From selling on eBay to a brick store?

[dipmicro]

I am thinking to move my biz into next level in the next couple months and diversify a bit and I would like to get some info on opening a local brick store and I would appreciate any comments, warnings, advice from people who have already done it.

I have searched this board but did not find any topic about this. Perhaps others are also thinking the same way.

My arguments for opening a brick store is:

. I can keep selling online and in the brick store at the same time.

. Customers easily travel 50km to shop in good niche store. Before starting selling, I have travelled to Toronto downtown (70km) several times to spend 2 hours in electronic supplies stores. Now I get all my stuff online. I still get requests from customers to pick-up even from 100km away.

. Already maintain inventory, so the investment in initial stock-up would be minimal.

. Already have a network of stable suppliers and there is always eBay with some of the best prices around (reverse model - buy online, sell locally).

In my opinion this is good times to start a retail venue. I see many "For Lease" and "For Rent" signs in retail locations. While I feel sorry for stores that went under and mainly for their laid-off staff, I would be more than happy to give some of them job back once my sales in store can sustain them (I expect few months after opening).

Have no money on hand to buy a franchise (and I see even many of them are struggling) I think this can be done with much less capital than what franchisers are asking for. Plus there is no franchise or business for sale that is even remotely close to what I do so even if it would be good in general for my and my family wealth, I would probably not enjoy selling coffee & muffins, pizza or running a UPS store (one of the less expensive franchises, but still way beyond my current reach).

Even little out of my current expertise I may enjoy running a CNC shop and there is several businesses for sale that would fit the budget and their ads are "Priced for quick sale", "Great opportunity", "sales 250k/year", etc. But I know a guy who owns a shop like this and how struggling he is can read between the lines and in these ads can see the business folding up with desperate attempt to get someone to take their machinery off their hands. I would probably end up working 20hr/day, divorced and hated by my grown-up kids before I would break even 🙂

So I am back to what I do now. I like to think I do it well, so all I need to do is to expand to another level. I have my website and sales there are ok, but people still like brick stores (and will always) and I think brick store in 150,000 town in my niche can pull-in much more sales than I would ever be able to do online.

Thanks for all the opinions

Roman

[ameroindustries]

Im in the same boat . Im opening a 10000 sqft store / wearhouse .
My benefits that i find are :

You will make more in a store for profit margin (i say 20-30% more small items at 10% - 15% more on larger expensive items .
You expand your client base / range of products (retail market is different than online market in a lot of ways ppl like different stuff)

Negatives are :
Rent / Lease / heating ect
More Hours (strict)
More work 😞
(for me personally i have to live in the city (EWWW)

my ebay company is going from 6000 a month expense to 12500 a month expense .

I live rural with very little people around to bother me i work when i want (which is most of the time) and have peace and quiet .

I have 3 benifits
LTL/ trailer load load Expense where im at cost me 800 a month average to get shipments

I will save about 1400 a month on Canada post fee's (lower rates in city compared to rural country )

I will pick up retail customers / Market i never had before
(All i need is a whole 15 k a month Sales to pay for my Retail side) which is nothing (can do that in 1 week if i choose)

I expect to Over come costs within 5 months of opening and make and extra 7 k a month in 1 year after opening .

I cant grow any more where i am . I ither stay the same or get smaller and if i have to get smaller ill just not do it (BORING)

I already have Strong ebay base which provides me with 90- 120 k a month in sales + 6 - 8 k a Month on Website (not much but higher profit margin Pays for something)

Guess its all what your comfortable with ... Personally i can be happy and take my daily naps and make 1000 a day OR i can kill myself and slave all the time and make 3000 a day ...

Still scary either way but i have huge money bases behind me have 3 company's running providing me with 55 k a month profit so even if im not profitable with one company another one makes up for it .

I just worry to much :S

I think your idea will work well as long as you have a good base and have a nich market . It dosent take much retail sales to pay for stuff .

Id be piss scared if i was JUST starting retail brick and morter i dont know how some ppl do it and put 20-30k into it OR even worse go and get a bank loan to do it .>> LOL

[cartoonsinabox]

Hello Roman,

We have 2 physical stores in Montreal and in business for over 15 years. I suggest before you open to do a market survey for products you want to sell. Also do a marketing plan , start up cost (rent,electricity,cost of starting a business,etc.). Also do market research on LOCATION . Find out possible government loans or bank loans. Be prepared because starting business does not means profit immediatly.

