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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
One thing I would really play on is the personal customer service you can offer - One thing that always worries me about 'mom and pop' buying computers is that they don't really know how to use them.
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Sure, their son Jim knows a bit, or the guy across the road can point them in the right direction, but I don't think there is anything like someone being able to run down to a store and get a knowledgable person being able to run through it with them
In fact, if you want to push it even further, include a couple of hours home tuition with it. They aren't gonna get that down at Walmart
codegolf.com - smaller *is* better.
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.
you could run introductory computer (and advanced) classes and maybe home tutorials (for money).
;-)
the first will help improve the ur customers computer literacy, and the later is very helpful/assuring to them.
you'll maybe need more ppl for it, and maybe some will need to go on a simple teaching course (cause it not as easy as u think to communicate alien ideas to ppl
and maybe use the popular buzz words, like this pc is 'internet ready' =)
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.
One thing that isn't offered by the big stores is computer upgrades. You could advertise Why buy a new computer when you can get the same performance by upgrading your current one. You could buy back the old parts for dirt cheap and sell them on Ebay.
Hacker Media
It's a pain in the ass to buy a system from Best Buy or Wal-Mart and when somethin' burns out to get them to fix it. If they do it usually has to be sent somewhere.
Lure them in with good service. Even service PC's people didn't buy from you if you get enough questions about it.
If all else fails... turn tricks.
No sig for you!!
"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.
Don't be afraid to sell strange things. While most people will buy a whitebox and a copy of Windows for Dummies, there are the exceptions (geeks). Stock cold-cathode lights and window mod kits (a few of each). You can still sell some of these specialty items to regular people (as another poster mentioned) - the artsy or futuristic-deco people might like an aluminum cube instead of a plasticy tower for a case.
Keep that dead motherboard that the manufacturer won't take back or that P166 you got on a trade-in - some people (mainly me, but there might be others) need those for one thing or another. Ever try to find an RTC chip with a battery soldered to it? It can be pulled from that dead mobo that you just threw away.
Be sure not to invest yourself heavily into software - I know of two types of purchasers for the latest 'Winderz.' Those who go to Wal-mart, and those who pick up a Warez release. Don't bet your business on a third type coming into the picture - it's unlikely to happen.
Have a good return policy. Sometimes you'll sell a dud, but the customer will keep coming back if you take it and hand them a new one with no hassle. It will take a bit of your time to get it back for a manufacturer's RMA, but it's worth the extra business from a satisfied customer.
Sell higher-end parts. Let the customer know that their onboard shared-memory AGP won't cut it for that copy of Doom 3 in their hand (assuming you ignored my previous point about software), and offer them the choice of a GeForce 5 or a Radeon 10000. Offer also to install it and configure the drivers - even the simplest of choices can throw a user for a loop (or a BSOD). I personally would rather buy my stuff locally, because I have had some bad experiences with internet retailers recently.
If someone comes in inquiring about a NIC, or a "networking kit," offer the service of installing a small network in their home. Odds are that you'll catch a demi-poweruser who wants to have two machines on the cable modem at the same time, and who can set up his own network. However, you'll occasionally run into someone who can't understand the concept of an IP address, and this is where you come in. Just don't overcommit yourself, and don't get them started on the idea of having you install network cables in their walls...
Have cool stuff in the store. Let someone come in and try your latest gamerz machine with a preloaded copy of Jedi Outcast up and running, or allow them to stare at the window-modded fileserver tower, with a terabyte of disk and all those spinning fans and blinking lights. If people like your store for the amusement value as well as the products, they'll come back more often. I have two choices of local stores - a dusty old hole in the wall with a dog that tries to rape your foot whenever you come in, or a newer store with machines up and running, just waiting to be crashed^Wplayed with. Which do you think I'd choose?
Anyway, enough rambling...
Every cloud has a silver lining (except for the mushroom shaped ones, which have a lining of Iridium & Strontium 90)
This is probably obvious to you, but be careful what you buy in bulk, but do make bulk purchases.
Things that are safe to buy in large quantities:
Things you should never buy in quantities you're not sure you can sell in a few weeks:
Everything else is a close call.
2. Sell quiet computers. Keep the showroom quiet so you can point out how quiet the machines are.
3. Except for the simplest things like picking out the right cable, charge for support. Keep the rates reasonable, and charge in small (5-10 minute) increments. Support includes helping them select virus scanners and firewalls, setting it up to call their ISP, recovering from crashes and infections, backups, etc. Many people have real trouble with the most basic things.
