Saturday, November 22, 2014

Diversity and competition.

My store, Pegasus Books, is so diverse now that I don't worry about one-to-one competition the way I used to.  Not only am I carrying between 7 and 15 different product lines (depending on how you want to define them) but there is so many different brands within each product line that it is impossible to delineate.

There was a time when I was basically selling two things -- sports cards and comics.  Sports cards got so big, I was advised to drop comics altogether.  Comics were taking up more than half the space and yet only bringing in 15% of the revenue.  Thank god I ignored that advice.

Because I was only selling two product lines, and the diversity within those product lines was limited, I was at the mercy of price (and other) competition.  For sports cards, there were the 3 sports and a number of brands, but it was pretty uniform over the industry.

What I didn't see was that what I considered a 'specialty' product could so easily be transformed into a 'commodity.'  Anyone could carry it, and the only thing that distinguished it was price.  I simply couldn't beat the suicidal fly-by-night competition, nor could I compete with the big chain stores in price.

I was screwed.

In comics, it was DC and Marvel, more or less, and mostly only comics.  Again, I was vulnerable to the industry ups and downs as a whole.  Any comic store that opened was probably carrying exactly the same stuff, and could steal competiton by bigger discounts.

In both cases, there was a bubble that popped, almost taking me with them.

There was a moment in 1997 when I simply didn't have enough viable product lines. I had no reasonable access to books or games or toys or any of the other things I carry now.

These products became available to me only over time.  The Internet, of course, made it all available.  (I should say, the product was available, but the difficulty factor was high.  Everything was done by snail mail or phone, the minimums were high, the distributers didn't want to deal with small stores, and so on...)

Hard to imagine now.

In each of the seven product lines I carry, there is so much saleable product that I simply can't carry it all.  I have the luxury of picking what I carry.

Back then, when a competitor opened, the customers could do a more or less direct comparion, and inevitably I would lose customers for any number of reasons, most of them out of my control.


Well, I have my regulars, and I would hate to lose any of them.  But another large part of my business is connected the thriving downtown area and how many people I have coming in off the street.

There is no one-to-one competition for their business.  They either see something they like or they don't.

Almost all my book business is like this.  They come in and they see a book they've been wanting to read and they buy it.  I'm not a destination store for anything but comics.  Everything else is due to my diversity.  In other words, a customer comes in and buys something he or she didn't even know they wanted.  Toys, games, books, graphic novels...most of them are impulse buys.

Turns out, impulse buys, spread out over a large diversity of product, is actually more reliable in some ways than a destination buys.  Which is counter-intuitive.

So when people complain about too much product -- too many books, too many comics and graphic novels, too many toys, too many of everything -- I understand what they are saying from a psychological standpoint, but from a business standpoint, the sheer volume of selection protects me to some extent from destructive competitors.  

No one is going to replicate what I've done.  It's based on my own ideosyncratic tastes, which even I can't explain.  But I know what I like, and I have confidence there are enough other people who like what I like to have a viable business.

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