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Sales and Tales From the Front Lines of the Hobby

In this month's column, we're going to talk about our gross margins.

But before we dig too deep into that, here's an overview of our sales for last month.

July was our first full month with 2 shops, and we're thrilled with the sales results.

We planned for a 20% drop in sales in New Buffalo since the Valparaiso shop is close in proximity. In the end, New Buffalo ended up -14% vs. last year. Mission accomplished.

We also set a goal to sell nothing online for the entire month of July. Instead, we wanted to focus our efforts on growing the customer base in Valparaiso and at local shows.

The challenge being to double prior year's online sales with our sales from the new shop and 3 regional card shows. A tall order, given how healthy our ebay, myslabs and social media sales were last year.

Long story short, we exceeded that goal by a longshot. The final tally showed a 154% increase over last year. And, our COG was lowered since we didn't pay any third party or shipping fees.

We'll eventually sell online again, but we'll continue to be selective about what we sell there and how we price it. One of the challenges with selling online is that prices are driven primarily by comps, so making a sale often comes down to having the lowest price.

Ultimately, our goal is to offer fair prices and make a fair profit. But we don't want to be known for always having the lowest price. I've seen that strategy sink many retailers during my 40 year retail career.

On to margins.

Our target margin for any product we buy, whether it be from a card maker, or an individual is 40%. That's the starting point.

However, many products from the card makers don't allow for a 40% margin, even when purchased directly. And especially not when purchased on a rebuy with dynamic pricing.

On the flip side, there are several products with much higher margins. Those margins can sometimes make up for the low or negative margin boxes that don't sell and end up being marked down.

When buying singles, we generally look to pay 50-65% of current comps, but comps are only part of the equation. Higher end cards don't sell as quickly, so they tie up inventory dollars. Whereas, local Chicago teams do very well in our market, so we may pay a little stronger for those cards if they're more liquid.

We're not in the business of investing in cards or buying and holding cards. We are a retailer. Our business model requires us to turn inventory as quickly and efficiently as possible. Sometimes that works out, but injuries and performance take a toll on our card prices just like everyone else's.

When all is said and done, our expense base at The Sports Card Shop allows for solid profits if we can maintain a blended margin of 40% or higher.

The big question on the minds of many shop owners is what will Fanatics margins look like once they have the licenses for all 3 major sports. Based on what I see currently, 40% isn't likely.

See ya next month!


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