4. Charge for training. I personally would not want to do training, but if you can stomach it it's a revenue source. There are companies that do nothing but computer training.
5. Promote the price-saving aspect of upgrades.
6. Hopefully this is so obvious you've already done it, but standardize on a few models of boards (motherboard, video card, etc.) Hunting for upgrades and drivers, and making them play well together, burns time and therefore money.
7. Use OEM OSes. Retail Windows 2000 is $200. (Or is it $300? I forget.) OEM Win2K is $85.
8. If you're doing free/discounted support, choose OSes that tend not to break. E.g., use Win2K and set the security up properly.
9. Sell support packages. (Other people have mentioned this.)
10. It's hard to sell premium services if the shop feels like a grocery store. Have comfy chairs for the customers to wait in. If you need to discuss, e.g. different options for a custom machine, have a table that the two of you can sit at.
11. Housecalls. People who can pay for them, can pay a lot for them.
12. Promote your services. Advertise, have signs in the store, make sure machines leave with pamphlets, get their address and follow up with mailings, bring it up as you're selling.
13. Salesmanship. How you sell often determines whether you make the sale, not what you sell. Don't offer a maintenance contract, ask them what they're going to do when the software inevitably eats itself. Don't be exaggerate or be melodramatic, just tell it like it is. If they decline, tell them they can always come in for service later.
-- ;-)
Kuro5hin.org: where the good times never end.
I'd love to be able to order online and pick up at my local mom-and-pop store. In fact, if you're anywhere near New Jersey I'd be willing to set up the website and give you 50% of the profits on orders through it.
But here's where I think the real money is (and there's a small shop here in Portland that does this very successfully): geeks. Geeks are impatient, they love tinkering, and they often break things that are vital to their system's health and will do anything to get a replacement in the shortest amount of time possible. So stock what geeks want. Do some research and find out what people are searching for on PriceWatch. Find out what Ars Technica is recommending.
Stock up on motherboards (especially Asus, Abit, and Tyan). Buy OEM processors if you can, because they're cheaper and geeks don't mind. Stock lots of cooling accessories. The latest video cards from NVidia and ATI. That sort of thing. If your prices are within $20-$30 of the average price on PriceWatch, most geeks would rather buy their stuff from you and not have to wait for shipping. And if the attitude of the guys at my local store is any indication, you don't even have to be nice to your geek customers. They don't care about you, they just want their hardware.
Good luck!
Offer more assistance, and a 'client' based approach. Rather than just selling hardware like Walmart offer your expertise and help too. If someone goes to walmart do you really think the guy selling the computer know enough about them to give you good advise? Even if he does is he going to spend the time to really listen to your needs? Probably not, but if you ffer the same computer at a little more of a price but offer help in setup and updates and upgrades and understanding the needs of the buyer then maybe you can make teh sales. Also you can offer more customization then walmart will do.
Only 'flamers' flame!
A very well-designed web site. Goes along well with my main reply, down below. However, they break one of my 'rules' for a good price website:
Don't use "$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
South Park:
Step 1: Steal underpants
Step 2: ?
Step 3: Profit
Service, Service, Service.
Pray for destructive viruses... They are lucrative. Pray that Microsoft and Apple never get their acts together. Their crap software and hardware generates Lots of service. Thank all the major hardware vendors for all their crap hardware too. Never put a crap power supply, motherboard, CPU cooler or generic memory into a machine you build for sale. It will come back-and service will be on your dime. Never flash a bios for a customer unless you have an Identicle motherboard in stock AND you put the system on battery backup. Check out VIA's Eden platform to build an OEM price undercutting system. Never attempt service on a computer older than PII/Win98SE/SDRAM/FlavoredMac. You will break more than you fix by changing anything in their system. Spend 2 hours a day MINIMUM researching hardware and software online. Learn apply a mechanic's lien to a computer when you put $300 labor into a system and the customer won't pay. Get on a first name basis with your sales rep at each of these places. If your shop is really small, use pricewatch and RESELLER RATINGS.
If voting were effective, it would be illegal by now.
As anyone will tell you there is really little money in hardware, that is an across the board thing. The money is in service, installing, fixing, maintaing, etc etc.
