Talking about opening up a LCS possibly soon, some questions

Alright my buddy and another guy are in fast paced talks of opening a comic/sports card shop. He wants me to run the card part since he is no where near as knowledgeable as myself. I have never went anywhere near the business part of the other side of the counter though in depth. Some questions would be nice to have answered as well as some comments and anything else added in would be amazing

Hobby Direct or wholesaler for sealed boxes/cases???

(if wholesale, who you recommend for cheapest prices and best service?)

Things that would sell good to keep cash flow going besides sports cards, supplies, etc???

Gaming is big right now, definite must selling this stuff???

Beckett magazines (direct or wholesaler?)


Any other comments, questions, or anything to add to this would be great.

Pro tip: Don't offer display space to Kevin Burge.

Sorry, guys, but I just have to do it, too! (Austin beat me to it! )
Arod812, here's a few tips mixed in here that might make your card shop experience better.
http://www.freedomcardboard.com/forum/threads/109691-Sad-State-of-Shows-Sports-Cards-in-the-ATL

This definitely isn't something he expects to get rich off of or anything, he already owns a successful business on the side. I will go through those pages eventually as I just wanted to get some feedback on things. We do run a show about a average of 2 shows per 3 months and they are fairly successful (25-45 dealers, 30-65 tables) so there is a lot of interest in the area. There are only 3 other shops in the West Michigan area and 2 of them are soooo high priced its not funny.

Honest questions you need to ask yourself...

1. Is there truly a large enough market to sustain a shop?
2. Factoring monthly costs (rent, internet, CC processing, power, water, gas, etc...) what is that total dollar number?
3. Do you have realistic minimum expectations when it comes to expected sales?
4. How will you get the word out about the shop?
5. What are the key interests of the area, IE: what to stock?
6. Do you plan on hiring any employees other than yourself?
7. Do you know the cost vs. profit to buy wax?
8. Do you have enough inventory currently, or have enough capital to stock it appropriately?
9. Fixtures, do you have any or know how much it costs to obtain decent, functional fixtures?
10. Are you planning on hosting or sponsoring/promoting events related to your products?
11. Are you planning on being open by November 1?
12. Are there any local "whales" than you can tap into to constantly provide sales?

My advice? Don't think about doing it.

There are tremendous misconceptions about what it takes to run a shop, and almost any collector has thought at one point that it's a dream job. Run the numbers, and they probably won't add up. So many shops load up on the wrong stuff, IE: wax. Sure, everyone loves wax, but if you drop $100 to buy it and sell it for $110 to stay competitive, you'll be mortgaging your future on 10% return...and therefore closed within 6 months to a year.

And just because something works in one shop, or one area of the country, it doesn't mean it will work in yours. Think about what would make a great shop, think about the product in it. Have you been to any truly "great" shops? What makes them great? For the record, two of the best shops I've ever been to have zero gaming cards and zero comics. These also happen to be two of the best shops in the country.

Well since Mike took all of the stuff that I was going to say in the post above, I will just stress the importance of cash reserves. The ability to sustain slow months is crucial for long term success.

I used to own a small chain of auto parts stores. Sold all 11 of them when my little one was born. One of the first things you need to do is actually very simple. Make a run to each and every shop that is within a 75 to 100 mile radius and go in as if you are going to buy the shop. All of it. Cases,shelving,inventory etc... Make an educated guess of what it takes to have in inventory. I had some shops that i had to keep 6 to 7 hundred thousand dollars in inventory and some I had to have a million dollars and more. You need a specialty YOU CANNOT PLEASE EVERYONE.

If there are only a couple of shops in that radius take that as a clue and then maybe focus on a eBay store. Next break down location. Needs to be in a high traffic area, something that has easy access grocery store,restaurant, sporting good store etc... If you end up in a dead shopping center like most of the card shops are now a days you will not last a year. If you last longer than that your not going to have much of a living. Regardless of a brick and mortar store you will need an online presence. Most shops would be out of business if they didn't have an online business model.

And last thing don't take a loan out to start this venture. If you don't have a reserve of 6 months wait until you do and build some inventory till you do.

With the questions you're starting with...you have a long way to go.

Austin said:

Pro tip: Don't offer display space to Kevin Burge.

Click to expand...

This isn't what I did.

arod812 said:

This definitely isn't something he expects to get rich off of or anything, he already owns a successful business on the side. I will go through those pages eventually as I just wanted to get some feedback on things. We do run a show about a average of 2 shows per 3 months and they are fairly successful (25-45 dealers, 30-65 tables) so there is a lot of interest in the area. There are only 3 other shops in the West Michigan area and 2 of them are soooo high priced its not funny.

Click to expand...

I do not have the time right now to add a lot to this thread, but having spent 30 years in retail (mostly in Big Box & Dept. Stores) I'll lend something for thought. The comment I highlighted above caught my attention. The perception that the competition is so overpriced should not be a basis for opening another competing business. Why?, as was previously stated (very well I might add) By 200lbHockeyplayer, there are so many factors into the cost of doing business, that very often prices have to be high to cover that cost. Perhaps the competition is not over priced just for the sake of greed, but rather it is probably out of necessity.
A simple way to figure it out would be; after all operating costs are accounted for, how much total sales volume at what gross margin %, would be needed to be to first break even. Exceeding that sales and margin number, would allow for the addition of inventory, hiring staff, creating a reserve fund & etc.

As I said, I had to simplify it, in the interest of time.

