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Survival for Mom-and-Pop Computer Stores?
Jeramy asks: "Hello,
In February I entered into a partnership with a friend and now own and operate a 'mom and pop' computer store. In this day and age of PriceWatch and $599 systems from Wal-Mart, it is very frustrating (to say the least)to try to sell anything computer related to anyone. Customers walk into the store trying to haggle down our relatively low prices (relative to what we pay plus shipping to get it here) like we are a discount fish market. So my question is: Since 'every day low prices' are not possible, what can a local store do to attract customers?"
We install servers all the time, and we would love a local mom and pop place that would have the following stuff in stock:
SCSI dirves and controllers.
Decent cases with good power-supplies.
Stable motherboards.
Generic mice and keyboards without hidious logos.
Well-built cooling fans.
2U cases.
Don't bottom fish - servers still have good profit margins and there are people like me who will gladly pay a premium for good service. You'll lose your shirt if you sell crappy computers to little old ladies - the suport costs will eat you alive if you don't have the heart to tell them to piss off when they can't figgure out 'winderz.'
Moneyed corporations, non-working 'poor' and criminal prisoners are turning productive citizens into tax-slaves.
I know this may only matter to the geeks that come in, but I like to be able to talk shop with the employees of the place I go to. Or at least spend time chatting with them. Keep regulars coming back. Since the workers are actually interested in what they're selling, I feel confident enough to seek their advice on product differences and their experiences regardless of whether or not they're upselling. Rarely will you be able to get that feeling at Wal-Mart or Best(must-sell-service-plans-to-all)Buy. There's something to be said for appearing 'on the level.'
Also, get unique (square bare bones) or cool cases/systems with black, aluminum or pre-modded cases (windows, side fans, etc.). Do *not* think for a second these are geek-only enticements. A lot of very normal and/or artistic people appreciate an aesthetically pleasing case without 'Hewlett-Packard' plastered across the front of it.
Look at the other responses to this message. Yuk.
So here are a few thoughts:
* Consider quality. You probably use higher quality components than your "cut to the bone" competition. Capitalize on that. A few horror stories about eMachines power supplies should be really helpful, especially if you can point out why yours are better.
* Run training classes for computer newbies.
* Do all you can to make your store a comfortable, pleasant place. If you're not going to price to the bone, you can at least try and make shopping more pleasant. Visit one of Apple's new retail stores and note what a nice shopping experience they offer. I know, I know, they spent half a million a store, and you can't. But you should still be able to emulate a few aspects of their model, such as selling Palms and digital cameras alongside computers. These are higher-margin devices, so if you send someone out with a package, you can pocket more profit.
* Hire salespeople who actually know what they're talking about. If you get people who can answer questions well, you'll collect customers who like having their questions answered.
This is a tough business, especially if you're competing against the likes of Fry's "We sell everything!". I'm sure there's still a place for the white box, because it's what my company gets all the time. We definitely feel that we gain from dealing with a local vendor who can be more responsive and less bureaucratic.
Hope that helps.
D
Advertise in other mom-and-pop shops. If there's something cool you can throw on a free CD-ROM for them to give away with purchases, you capture the minds of people who aren't living chain-store lifestyles.
Have a local news presence. Make friends at the local TV and radio stations. Be the first with answers about viruses and other computer-related news. It's a given that they let you plug your business in exchange for acting as an unpaid consultant.
Don't talk down your competitors. Don't be afraid to point to them as a source of things you don't have. If you send someone to the best buy to pick up a product you don't have, they remember that you had the answer, not that Best Buy had the product.
Bring the prices up just a touch so you have room to drop a couple bucks for repeat customers before they even ask. People love believing they're getting a bargain on top of good service.
Don't tell them about all the service benefits of being a local shop. Show them.
Look for a few high-profile places to drop a couple free systems. I'd bet most school papers would print a few nice ads and a favorable story in exchange for a system for their school paper, for exmaple. Set up a shelter or a church with internet access and some old PCs that might be thrown away otherwise. Toss in a few old "Learning Word" books or similar and you can be credited with creating a job skill learning center. It doesn't have to be fancy and great. People will talk even so.
