How Do I Open A Card Store? Online & Brick/Mortar Shops Q & A

Fixed price over auctions 95% of the time.  If it is something that is super rare, or if it is a ebay promotion, then I will use the auction feature.  Set an item at a price you would be happy for and if it sell that is great.  If it doesn’t, that means that the right buyer was not on Ebay at the right time.  I have had some cards that have gone unsold for weeks/months only to be listed at a higher price and sell.  I can’t explain it.

Do not use the “Best Offer’ feature on your fixed price auctions. – As soon as you give the perception that you are willing to take less for an item, it won’t sell.  People want a deal and as soon as they see a best offer they will expect a deal.  It is not your “deal” that they want.  They want “their deal”.  The first offer is almost 20% of the asking price, even if the card has sold at 80% the original asking price.

I agree about buying low vs selling high.  I put out buy posts like “Have $20.00 to spend on a lot of cards” I specify what I am looking for in the body of the subject and watch the offers roll in.

I have a few other things I am keeping to myself, but I think you get the point.  It can be done…but it is a lot of work.  My wife is out of the house at 6 AM and gets home at about 5 PM.  I am on the job as soon as I wake up and usually sorting cards for uploading the following day when she comes home at night.

Answer:

Thank you so much for this insight, I’m not sure if you listened to podcast #106 yet but I basically tried to give out this advice. I remember the days when fixed price was a different fee structure … but certainly now with eBay making it ‘free’ to list the fixed price is the way to go.

Question:

I’ve been thinking about a career as a card shop owner. If my memory is correct, I believe you used to run a shop. Do you think it is even possible to be successful in the card industry today? Any advice will be really helpful. Thanks.

Answer:

The short answer is probably ‘don’t do it.’ But there are lots of businesses that started under that principal, and are very successful today.

If you decide you want to try and go for it, my advice would be pretty simple.

#1 Keep your expenses low – and always be looking to make them lower, not higher. Location is not always key for card stores – as its a niche sale anyway, so you can find a hole in the wall commercial spot for under $200 – $300 per month, that’s where you begin. Find the cheapest credit card processor, and the cheapest display cases you can find – and dress them up using cheap techniques. Don’t advertise in the newspaper or yellow-pages – they will cover you anyway. Don’t buy any advertising – you can do it yourself much cheaper, and effectively.

#2 – Diversify your income stream. Sell on eBay, Amazon, your own website – and other sources. Always look to maximize your cost vrs. profit. Sometimes selling 400 $1 items works out better than selling 1 $400 item — sometimes its the other way around. Try to cross sell people on other items (hopefully high margin) other than sports cards … which tends to be a 10 – 20% markup vrs. 50%+ for traditional retail. Things like team Key-Chains, Pennants, and hats can sell well in a sports card store.

#3 – Save your money – no matter what business you are in. Understand that its nice to have cars, equipment, inventory, houses, … ect … but at the end of the day, business and life tends to revolve around having cash money, not ill-liquid assets like property and inventory (boxes of cards).

We were in business during an extraordinary economic time in the US/California. People felt rich in CA because homes were all selling for close to a quarter million dollars or much more. So people spent a lot of money rather frivolously during our early days. Once oil/gas climbed to huge prices in early 2008, and home prices fell over 60% in late 2008/09 – people stopped spending money on things other than food, gas, bills. If you are in business during a growing economic period – you should be able to make a profit.

If you sell anything other than food, water and the essentials during a downturn (like sports cards) you’re going to get crushed. Understanding your local city, state, country and even global economics should help you when determining if its a good time to open a business.

Economic cycles are proven to move in a wave-like fashion … with dramatic ups/downs along the way. We are in the midst of a dramatic downswing, however – it won’t be long until the cycle corrects itself,  and we are already seeing that now. Its possible that in 2 – 5 years, economic conditions exist where owning a sports card/collectible shop makes sense – but we are a ways away from that, at least here in California.

Hope that helps. If you get anything out of this – its to do what you absolutely love in life – no matter how much money it makes you. I’ve quit many jobs paying me more – so I could do what I want in life. Having some money is great, but doing what you want in life is the real payoff. Somethings require lots of work and talent, but if you really want to do it – you will make it happen.

Question: (How To Get Your Website To Show Up In Search Results)

Hi, I recently opened an online hobby store and we are having all kinds of trouble getting our website found or even visited. I took your advice and we have the cheapest shipping rates on the web! Our prices are very competitive, yet we just cant get our name out there! Any help you could give would be greatly appreciated!

Answer:

Hello, good questions –
In short, there is no 1 magic trick you can do to gain presence and traffic to a site. Its always a combination of at least a dozen factors that all need to be done in order to maximize the traffic you can get. Just know that I worked 3 – 5 hours per day (sometimes longer) in 2009 when I was getting no traffic to my site … It took over 1 year for that ‘work’ to pay off … so having patients is key.