Good luck in your venture, and I do believe many of us have had the same "Dream"

-Steve

Opening up a LCS right now is just not a good idea, it has virtually no chance of success. Recently I was at a local LCS and was talking with the guy there he was saying he was buying some box for $160 at cost to him and a customer came in and wanted some of these boxes and my LCS guy was charging $170 per box a whopping $10 profit and the guy that came in said he can get it online for $150 would he sell it at $5 under cost? Basically the bottom line is there is everything we need in the hobby online at a cheaper cost and we don't have to get off our ass to get it. eBay has the rarest cards out of any card shop anywhere. Some online dealers have earned the trust of people as well. Personally though I like going to my LCS it took me awhile to find the right one but the guy is awesome but sadly even he said overhead costs were just getting too high for him to maintain and he'll be closing within a couple months.

I've found a good system at shows I see whose got the best stuff and just get their contact info and meet up with them whenever they've got some new stuff. I have two guys in the area that have great new stuff one a board member and another guy. With people collecting so many specific things now opening an LCS just wouldn't make sense now I'm just not sure which area of the hobby you'd make your money on.

A lot of great comments here. I have always thought owning a LCS would be cool, especially if you already had the money or a side business which was paying all the bills. With that said, I think there are better businesses or ways to invest your money other than LCSs but this is IMO only. Think of the margins.... less than 10% on wax? Higher margin on individual cards but you have to bust the product and deal with people who will say "I can get it cheaper on eBay", etc. Really it is an uphill battle which I think is getting harder and harder to keep up with... which IMO is sad... I really enjoyed going to the shop when I was younger but you just can't compete with online ::facepalm::

And I forgot this little zinger....

Do you bust wax? Because that should stop. Wax is now product and for someone else to buy. A total bleeder. I don't know of any successful shops were the owners bust a lot wax.

I don't necessarily agree with simple8's idea that if there aren't many shops around, take a clue. IMHO, there are a couple of very good areas right around me with high traffic, somewhat reasonable rent, with a decent demographic of people who I do believe would give a store like this business. If I had the cash set aside, and was of the mindset to open a shop, I'd certainly think about it. Cause the only one within 30 miles just doesn't cut the mustard.

Rent out as much display case space as possible. Charging a percentage on sales will help pay that rent quite a bit.

I'm actively involved in 3 hobbies, comics, cards, and Magic. If I was to open a store involving any of them, and I haven't just won Powerball so it would matter if it was profitable, it'd be Magic. Comics and sportscards seem like there's such a huge commitment in time and money to get things reasonable. How many times have you walked into a new shop and seen that everything is stale and sparse, old and overpriced, and you literally cannot find anything you want to buy? How many times did you go back? And look at the reactions to new sets on the boards. If there's a product that's a hit, it's a huge hit and jumps up either for the short term or long, but it's sold out at the distributor so you have to chase it down and sell at a marked up price. If it's a dud there's usually no resuscitating it, so you're going to take a hit on it.

With Magic, there's only 1 manufacturer (aside from accessories and whatnot), and you buy direct, they release a highly desired product regularly, offer (from what I've been told) very reasonable discounts on wholesale prices once you reach certain thresholds of sales and participation in on-site tournaments (the drawback is you will need a larger space than a regular hobby shop). The product line is small, so there's not a whole lot to learn, at least compared to comics or baseball cards. And Magic is in a great place at the moment where there is no such thing as dead product. Anything that's old is still saleable, and nothing sells for less than cost, and even that is rare. Even the worst boxes of the mid-90s will sell, sooner or later, and the best ones just keep appreciating month after month. Plus, you know how people bemoan the future of baseball cards because kids aren't collecting ? Well, there are plenty of kids in Magic, and they stay with it for a long time. Wizards makes the game very enticing to new players, and supports retailers to that end with various free or low-cost introductory product, unlike any sportscard maker. The low cost of entry into the game is easy for parents to deal with. Once a kid pulls a $20 card out of a $4 pack, he'll be hooked on the collecting. When he uses it to smash an adult's face in a tournament, he'll be hooked on the playing. Then you'll have a customer for a long while, a couple years at least, or even until he discovers girls or goes off to college, but they always come back, don't they.

There's plenty of reference for pricing both for selling and buying (many store use the larger websites' buy-list pricing for their own), and the trading aspect of it is alive and well, so there is usually a frequent turnover of collections from players, allowing for a good turnover in stock and profit margin. For some reason there's a certain reticence among Magic players about using ebay, even though prices are generally 5-25% lower than the online shops, so you don't really have to compete with that. So I'd check out the Magic scene in your area and see if there's a hole. Then once that's up and running you'll have a good base for moving into another arena, from the standpoint of money, a track record, and an established storefront.

I would definitely doing gaming and comics, they make a HUGE difference w/ weekly guarenteed sales, which is even more Important w/ alot less releases.

And I assume you'd have a good Market for Hockey items and wax, but Nationally it is VERY spotty...

My only advice is only do it if you are sure you will be fine even if it tanks. Dont let something like this break the bank.

You know, while I am still amazed magic sells as good if not better now, as it did 12-15 years ago, I do hear a lot of griping about the ccg's. Basically you get more people interested in playing it at your store than spending money. I guess you kinda have to have that happen to get people in the store but I've heard people say in the past they made more money selling deck protectors and sodas and candy than they did on a lot of these folks that come by regularly to play.

But man oh man am I amazed at how strong it still is. I honestly never thought that would happen...

... 6-12 months of cash reserves...