Play up the locally owned bit. Patriotism and local pride is very big right now. It's a valid and honest thing to advertise.
Says the RIAA: When you EQ, you're stealing bass!
The day of selling hardware for a profit is gone the to the way side. You see computers have made the transition to a comodity iteam. Like a television. In the day you had television shops that sold only televisions, and they did repair. It was a good run, I know my grandfather use to do it. Hell when TV breaks now a days you just chunk it in the garbage. Computers are getting to that level, not yet but they are getting close for the average user. Why spend 250 bucks having your old computer fixed at 75 bucks an hour + parts when you can get a brand new one for 400?
The only people I have known to make this work over the long run have been the guys that sell bulk to established middle to large networks at a fair price. The guy we are dealing with is selling us "Value Added", and giving us the hardware at a very low price. Mind you he still makes a profit just not as much at say CompUSA. He markets the network administrator, system eng, CTO at a middle to large businesss and makes it his job to keep them happy. He delivers everything we need very quickly. We could order online only but it is a hassle for us. That involves shipping, and RMAs if stuff is broke. What this guy offers us is "unconditional" returns on product that is hosed, on the spot, and delivered to our door. This keeps us from having to have the extra helpdesk guy to do RMAs, purchasing, and just not having the hassle of looking for it.
If he does not have it he gets it for us and we know it is going to be about 5 to 8%(which would if trends are the same still net you about 20%) more than we could find online but it is well worth it to us. We spend about 100k to 150k a year with this one guy, and it is well worth every penny. Mom and pop stores are fine, just don't sell to Mom and Pop there is not money in it and they will eat you alive in support. Wrangle in the the business networks around you, bribe the admins and CTO with some free goodies, deliver to the place on the day that they order if you have it and you will have a place that starts to really depend on you.
Then again what do I know, I left that biz about 5 years ago and back then we could mark it up 200% and people kissed us for it.
Anyway,Good luck.
Neck_of_the_Woods
#/usr/local/surf/glassy/overhead
Ask any first-year econ student "What can a distributer of a commodity product do to increase the demand (and thereby increase the price) of his/her product?" and they will tell you "Differentiate the product."
How does Starbucks get away with charging $1.00 for a cup of coffee when you can buy a cup of Folgers for 50 cents? They've differentiated their product by emphasising the quality of the bean, the uniqueness of thier roasting process, the skill of their baristas... But when it comes down to it, you've still paid twice as much for a cup of coffee. (I'm not implying that you got ripped off... You're getting what you've paid for, which includes the beans, the service, the comfy couch you sit in while you sip your latte.)
I would suggest looking for a niche in the market that you can serve well. Maybe you play to the Linux crowd by preinstalling Debian... You could play to the needs of the home user by offering installation or SOHO network services... Or you play to the small-businesses by offering complete server systems with installation and configuration services... There are plenty of opportunities where a small, local shop can service their customers better than Walmart or one of the cutthroat Pricewatch vendors.
Competing on terms of price alone is suicide... You'll get spanked by the retailers whose buying power dwarfs yours.
If Happy Fun Ball begins to smoke, get away immediately. Seek shelter and cover head.
Also, perhaps offer free seminars teaching people about their computers. You'll only get a certain type of people showing up, but my guess is that type of person would be more inclined to upgrade in the future and also more inclined to talk to other people about your store.
And finally, don't screw the customer. Fry's motherboards are about 10% more expensive than online stores' motherboards, but Fry's memory is about double what I can find online. That's why I recently bought my upgrade hardware online instead of the more convenient local store.
"Oh, we don't have any cd-rom drives. We have dvd-rom drives for $20 more"
"No, I don't want a dvd. I just want a cd-rom"
"Well, all I have are dvd-rom"
"well, then $OTHER_PLACE has cd-rom's. I'll get one there"
"Oh wait... no I guess I *do* have a cd-rom after all"
If you rip off the customer, better enjoy that sale, that's likely the only sale from them you'll get.