LOCATION ! LOCATION ! is the most important in starting a business.

If you have any questions please email us.

Frederic

[fatdane]

If you are a one man band, opening an online store is a big step.

You become "easy to find" for those that like to take a 100% discount, ie they shoplift or they make midnight visits. If you are really unlucky armed robbery is possible

You are going to be to be tied to regular hours and have to be "dressed" ( pajamas at 4 Am is ok for Ebay but not for a store)

Unless you live above or behind the store you are going to be traveling to work which is complete dead time unless its a brisk walk

Unless you have a large family willing to work cheap you are going to have labour costs, which involves time handling payroll, ie withholding tax, cpp, EI, provincial health premiums, workmens comp premiums, etc. Finding good help can be a challenge.

Spend a lot of time researching locations, and be aware of all the little funny commercial real estate terms. There are many vacant stores around and there may be a good reason for them being vacant - no traffic, unfit for habitation, etc.

In a store setting you are going to have some serious buyers, and you are going to have more serious time wasters - can you cope with that?

Talk to your banker about Merchant credit Card services and other services - walk in customers will want to pay with credit cards or interac. You might also see if you can get a credit line from him even if you don't need it. A good banker might know a lot about your type of business and its pitfalls. If your banker knows nothing shop around until you find a banker that does know something about your type of business

A store or an office can be profitable, but there are a lot of things to watch out for.

[surplusdealdude]

Hi Roman,

I'm somehat in the same boat as you are.

Customers and even my suppliers have been asking me to open a BM store.

I can see that the idea would work but the fixed hours would clash with what I have to do now.

You take on a LOT of fixed monthly expenses that just HAVE to be covered even if you don't sell a thing.

And I note that all of those "For Lease" signs are there because the BM concept did NOT work for so many others.


I suggest that evaluating the idea by itself is a mistake - what's your OTHER option?

There always is one, you know - perhaps, instead of a BM store, you could open up more online ventures, sell on different sites, sell internationally, open up a wholesale branch and let the other retaillers handle the retail problems.

Once you generate a full range of possibilities, the BM concept might fade in it's appeal. -------------------------------------------------------------------
Every day, a businessperson has to ask himself 2 questions;

Am I being paranoid? and
Am I being paranoid enough?

[dipmicro]

Thanks guys for all the thoughts.

I realize all the time that's needed in the brick store. However, I'd either expect the sales to pick-up to place someone new on the payroll or the brick store to die and me to move on to other ventures. If I am sitting there all day, I realize there would be timewasters, people who came to chat, I am afraid shoplifters. Armed robbery is low chance, gas stations are at much higher risks of that.

surplusdesign, you are right, I barely scratched the surface here, eBay is just one of many online venues that make money 24hrs (brick store does not make money on weekends, holidays, night). Maybe I will just hold onto this idea for few months and try few other things before that.

Tea was always lobbying for other sites and now he comes back and says eBay rulez and other sites suck.

Google just recently ranked me PR3 (was sitting at PR0 for long time, then it hesitantly went to 1 and now it skipped PR2 and went straight for PR3), so I am hoping it would not bounce back and I get much more quality traffic there and will add more quality content and more of my own products coming up (they are best profit margin).

I believe the brick store would definitely help, but perhaps it's too soon right now. I will just continue working on my catalog and try to expand the sales. My best success so far was when I moved away from $1 items. I still have many $1-$2 items but my best performers are in $8-$10 range. Maybe I need to develop $40-$50 range before even considering brick store 🙂

Thanks guys. Keep the ideas coming. I am not giving up, just want to do it right 🙂

[dipmicro]

Heh, sorry surplusdealdude for renaming you 🙂

[surplusdealdude]

It's been done before. Not the wost name I've been called.:^O

Tea was always lobbying for other sites and now he comes back and says eBay rulez and other sites suck.

In a lot of cases, he's right.

But there are exceptions, depending what type of goods you are selling.

The specialty sites appear to be doing well, for instance.


One other possibility you can look into is rack jobbing to other retaillers or wholesaling at some level. You could even go the OEM route with micro-manufacturers in some cases. I do some of that now and it helps balance off the retail ups and downs.

If you have your own web store, you might even be able to set up discount levels and have your wholesale accounts order what they need through the website to centralize the paperwork - I'm thinking of doing something like that myself in time. -------------------------------------------------------------------
Every day, a businessperson has to ask himself 2 questions;

Am I being paranoid? and
Am I being paranoid enough?