Something every business must evaluate periodically is their ability to dissolve their business, and start fresh with a new service or products. I talked about this last year when my sales dropped by 25%, but never applied my plan. Now, I don't have much choice.
That's where I am today. We visited Movie Gallery today because we wanted to rent a new release that wasn't in Redbox, and we didn't want to wait a week for Netflix to have it back in stock.
There was a sign on the door that said (not verbatim) "We are closing. We do not know when, and it was not planned. We will not be receiving any new movies."
The lady working said all stores are closing with their bankruptcy.
Wow. The first movies we ever rented came from Movie Gallery, and they will be gone by summer.
This brought me to the realization of several issues with my business:
1. If customers won't pay $4 to rent a movie and copy it at home (come on now, you've done it...) they sure as hell won't pay $20 for me to ship a copy to them.
2. Most people who rented movies now use Netflix. I do too, and I sell movies. I can watch any one of over 20,000 movies every day on my computer, or have 3 of over 60,000 of them in my mailbox tomorrow, for $16 a month. That's less than my price for a single new release.
3. The only way I ever sell a single movie is to make nearly nothing on the sale, or the shopper will be buying from a much bigger competitor that can get a lower price.. If I sell a movie for $10, I am lucky to make a buck after the processing fees, and if it is on eBay, I just can't sell a new movie and make a profit anymore.
4. DVD sales weren't killed by Blu-Ray, they were killed by Netflix.
This is the year that my 8 year business selling movies, since July 2002, will come to an end. It's no longer feasible to make a minimal profit. Fortunately, I have a primary income to support my online selling addiction, so I can experiment. If your business is on a downswing, your options may be more limited.
This is my plan:
I have found a specific audience to target, and while there is competition, there is a very simple way to insert my brand into the market.
I already have a decent amount of knowledge regarding suppliers, and have expanded my sourcing for the products. There is a very good margin on these items with an average selling price of $40 within the niche.
I will continue to use my same supplier for movies as needed, but I am preparing to unload a large number soon via Craigslist. Hopefully, I can raise a good bit of cash, plus my credit will help greatly to go on a new track.
So, let's look at your business.
Are your sales less than 75% of last year? Mine were there in 2009, now they are less than 10% of that.
Are your profit margins slipping because of increased competition?
Are you prepared with a backup plan to make up your lost income while you restructure?
The reality is simple. I have sold movies, only movies really, for 8 years. My sales were once over $50k monthly. My sales for April have been less than $500. That's 1% of my sales in 2006, and 10% of my sales from April, 2009.
It's time to plan my exit from the DVD market. I'll stay on top of it, so stay on top of yours and don't let your stubbornness get in the way of profit.