I have a "mom & pop" store local to where I am and I am keeping quite successful. One thing to know is DO NOT PRICE-BICKER. Make sure you have good suppliers and that's about it as far as pricing. One of the things to know is this general rule of thumb:
When the economy is bad, People will be repairing their computers all the time.
When the economy is good, People will be buying new computers all the time.
You should place an add in your yellow- pages and be sure to not on there that you repair computers. And don't be worried about price. I live in the bay area and I charge $75 per hour for repair in my shop. Vary your price for where you are, and ALWAYS GUARANTEE YOUR WORK.
Or, You could do like the RIAA does, just sue all your competition in your area until you are all that is left... (lol j/k... it might not be all that smart.)
Erutangis ym si siht.
Geeks burn up processors by overclocking them and then demand a refund. It's not necessarily a good deal to sell to geeks.
A very well-designed web site. Goes along well with my main reply, down below. However, they break one of my 'rules' for a good price website:
Don't use "$CALL" when giving your prices.
As a consumer, when I see $CALL , I don't call. I just go elsewhere.
What this amounts to is that you're too lazy to update your website when the prices change, so you want the customer to call you to find out.
FPGA, Wireless, ASIC, Verilog, VHDL, HW, 10yr exp, Team Lead, Ottawa (More? Email above. slashdotusername=dgmartin98 )
I'd guess you were my white box shop, but the owner is fairly clueless about Linux, so wouldn't be around slashdot. Heck, I did their last Linux install:)
Anyway, most of the input so far has been on the ball. Let me mostly just repeat what others have said.
First, have some stuff in stock. If you don't have anything, there is no reason I shouldn't go mail order. It's going to cost me just as much. You don't need everything. But you do need some RAM, drives, etc. that aren't committed to machines you are building.
Second, tell folks your name. "I'm John Smith, when you have a problem with your computer, you will talk to me." Well, not exactly, but knowing the person behind the counter is a good thing.
Set an upgrade plan for people who don't buy all-in-one boards. Include it in your probably overpriced (IMO) service plan. "If you buy the warranty, we will sell you upgrades at 10% list price".
Remind people that there is no shipping. If they really can't get through life with phone tech support, they can go to someone in their neighborhood and drop their machine off. This is the number one reason my office does not use Dell/IBM/Gateway machines. I don't have to ship them to who knows where for service. I go there on a Monday, they look at it by Tuesday, and I pick it up by Wednesday.
Someone mentioned making the techs and machine builders accessible. Once upon a time, I would have laughed my ass off at that. Not anymore. It made them more 'human' to me. Also, I feel like I'm getting special attention. True, they are going to give away a little bit of money (extra IDE cables go bye-bye, a little tech support that isn't charged for, etc). But I'm also a damned good customer. Eventually, they figured out that if I come in with a diagnosis, I'm 99% right. It makes their lives easier, and I'm not spoken to like a moron. That's the biggest thing. Of course, if they are busy, I have sense enough to clear out.
And the final thing that I saw mentioned in the replies that I also believe in is serious customization. I'm sitting next to a reasonably new Athlon. I could have EASILY built it myself. But I haven't had a new machine, all my own, not owned by work, since college. I got EXACTLY what I wanted. I even brought in a print of prices from Pricewatch. And paid more for every single component. Because I knew that it was worth a few bucks to have the machine built for me. Instead of tinkering, I just wanted the thing to run. But I also wanted very specific things. A certain motherboard, a certain video card, etc. (Of course, I also wanted the RAID set up a certain way. It wasn't. I was pissed. But that guy was fired.) Hell, I wanted a certain case! All done without a problem. 'Just tell me what you want'.
I think that white-box shops are best suited to the second or third computer purchaser. First timers want the Dell or Gateway with the reassuring corporate logo on the front. But after getting the runaround with tech support, they'll be happy to have a name to bitch at. Similarly, gamers, etc. want Falcon NW and Alienware machines, but not at those prices. I KNOW you can undercut them. My guy can do it, so can you. Get one of the benchmarking programs and benchmark your gaming systems. Include an individual benchmark on their actual machine. It's like some of the car manufacturers who include dyno results with each car.
Good luck with it.
Jesus was all right but his disciples were thick and ordinary. -John Lennon