes the entire industry stronger.  It’s kind of fun to watch and heartening to see – and it’s a lot less lonely than working out here on the fringes.

Online Stores

That’s what we are, online stores – fringe players in the market.  Not only based off size – most of us aren’t that big, being tiny little stores; but also because there’s no camaraderie among online stores for the most part.  The same way you rarely see competing stores in the same town sitting down sharing trade secrets, you don’t have online store owners talking to one another.  Unfortunately, the web makes all of us part of the same village – and that means we’re all competing against each other.

It’s definitely true for us Canadian stores, a little less true for Canadians to US stores (they ‘steal’ ‘our’ customers) and a lot less true for those based in other countries.  It’s not to say I don’t talk / discuss matters with other competitors (see this entire blog!) but there’s always things I’m going to hold back on.  There are areas that I just don’t discuss because I see it as being part of our ‘edge’.  While I don’t think there’s anything we do that a smart competitor could not figure out themselves, it’s not as if I want / need to be laying it out for them to read either 🙂

It does mean that it is kinda lonely though.  Sure, I could talk shop with other business people (and I do); but our trade is such a strange one that they sometimes don’t get it.

Across the Lines

What about B&M and Online stores? How do those interactions go? For the most part – they don’t.  Online stores are considered ‘the bad guys’ by a large number of B&M stores in our view.  We are quietly shoved to the side and generally excluded from a large number of conversations.  Other conversations, we just don’t care about – running Magic Tournaments aren’t a factor for us, nor will it ever be.  For most B&M stores, the difficulties of dealing with Canada Post, online customer service and shipping is just foreign to them.

The point of this post? I doubt I have one, beyond perhaps – if you’re going to launch an online store; be prepared for it to be much more lonely.

Marketing – Target Markets

What’s a target market? It’s a group (or groups) of customer(s) that a business has decided to aim it’s products and marketing to.  This group can be as small (left-handed, redheads who walk with a limp) to as large (women) as you desire, though generally it’s a good idea to focus your marketing on a reasonable target market.  Part of the process of creating a business plan involves defining your target markets, preferably with an idea about the market size.

Why are Target Markets Important?

No non-commodity business or product can be the one thing that is required by all customers.  Sure, if you sell salt, you might be the monopoly (or heck, oxygen) and not worry about your target market; but for the rest of us, we have to define these markets so that we can structure our businesses to suit them.

Are you a discount store? Well, then you have to sacrifice personalised customer service (to some extent), location and aesthetics.  Maybe even stock levels.  Are you a B&M in a shopping centre? Your product line is going to be very different and have a higher focus on the general public than the discount store.  And so on.

By defining your target markets, you can then adjust your store to meet their expectations – everything from pricing to product mix to location.  By meeting all their needs, you create goodwill and brand loyalty because you are ‘their store’.  To them, it seems you are perfect – while to those outside of your target market, you might be mediocre at best.  Mediocrity means that converting these untargetted customers, these poor fits take a lot more effort (and dollars) than those who are already targetted.  In an e-commerce site, you can see this is in low conversion rates.  In a physical store, it’s during the sales process when you realise that you are putting in a ton of effort and still getting very few sales.

Apple does this really well – to their die-hard loyalists, they are perfect.  Beautiful products, seamless integration, good customer service and a status symbol all rolled into one.  To others, they are over-priced, control freaks that have created a cult.

The Untargetted

The hardest part of having a target market, of understanding who we are focusing on also means letting go of the idea that everyone should be our customers.  There are individuals, even groups of individuals, who we just can’t / won’t focus on.  Doing so might be a detriment to other customers (example – by some reports, Yu-Gi-Oh players can be a horrendous group to have in-store); while others just have products or needs that we can’t meet (example – a RPGer looking for 40 year old product).

At the end of the day, letting customers go is difficult.  We see the loss revenue, the loss opportunity and want to win their custom.  Yet, meeting these untargetted markets need can be more costly than its viable.   It could be a matter of timing (bringing in a new product line) or it could be a decision, but we have to remember why we chose to target the markets we did in the first place.  Learning to let go is a hard lesson to learn and one that most of us have to relearn on a regular basis.

Letting Go

Once you let go of these untargetted customers, realising they just aren’t going to buy from you, you can (or should) realise that there’s often space enough for your competitors.  If some customers won’t buy from you, perhaps they are better suited to your competitors? Perhaps you should point them in that direction..  It’ll keep them happy and leave you focused.

Online vs Brick & Mortar

When starting out a game store, one of the first questions you run into is whether to create an online or Brick & Mortar store. There are, in my view, numerous reasons to choose one or the other.

Skill Set

Let’s start with perhaps the most important aspect – skill set.  The skills and knowledge required to run a B&M store compared to an online store are quite different.  In B&M, you worry about shrinkage, inventory, merchandising and upkeep of the physical store.  Online, you deal with website infrastructure, online marketing, inventory and logistics and shipping.  There is some overlap – customer service, purchasing, accounting but at times the information you receive and the processes are vastly different.

Depending on your previous experience and occupations, you might arrive with differing levels of knowledge in each area that would push you in one direction or the next.

Capital

Capital wise, it’s much more viable to start an online store with much lower capital amounts.  Mind you, I am not saying you’ll succeed with an extremely low capital amount but it’s possible to launch an online store that way.  In fact, if you use eBay or Amazon only where the focus is individual sales, you could probably make a small profit selling only a few games.

With a B&M store, that’s just not viable.  At the least, even a small hole-in-the-wall requires a commitment of a lease and inventory to stock the location sufficiently to make it viable.   As such, capital requirements are much lower.  In addition, with an online store it’s possible to create a decent store if you have the skills to do it yourself.

Time Commitment

Here’s another thing about going online.  For the first few ‘months’ of launch, you could potentially work part-time for the company since you are unlikely to have that many orders to ship out.  This is much more difficult with a B&M store as you still need to staff the store even if it is empty.

In addition, you can outsource a large chunk of work with an online store.  Everything from shipping and logistics to marketing & customer service can be outsourced when things are done on the Internet.  Obviously there’s a degradation in quality and a cost, but if you are willing to eat the margin hit, it is viable.

Personality

Here’s one I don’t hear as much but plays an important part.  Not everyone is suited to running a B&M store or an online store.  B&M store’s require a more extroverted personality, individuals who are happy (or least able) to interact with individuals on a daily basis for 8 – 10 hours a day while staying pleasant.  Online stores require disciplined individuals.  There is very little external stimulus to force you to work, so the discipline required is very similar (in fact, can actually be) the discipline required for telecommuting.  If you can’t do one, it’s really going to be hard to the other.

Competition

Local competition in the city you are in can dictate whether or not a B&M store is viable.  If your town / city has no game stores, your local competition is extremely low, making a B&M store much more attractive than starting such a store where there are already 2 or 3 existing (and strong!) competitors.

In addition, the landscape of online automatically places you in competition with the big boys.  You do not get a chance to ramp up slowly, your store is automatically compared to much larger, more established stores.  With competition only a click away, you have to put your best foot forward from the start, leaving little time to work out kinks in the system.  On the other hand, with little to no marketing your online store will never have customers due to the sheer number of competitors.