Case Study: Online Presence Resuscitates ‘Buggy-Whip’ Sales

Case Study: Online Presence Resuscitates ‘Buggy-Whip’ Sales
April 10, 2012

Bruce Edward Walker

Bruce Edward Walker was managing editor of InfoTech & Telecom News from 2010 to 2012.... (read full bio)

The Internet often is depicted as the bête noire of traditional bricks-and-mortar retailers. As soon as the traditional tech-savvy household plugged in a dial-up modem to a computer in the 1990s, consumers opened up their wallets, gave up credit-card numbers to Web-based retail operations, and waited at the door for UPS to deliver goods purchased from pioneers of Internet retailing such as Amazon.com, eBay, and Barnes and Noble.

The Internet was and still is perceived widely as the latest onslaught against stores possessing a physical “nexus” that have managed to survive previous threats from catalog retailers, nationwide retail chains, mega-malls, and big-box stores. Corner shops selling goods to a small town just can’t compete with the scale available to online retailers—or so the theory goes.

In fact, although the Internet has helped spawn several of this century’s Goliaths of retail, it has also allowed thousands of Davids to arise using the power of a strong brand, a unique project, and a broadband connection. For every Amazon and Apple online there are literally hundreds of small businesses specializing in everything from rare collectible items to niche products and services.

In the last decade especially, independent retailers have employed the Internet to gain market visibility and achieve the same scope enjoyed by their larger rivals. Instead of relying on foot traffic in a high-rent neighborhood, these small businesses can set up shop anywhere—or even forgo a traditional brick and mortar boutique entirely, selling products and services from the comfort of their own home.

Internet Revitalizes Small Businesses
The rise of high-speed broadband was the first piece to make this new e-commerce possible, but the explosion of online tools has also been a boon to the small business community. For example, a small business can launch a Web site and employ search engine optimization and online advertisements to micro-target consumers using specific search terms or similar websites, allowing the business to cheaply and effectively gain traffic. As a result, some small companies are able to increase exponentially their market exposure beyond their immediate geographical location and become a player in the online “borderless” economy.

Social media are another tool that can help improve a small business’ brand recognition and boost sales. Positive reviews and word of mouth can travel across multiple platforms and reach a diverse crowd of potential customers.
The Internet isn’t just a tool for cutting-edge start-ups—it can also help reinvent and revitalize small businesses that have been around for decades. In addition to allowing customers to shop around for the best generic brand television at the lowest price, the online marketplace has also been a savior to the specialist, allowing collectors and enthusiasts to find the niche items they crave. Before the Internet, finding classic car of a particular make or model could take years. Now it just takes a visit to Craigslist or Cars.com.

Seizing Online Opportunities
In no industry is this example more prominent than for music. In its heyday, shops relied on the sales of records and later cassettes and then compact discs to make their profits. The rise of the Internet was perceived as a threat to local shops because of cheaper costs online and the shift from hard copies to digital downloads found on iTunes and Amazon.

Warren Westfall, owner of the Record Collector, a used compact disc, video cassettes and discs, and vinyl emporium in Ferndale, Michigan, notes the advent of digital downloads on the Internet stalled sales of newer music that represented the bulk of his sales since he opened in 1981. Westfall, however, was an early adoptor of the Internet and his online presence now accounts for 20 percent of his sales.

“I'm in what I call a ‘buggy-whip’ retail business,” Westfall says. “The last surviving manufacturer of buggy whips made a good product and had survived competition from all of the other buggy-whip makers,” he explained. “The automobile was still coming, and what you made was becoming increasingly irrelevant. What I sell is the equivalent of buggy whips.”

Westfall continued: “eBay and Amazon have become for me the way to sell inventory that I think I can no longer sell in my store. A good example is the collection of 40 or 50 Romanian LPs I bought last year from a customer for $0.50 each.… The Internet is almost the only way I can expect to sell them. And I have sold most of them online for $6 to $10 each. In my store I probably still could not sell them for a dollar each.”

Westfall says eBay has become essential in the Record Collector’s sales strategy.

“No one is going to walk into my store in Ferndale, Michigan and spend almost $600 on a classical LP that I received in an eBay auction. Because of those sales I now have international customers who physically come to my retail store in search of the kinds of music they are looking for. None of this would happen if not for the Internet,” he says.

“I feel the Internet is an essential part of my company’s sales,” Westfall concludes. “To ignore it would be my death knell.”

Bruce Edward Walker (bwalker@heartland.org) is managing editor of InfoTech & Telecom News. This article is excerpted and reprinted with permission from the American Consumer Institute.

Bruce Edward Walker

Bruce Edward Walker was managing editor of InfoTech & Telecom News from 2010 to 2012.... (read full bio)