Some genius in the fashion world figured out that destroying a pair of jeans and marking the price up infinity percent would be a great business model. And do you know what? It worked.
While the “destroy the product” model might not work so well for guns, there are some small elements of truth to be gleaned from the idea. For example, people like unique things and are willing to pay more for them. Part of that is classic supply and demand. If you’re selling the same thing as everyone else, supply is plentiful, so the price falls to the point where demand reaches equilibrium with supply. When items are unusual or scarce, someone out there is willing to pay more.
You know the drill. Everyone and their brother stocks the new Thunder Boomer .380 ACP pocket model, so the only “unique” thing is the price. All the retailers compete by racing to the bottom of the price ocean, and soon everyone makes about $15 on each Thunder Boomer sold.
While doing huge volume in Thunder Boomers is a valid business model, there’s another way to make money in the gun business, and it has to do with two of the best qualities of firearms. They last virtually forever and there are infinity plus seven variations. Unlike cars, they’ll run for a century with the smallest amount of care, and unlike most consumer products, they really don’t become obsolete with the next “i-launch.” And uniqueness? Every day I see something new in the used gun market.
So we’ve got products that last forever and have infinite potential variety. How do you succeed selling used guns? The simple answer is to stock them in your store. There’s nothing wrong with that. You already know you’ll likely make better margin than selling those new Thunder Boomers. However many people cross your threshold every day, a certain percentage of them will buy a gun. A certain percentage of those will buy a used gun at a higher margin from you.
To grow the business, you can focus on each of those three numbers. Marketing, advertising and great service leading to word-of-mouth referrals will eventually increase your overall store traffic. Investment in professional staff and consultative sales training will increase the number of store visitors who make a purchase. And astute buying and creative display strategies might increase the number of people who buy a used gun from you instead of a new one.
These are all great strategies, and in no way would I discourage investment in all of them. The only limitation is the size of your audience. Yes, you can grow your in-store customer base, but only to a point. Based on population or the square footage of your store, there are only so many people that are going to cross your threshold in a day’s time.
The New In Used
I spent some time visiting Albright’s Gun Shop (www.albrightsgunshop.com) in Easton, Maryland, recently. Albright’s is a classic example of a local gun business done right. For 33 years now it’s been building a loyal and knowledgeable customer base. Part of that stems from Albright’s location. On the Eastern Shore of Maryland, locals take waterfowl and deer hunting seriously. The area is also a major tourist attraction not only for hunting, but also for clay sports. These are some of the reasons you’ll find not only truck guns, but also high-end smoothbores like Caesar Guerini and Beretta at Albright’s.
“We’re very lucky on the Eastern Shore,” owner Larry Albright says. “We have a great customer base and they’re very knowledgeable and sophisticated.”
Looking beyond a thriving local business, Larry did some math on the used gun market a long time ago. Even busy Easton with its high volume of tourist traffic only yields so many shop visitors per day. “But,” Albright observes, “with the Internet you don’t know how many people are looking at your stock 24/7. We got into online selling right away and embraced it. It’s been phenomenal for our business.”
Phenomenal? If you consider that two-thirds of Albright’s business is now transacted online, yes, phenomenal.
It’s Size That Matters
While Albright’s is certainly not averse to selling new guns online, the secret sauce is offering used firearms. It all boils down to leveraging the power of large numbers. We all have different tastes and wants, so in theory, there is someone out there who is willing to pay for just about anything. The key is reaching that person and matching them with the product they desire. That’s where online selling really shines. It’s not about being more efficient or saving expensive floor space, although those are certainly some benefits to selling on the Internet. The real money-maker is leveraging the near-infinite size of the prospective customer audience.
Albright’s has a great story that illustrates my point. A few years back, they purchased a used Winchester rifle. The quality of engraving was, to say the least, interesting — meaning really, really bad. Their natural instinct was to put it on the shop floor and price it at less than $500. In a moment of inspiration, they decided to post it online, with good photos and an accurate description. Perhaps someone out there might find it interesting.
