Thanks for the compliment, now buy something!

I know some of you appreciate me telling you when I have a particularly wonkish entry, so this one is mostly about business.


So how is it that I've managed to create the store I like, and yet have it perform so lacklusterly sometimes? How can I have a store that so many people find intriguing enough to compliment me, and yet have so few of the same people buying from me?

I think it's because we're off the beaten track, out of the mainstream. The same thing that intrigues everyone and so interests me, is the same thing that most people aren't interested enough to buy.

Because if it was product that was in the mainstream, they could find it at the mass market outlets. (Comics sell to a very small percentage of the population -- but that's why I'm the only guy selling them.)

The reason I sell the "out of the mainstream" material, is because it's the only material that is left in the marketplace that I can realistically sell. It's what the market has given me.

If it was just price, I think I could compete. I could get within shouting distance of the mass market prices, and make up for it with service, selection, convenience and knowledge. But pricing isn't it.

It's a much bigger fabric of intertwining advantages that the manufacturers have given to the mass market. Most people don't even seem aware of this. They think it's all about volume discounting and more efficiency and the bigger size. They think that independents haven't been able to compete, and thus don't deserve to survive.

But it isn't a level playing field. Not even close.

I repeat, it isn't about the price.

The only way I know to explain this, is to use a couple of products as examples.

People come into my store all the time looking for Marvel toys. You'd think Spider-man and Hulk and Daredevil and Wolverine toys would be a natural fit, right? I carry Marvel comics, and I carry toys.

So here's the problem. One, admittedly, is price. I'm paying about the same price that the mass market sells the same toy. But, as I said, I could compete if that's all it was. I'd accept a smaller margin and be within acceptable range. Say, sell a toy a chain store has for 5.99 for 7.99. A couple dollars difference.

But....I know from experience that I'm likely to get that case of toys two to three months AFTER it's already shown up in the mainstream marketplace.

Secondly, every case of toys has twelve figures. I have no choice as to what figures I get, or what quantities. There may be 6 figures available, overall, but I may get 1 each of 3 of them, 3 each of 3 of them of them, and none of two of them. At random. (In the last case of Lord of the Rings toys, I got 6 Gollum toys, which no one wanted at the time.)

Now if I'm a mass market store, if I get 10 cases those numbers might even out. Me? I can afford one case, maybe two.

But actually, for the mass market it doesn't matter how uneven the distribution. Because at the end of the selling period, they are either given a credit for unsold toys, which they can then blow out for a further profit, or they send them back.

So....assuming I've accepted the smaller profit margin, I need to sell about 9 or 10 out of the 12 figures in every case just to break even.

As I said, the toys come in randomly and vary from series to series, but a good rule of thumb is that out of every case, 3 toys are sure sellers, 3 toys are probable sellers, 3 toys are possible sellers, and 3 toys are real dogs which will take years to sell if they ever do.

As I said above, it doesn't matter to the chain stores -- they put all the toys out for the same price, so Spider-man costs the same as the Taskmaster toy.

What ends up happening, of course, is the Spider-man and Hulk and Daredevil toys sell instantly, and the rest become what is known in the trade as "Shelf-Huggers."

The mass marketers just apply the credit for the unsold toys to the next wave of toys, which they get in three months before me, and I'm still sitting on the last batch of shelf-huggers.

I have figured out only one way to fight this -- charge more for the better figures. So now, the price differential is 5.99 versus 14.99, or something. And even that only brings me to a break-even situation. And makes us look bad.

The only toy line I carry that I'm willing to do this with, are Star Wars toys. I get a case of 12 toys in, and there is one Yoda in there, or a Boba Fett. I put it on the wall for 19.99. Six months later, the toy can't be found anywhere, and someone may actually buy the toy from me.

And yet, I probably still have three or four toys left out of that case, and even selling Bobba Fett and Yoda for 19.99, I probaby have only broken even. So I look bad, breaking even. I do it for Star Wars, because love Star Wars and because people accept that five years after the toy came out, it might cost more.

Even if I am successful at selling all the toys, it's still less than half the margin I get on most of my product, and I'm probably better off using the cash, space, time and energy selling other stuff.

I'm not even talking about the shipping, credit terms, and other advantages the mass market has.

But even all the above would be something I think I could compete with, at least some of the time, except for one thing -- Exclusives.

Exclusives come in two flavors. One is, a unique item only offered to that outlet. And secondly, unique packaging only offered to that outlet.

Packaging is important. If I have a box that looks exactly like a box in a chain store but which costs 5 times more money, which do you think Grandma is going to buy? She's not going to look to see that there is only 20% of the packs.

Or that I have to pay 5 times as much, for the privilege of carrying a the minimum amount.

The best example of exclusivity I have is an old one, back when Fleer was first selling basketball cards. They had packs that you could buy at the mass market that had "exclusive" Rookie Sensations. For the hobby, we had the "exclusive" Foreign Stars.

So you could buy from a grocery store, a Rookie Sensation Kobe Bryant, or you could buy from me, a Foreign Star Detlef Schremf. You can imagine how that worked out.

A really good example of both advantageous packaging and exclusivity is when Marvel -- probably my biggest supplier of material -- created Marvel Masterworks in two editions.

These were the original Spider-man, Hulk, Daredevil, etc. silver age comics everyone remembers. The comic store version was hardcover and 49.99. The softcover version was 14.99 -- and available only through Barnes and Noble. Nice.

This kind of thing isn't 'competition' unless you think bringing a knife to a gunfight is competition.

Packaging and exclusives are almost always in the favor of the chain stores. Even if they weren't, their sheer volume ends up making those the items people are looking to complete.

Not coincidentally, both of the above examples are products that generally don't have a printed Suggested Retail Price -- which means the mass market can price less and I can price more -- and it's acceptable either way.

Much harder -- if not impossible -- to carry anything above the SRP. Books and comics have suggested SRP, and that's what I sell them for. People may understand they can buy them cheaper from Costco, but they aren't usually outraged that you're selling them for regular price.

You just don't sell them much.

So that's the direction I've been moving into. Carrying mainstream product as regular price and hoping I can make enough to make it work. Because of my location, I've needed to move as close to the mainstream interests as I can get, and that has been books and boardgames.

At the same time, keeping the specialty product than no one else carries.

I think this is going to be the model for specialty stores in the future -- independents are going to need to compete both at the mainstream level, and at the same time look for niches that they can exploit.

It's a very fine line between popular and uncompetitive, and obscure and uninterested.