As I sit and watch the first snow of 2016 (I’m writing this column in early January), I think it’s important to take stock of the year that’s just ended and look at the year ahead. Last year brought some eye-opening changes to our industry. Those changes, not to mention a long and slow economic recovery, have left many retailers scrambling just to maintain their bottom line. Indeed, “flat is the new up” has become an industry-wide quip. New revenue streams are badly needed, and retailers must embrace the platforms available to them in order to make any kind of gains.
Independent retailers have been struggling to embrace e-commerce for years. Web-savvy dealers previously have used their own Web sites as a primary source of Web sales, often with mixed results. Larger and more tech-savvy stores were able to add significant sales online, whereas smaller stores, which weren’t as well versed in the world of online retail, have found themselves struggling to add any significant amount to their bottom line. Some turned to auction sites like eBay, which, for a decade or more, many have used with great success. Often, they moved vintage and used gear as well as new inventory and “new old stock”—new items that had sat too long on the shelves and that could easily be moved at discount prices to generate cash flow. However, over time, eBay and PayPal fees cut so significantly into margins that it became less of a draw. On top of those negative factors, the general nature of eBay drew the maximum amount of tire-kickers and problematic buyers. eBay quickly began to lose its luster. Some retailers turned to Amazon as it came of age, but they were similarly disappointed as fees climbed higher over time.
Obviously, none of this has slowed guitar sales significantly, but it has left a large hole in the online marketplace for peer-to-peer sales, as well as dealers who are looking for ways to augment their brick-and-mortar sales without investing tons of money into a whole staff devoted to online sales. And then, along came Reverb.
Since David Kalt was just profiled in The Retailer, I’ll skip over the history of the company and focus on what matters: Does it work for independent retailers? My answer is an unequivocal yes.
Reverb is a must-use for independent retailers. Although having an e-commerce Web site has become more important than it ever previously had been, Reverb’s reach has grown very quickly, and it’ll only continue to grow. Its strategic use of inexpensive cables and tuners to encourage new accounts to sign up has resulted in grabbing a huge foothold, and it shows the company’s savvy. It has been heavily advertised and it’s rapidly increased its user base. It has invested heavily in making a user-friendly site that’s built to help you sell easily and efficiently—whether from your laptop or using its smartphone app—and it’s begun venturing into Web site integration using its API for systems like Magento and BigCommerce (please let Lightspeed be next!), allowing quick importing right from your existing e-commerce platform.
All those things are fantastic, and they’re a no-brainer for retailers. However, the real value to retailers comes in three ways.
First, the fees are considerably lower than on any other platform. It’s 3.5 percent, plus either a fee for credit card processing via Reverb or a fee on PayPal. Plus, buyers can finance purchases via Affirm.
Second, the staff of Reverb is endlessly helpful anytime there’s an issue and, unlike what many people have experienced selling through eBay and Amazon, they tend to be very hands-on in conflict resolution. And, they’re very willing to protect sellers, in my experience. I’ve had very few issues, but, when they have arisen, the staff has been extremely helpful.
Third, and maybe most important, is the user experience. It’s a game changer. As I mentioned earlier, the site is very easy to navigate. The Price Guide is a very helpful tool for buyers and sellers, helping to maintain reasonable prices and keep the number of lowball offers to a minimum. Although the Web site itself is very user friendly and easy to use, perhaps the best advancement Reverb has made is its smartphone app. If you take a halfway decent photo of a guitar and write an honest assessment of its condition, injecting a little of your store’s personality into the text, you’ll be up and selling in no time. My store’s whole staff, including Owner Brad Shreve, has added the Reverb app on our smartphones, and we use it to take photos and upload listings of our vintage, used and hard-to-find gear.
The demographics, too, have been very interesting. I’ve sold things to hardcore vintage Silvertone collectors, recording studio engineers, weekend warriors and soccer moms looking for Christmas presents. I’ve sold products ranging from $50 to nearly $5,000, though the average is closer to the middle. New inventory hasn’t proven to be as strong a seller, and some companies prevent dealers from selling on third-party sites entirely. When we do sell new inventory on third-party sites, we always adhere to MAP and defer to dealer agreements. (And, incidentally, plenty of things sell right at MAP.) We have found that it’s simply easier to focus on used inventory most of the time, except, perhaps, with hard-to-find effect pedals.
Hardly anyone is pushy and, often, people find it reassuring that they are buying from a store and not from an individual. By extending the kind of hospitality that we extend in our store and on social media, we’ve gained repeat customers who now buy over the phone or, in a few cases, who’ve made the trip to our store. (Some have come from as far away as Canada.)
I know that I spend a lot of time railing against the ways MAP violators, direct sales and third-party marketplaces can hurt dealers, but here is a third-party marketplace that was created specifically to empower dealers. Independent stores should be getting out their smartphones and putting their used, vintage and old stock on Reverb to generate some positive cash flow and to clear room for new inventory. Get creative, be yourself (or a better version of yourself, if necessary) and connect with people. You’ll gain some new customers and make money with minimal effort. This is a great new platform and, barring negligence on the part of Reverb, it’s set to redefine what third-party selling can be, and to help indie dealers grow their business online…one customer at a time.