There are 3 main sources of traffic – Direct, Search, Referral. For most websites starting out, you won’t be getting many visitors at all. To build up people coming to your site, you need to build up reasons for people to come to your site. For an online hobby store, it can be ‘daily deals’ where you mark-down a card well below what it might go for on eBay, giving customers a good deal is a great way to get them to come back everyday. While most sites have to start small, and therefore have a small budget – giving away, or seriously reducing prices on certain items is a great way to gain visitors when you are just starting out a website.

The main thing you want to remember is to create ‘content’ or ‘pages’ that people want to come back to on a daily basis. The more you do this, the more direct, referral and eventually search traffic you will get overtime.

How to get high rankings in searches on Google/Yahoo/Bing is not something I can’t fully explain. The theories are always changing – and online stores are different than an ‘information’ sites or forums. But there are some key things to understand. First thing is to watch Google’s own video’s they post on the subject:
http://www.youtube.com/user/GoogleWebmasterHelp

Some are going to be too detailed for what you need to do – but there are some on here that will help you understand the types of things Google needs to see in order to rank you high on their search rankings. I watch most of these videos more than once – as they never give you that ‘golden key’ to traffic – but add up everything they say – and you will figure out how to best apply some of the techniques they talk about.

Second thing related to search – and its a huge must that I know nothing about (because I don’t sell products) But its to sign up and use the Google Merchant Center: http://www.google.com/merchants – in short, you send them product data – and that appears in Shopping results and other shopping apps on the web. ProStores might have ways to automatically do this – but its probably better if you manage it yourself. Bing/Yahoo might have something similar – I’m not sure.

While you’re at it: do all the work needed to submit your site to Google, Bing & Yahoo if you haven’t already –

• http://www.google.com/webmasters/tools
• http://www.siteexplorer.search.yahoo.com
• http://www.www.bing.com/toolbox/webmaster

Referral traffic comes from you actually having a good price on something – or cards that are popular to collect. People will post links on Facebook, Twitter and forums when you have a nice store with lots of good things for sale. This takes a long time to develop – as people other than you won’t link to your own site for a long period of time. However, if you move up the search rankings, and get some happy customers – you should notice that the referral links come in from more sources. Even with fairly popular Twitter and Facebook accounts – this might only amounts to less than 10 visits per day … but it is very much worth doing as it’s tied to search rankings and other factors that will help sales. I follow about 100+ avid collectors on Twitter, and have personally seen http://www.twitter.com/brentandbecca sell many cards this route.

There is lots more than this – as this is just the beginning things to work on. This guy on YouTube (http://www.youtube.com/user/chri5784) busts a lot of boxes for customers, and is another way to get traffic & customers. He also builds trust because he has so many successful box breaks that he’s posted to the site.

Hope this helps, All at once – its a massive amount of work. But 1 – 3 hours per day, every single day, and you shouldn’t have a problem becoming one of the top 5 online dealers in 1 – 2 years. Its possible.

Question (What Are The Prices Like At A Distributor Vrs. Buying Direct)

Hi, I have recently gotten everything I need to start a hobby store, I will use a storefront and utilize the internet and shows to help me. Is there money to me made when using a distributor, or is buying direct the way to go? I was curious to about the prices distributors can offer and some that you highly suggest. Thanks in Advance, I love this hobby, and have dreams of owning a shop.

Answer:

Thanks for the e-mail. Selling online is fairly competitive (and recently Upper Deck & Panini have taken steps to restrict the number of sellers online) – and the prices you get from a distributor/wholesaler won’t be ‘that’ much cheaper than you currently see online. Buying directly usually requires a store-front, and fairly large orders of all products – so having the ability to move product in volume is a must.

When I had a store, selling by the pack is where you made the most money – especially if it sold quickly. Boxes, you’re lucky to make 10 – 20% either in store or online because many customer will want you to ‘match’ online prices.

In short, you want to start with wholesalers/distributors until you have the customer base to require you buying multiple cases of every product a company makes.

Here is a list of the wholesalers/distributors I used – there might be more, but these are most of the major ones I know of: https://www.sportscardradio.com/sports-cards-wholesale-dristributor-list

Question (How Do Online Places Like Blowout & DA Sell So Cheap)

I have currently signed up for several wholesaler that sell sports cards. The price list that I have viewed of theirs all reflect prices higher than what i find at the actual sports card shops like blowoutcards, dacardworld, bigtsportscards, atlantasportcards, dcssportscards … ect. My question is how are they able to sell these so cheap??? Is there something I am missing?