First off, I'm already a reseller, but I've never operated a storefront.
Here's what I like to see:
1. Carry the stuff big stores don't: Keep a few lease-returned systems (and ESPECIALLY monitors) around, Y-power adaptors, silver heatsink compound, ISA and PCI video cards... Simple stuff like that will probably at least get me to come back.
2. Service needs to be your life. Keep the geek in the back happy, and send him on the odd no-charge housecall for your small business customers. Pay a bonus for good, fast work. Don't nickel and dime service customers (installing RAM or an optical drive should be free) when an hour of your tech's time is $100. Service can also be used to build incredible goodwill.
3. Interview your customers if they're looking for whole systems. Can't stress that point enough. Talk to them. Most people stop at price.
4. Don't sell all generic. Don't sell all namebrand. Don't sell all retail. Don't sell all whitebox. The mix is important.
5. Don't stock crap equipment. Step away from the Jetway system board and the truly generic NIC. Name-brand RAM is a good thing to see, too.
-- I wanna decide who lives and who dies - Crow T. Robot, MST3K
Good stuff. One more thing:
Keep a "default" image of the pre-installed software that you setup for clients. It makes life MUCH easier when you need to service the machine. CD's are cheap. Keep them in a numbered box with a database to help you find the correct CD by serial number of machine (YOUR serial number, not the MFR's. I assume you will also sell some name-brand boxes. Oh yeah, have some ser number labels printed up.) The database should also have ALL the details about the machine as you sold it. Ram, HD, vid cards, software, bios, etc. Keep a history of the machine. Put your phone number on the serial number tag too.
Your database will also allow you to send out "tech update" notices to people. First, they will appreciate the info. Second, that will entice them to come to YOU for updates, fixes, etc.
This is the kind of thing a mom&pop can do that big companies and stores never will.
The other day I decided I needed a computer. I didn't want some name brand piece of proprietary junk. I was about ready to buy one from Wal-Mart's web site, but first I had to pick up my girlfriend from the train station. While there, I saw a small mom + pop computer shop had opened up.
I walked in, talked with the owner a bit, asked him for a quote, and I ended up with a brand smacking new computer 3 hours later (took him a few hours to put it together). THAT's why you shop at these places. Almost instant gratification.
In the past I was involved in a similar operation and faced the same problem.
The solution adopted was stack it high and sell it cheap. Use a low margin/mark-up (~5%) on componets price and a published price list list. Gain a reputation for being the cheapest, keep your margins low and offer a build to spec service for the component price + 25 pounds (dollars/euros).
Target special groups like schools, with blanket advertising and make special approaches to the new University/College intake each year and can shift 200-400 units in two weeks. This can be enough to get your volumes up to the level where YOUR purchasing discount is really worth having.
Get your suppliers to discount based on your monthly volume rather than on each order and play your suppliers off against each other.
Also talk direct to the big players, they are constantly changing the case designs and upgrading and always have end of lines that are perfect OK and heavily discounted.
As it happened I didn't agree with this strategy, though it was doomed to ever more discounting and wanted to go up market with value added services, so I went my own way. I was wrong, The chain has gotten stronger going from 1 to 4 stores in 3 years.
What I really want in a computer store is someone who has that special cable/card I need now. Best buy is miles away, and they don't carry the details I want. There is a large markup on cables, and If you will open at 4am I'll pay double again.
Look for industy in town. Every town has (normally several) small buisness in town, some with many computers. They want local support. Many cannot afford, and do not need, a full time system administrator. You are their administrator. Make sure you (or your helper) can run out at any moment to deal with their problems. Printer doesn't work? No problem, I'll run one out, and have it working in minutes. (Make sure you have something in stock that is at least as good, better they replace a 4ppm laser with a 20 ppm color duplex laser than the other way around)
Get everyone to backup. Ideally you will have a secure system to backup to your location. (secure in that you can't get the data, just in case there is an audit). You should be able to charge for this, but consider implimenting it for the smaller customers at no charge, when they need it chrage a lot extra for having a spare copy of their data.
Refer to others, and get their referals back. If Joe sells office supplies tell everyone looking at the one ream of paper you have on the shelf that Joe is cheaper and has a better inventory (and make sure you overcharge to make that true), you carry paper only to give away with new purchses. Only do this if Jow is a fairly nice guy though, you should be careful who you refer buiseness to.