A $2,500 auction sale later, the value of an infinite prospective customer audience became clear. With all those eyes on the gun, someone figured out that the engraving was done by someone who was likely better off working as an accountant. His tenure in the engraving shop was about one month before he was moved on to a more productive position.
As a result, his small number of “artistic” pieces are now collectors’ items. The odds of someone walking through the store and recognizing the value of that particular gun were less than zero. However, when thousands of people are looking, one of them is bound to find the item interesting for some reason. And someone did.
Auction Or Fixed Price?
So how do you get started selling used guns online?
The first decision is to figure out whether to purchase outright or sell consignment pieces online. Most retailers I spoke to prefer strongly an outright purchase due to larger margin opportunity. Albright’s prefers that model too, but it also sells consignment pieces online.
If you’re going to put consignment pieces online, be sure to consider two things. First, make sure you charge enough to cover your true online marketing costs. Unlike an in-store sale where you simply place the gun on the rack, an online sale requires time to take quality photos and write an accurate description. You’ll also have some minor extra costs like listing fees and final sale commissions. Second, make sure you have a strong, written consignment policy signed by you and the customer. Let them know you might sell the product online and establish clear terms to cover unforeseen circumstances like a loss in shipment.
The next decision is whether to sell via an auction or fixed price model. The two largest gun sales sites on the Internet, Gun Broker (www.gunbroker.com) and GunsAmerica (www.gunsamerica.com), each offer both types of sales models. Over time, Gun Broker has become the primary auction seller while GunsAmerica does better in the fixed price category.
The auction or flat price decision depends on a couple of things. The first is your level of risk aversion. Are you willing to sweat it out until the closing bell to see if you got what you wanted for a gun? Or are you the type that’s happier with a lower, but predictable, price? The second consideration is whether the gun is new or used. While there are plenty of examples of new-in-box guns being sold with auctions, it seems that used ones fare better in bidding scenarios. Certainly, used guns have more upside when viewed by a large audience.
Descriptions, Pics And Honesty
As with any new venture, you have to learn the ropes. What are the rules? What do buyers expect? What is the proper etiquette for doing business online? Don’t just dive in. Watch transactions from other sellers, ones with both good and bad reputations. See who closes sales and who allows auctions to fizzle out without any bidding activity.
One thing you’ll learn quickly when selling online is the power of feedback. Yes, local customers can say good or bad things about you to their friends. When your business is online, transaction feedback is part of the game. Most customers who buy from you will leave a rating and/or comments about their experience. You cannot control or edit this process, so you must focus on providing excellent service with each and every online sale.
The most important thing you can do to gain positive feedback from your customers is to be exceptionally accurate with item descriptions. Invest the time to describe it exactly, warts and all. If someone buys the product, they’re going to see it anyway, so you might as well share all the details in advance. As a rule, you’re better off being more critical of your own items so that when it arrives at the buyer’s FFL, they’re pleasantly surprised by the item’s condition.
Be descriptive. Instead of filling in the description field with “Mosin Nagant Rifle,” tell a story. Write a couple of lines about how the Mosin was used by the Russians to defend their homeland and by the German army as captured weapons. Help your buyer appreciate some of the more interesting aspects of the gun.
You must, must, must supply quality photographs. Rather than describe with words the condition of an item, provide plenty of close-up photos. In your text, you can always say something like “We’ve provided lots of images so you can see the exact condition for yourself. If you need more photos of a particular area, please let us know before bidding.” As you watch other auctions, you’ll see items with lots of great photos getting top dollar while those with a single image of a gun on a bedspread won’t fare as well.
While selling used guns online has a new set of rules, most of the marketing and merchandising basic principles still apply. Be honest and accurate. Communicate clearly and frequently with your prospective buyers. Be responsive to questions. Most importantly, if there’s a problem, solve it quickly. Online, one unsatisfied customer can cause a lot of damage to your reputation. The upside for this effort is clear. More lookers translate to more customers.