Answer:

Good question, you are not missing anything. The margin is usually 5 – 10% markup at best when selling online (as a ‘small’ seller). Most of the big guys are pre-ordering large amounts of cases – you should get an additional small percentage off (usually 3%) when buying cases in large quantity via wholesalers. Most of the price lists are going to be higher than eBay/blowout/da – because when you can buy in large volume, you get even greater discounts than the ones I describe above. Rarely can you find product to flip unless you get it on pre-order and/or a player inside is blowing up (like Blake Griffin or Stephen Strasburg)

Blowout, DA and others order directly from Panini & Topps too … I never did this, but when I worked at a card store many years ago – the prices are typically 30 – 50% lower than wholesale …but you have to commit to large orders of every product they make. That’s why they can offer such low prices – because they order $10,000+ per month from each company.

Its a real tough business. If I were to get back into it … I’d build up a base of pre-orders at a low markup and try to cross sell them on supplies or other (older) wax that they can’t find elsewhere. I would not compete on price – because $5 more is not that much if you offer great service, packaging, special orders and communication – something all the online retailers lack as they get larger and larger.

Question:

I recently received a seller ID number and contacted and set up accounts with three of the distributors.  I received a price list from Southern Hobby. Internet prices are anywhere from 30-50 a box dollars cheaper than what I can purchase them for. I spoke with the sales rep about this and he stated, that people must be taking a loss on product they already purchased or purchased entirely to much and could not resale them.  I really don’t see that happening considering  some of the products came out in November of this year(2010) I inquired about purchasing several thousand dollars of the same product and basically was offered thirty dollars off of a box but that still is not competitive enough for internet pricing.

It seems these distributors are geared more towards storefront vs. internet operations. Basically my question is do you know of any distributors that I can buy from that I can still turn a profit and be competitive with on ebay? These people that are selling online are getting their product from somewhere and I was curious to know if you may have any ideas.

Answer:

The larger retailers will deal directly with the companies – and they get a fairly competitive price, but its very difficult to deal directly with Topps or Panini unless you have a physical store – or you are a huge online retailer with a presence already.

Your discount with a distributor will be if you pre-order the product at the right time & in large quantities. The prices are always going to be fairly similar to ‘eBay’ prices because that is how the market works. You will only make 5 – 10% profit on each sale if you are lucky online selling boxes. DA and Blowout don’t mark stuff up that much either (they make about the same on each sale too because of higher costs that smaller internet retailers) … but the volume is there to make it profitable.

So in short, there is no 1 place to go .. you really have to dig for the products that you think will make money (or find the products that will go up in value from the presale price) – and very little product does that, in fact most goes down. Many people got caught on the wrong end of 2010 Baseball when Strasburg got hurt … but then again plenty of people made money before he got hurt. The big guys can just trust they have enough ‘regulars’ to buy anything that comes out – that they just order it all. Smaller operations can’t do that because it’s too risky & a sure way to loose a bunch of money.

If you could just order boxes and sell them online for a guaranteed 10% … everyone, including many top businesses would be doing it. However, under current market conditions this is very difficult unless you have built up a massive customer base over a period of time.

Some wholesale places won’t mark down stuff after they get it – others do. I remember ordering 4 cases 03/04 Finest Basketball for $44 a box (in 2004) and the guy saying on the phone that they were taking a $20 per box hit on the sale.

It happens less now because of the exclusive contracts and there being a lot less product on the market. So it wouldn’t surprise me if people just sit on it, instead of dropping the price like they did in the past.

Question:

I am going to strictly be selling on line.  If the wholesaler drop ships that would be even better, but is not mandatory for me. Do most of these companies require a minimum order?  Are there prices much different then if I became a dealer with Topps, UD, Panini, etc?

Answer:

There aren’t many drop shippers, as the margin on the boxes is too low to make this possible. Drop shipping only works when the margins/profits are 50%++ on each item.

Be sure to check out Panini/Upper Decks rules on selling online. Most brand new products in the future won’t be sold online unless you are authorized. Blowoutcards is currently suing UD over the issue. Wax 1-2+ years old isn’t effected really, just the brand new products.

The minimum order is usually $300 at wholesalers, but I’ve dealt with some where its $500. Your very first order is usually $500, or higher than the normal amount. Most collect payment via COD, or collect on delivery, so you need a Money Order the day it arrives.

To deal with the companies directly, you need an actual store … and be ordering several cases of each product they make. The prices are lower, but your expenses & risk will be much higher..

Another option versus tradition drop-shipping is using Amazon Fulfillment. Essentially you would ship the items to Amazon and have them fulfill the order either via the Amazon front-end … or Amazon can actually act as a private label fulfillment. In these cases you are layering on some added costs – however with the advent of Amazon Prime and/or 1-day delivery … these added costs might be something collectors are willing to pay more for. These are things to keep in mind as e-commerce online evolves over time.