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In short: I’m explaining futher on how I manage to make money on finding rare and not so rare music CDs ONLINE and selling them to OFFLINE world people. I reveal as much information as I can think of: mark-up amount, my best sources for CDs and even the business model. Feel free to implement it in your coutry and prosper on it

(continued from “Part I: Making Money By Helping Internet Illiterate People To Find And Buy Rare (Or Just Any Kind Of) Music Via Internet” post)

One day I dropped by a friend of mine for a couple of beer. He owns an OFFLINE, that is bricks and mortar, music store, and after 5th beer (err…did I say I was in for merely a couple?…) he offered me a partnership in a new (music related) business.

He said:
- I’m positive that you are absolutely the best “Internet Lost & Found service” guy in this neck of the woods (Indians’ lifestyle is his lifelong hobby, so he would often speak in a manner of an ol’ Crow addressing a naive white fellow hunter). Every so often I’ve being approached by aging music lovers who fail to find their favorite tunes, albums and singles. They keep coming and asking me, Vadim, can you please get for us this AC/DC album or that Spliff single? They do not mind paying big bucks for that kind of music - music they adored in their adolescence age and are eager to buy now - price is not the issue (well, within certain boundaries of course…). Some of most advanced ones even manage to order such stuff via Purple Legion (large music retailer in Moscow), and the price Purple Legion quotes is OK with them. I know almost all of these aging music lovers personally, so I can see no reason why we cannot process these peoples’ request _better_ and _faster_ than Purple Legion does?

I started to respond:
- Old buddy, you know, I’ve been into music for ages, and I was about to start such a business myself, but look - nobody buys music nowadays, whose pesky musicheads got Internet connection and ….

And here he interrupted me:
- Forgot all those guys who got Internet connection! I’m speaking about real life folks who doesnt know a thing about Internet and does not WANT to know it! They work hard running their TOTALLY OFFLINE businesses and they got NO TIME to learn neither English nor what could be done via Internet, they just want their FAVIORITE MUSIC NOW, and that’s what WE can OFFER them.

Step by step (err… beer by beer, actually), we came to aggreement and developed a simple yet effective business model. Here it is, barebones:
- a customer comes to my friend’s OFFLINE music shop and provides a wantlist of music he’d love to get;
- a shop attendant transfers the wantlist to me by email;
- I look up the wanted titles over multiple resources I managed to collect during my music collector’s career, having in mind three main factors: 1)the cheapest price of the given item, 2) the cheapest postage fee to Russia and 3)”international delivery” option at seller’s online store.
- I pass the found information to my partner who adds a mark-up (no less than $10) and quotes the price to the customer;
- if the price accepted, the customer pays full sum in advance in ol’ good cash;
- my partner deposits the necessary sum to his debit (Internet transactions only) card;
- I proceed and pay for CDs using my partner’s card details and get it shipped to my partner’s music shop address;
- upon receiving the package, my partner’s employee hands the CDs to the customer.

Simple, isn’t it?
Speaking about the profit margin - we can easily add $10 to a regular price of $12.99, and that’s still OK with our customers - that’s 77% profit. Good one, isn’t it?

And there are ways to increase it. While large, small and tiny mailorders does not (usually) offer any kind of affiliate programs, then huge sellers (like Amazon) does offer it. So I’ve registered as an Amazon affiliate, and buy CDs in my partner’s name and by his card via my Amazon affiliate form. That’s another 5% (off the seller’s price) to add to the profit.

Amazon is not the only source of music CDs on the market though - there are two other players who operate in slightly different field - I call them “shop aggregators”. Namely, these are GEMM (Global Electronic Market Place) - they were the first in this field, and their rival - MusicStack

GEMM currently features over 26 million CDs,Vinyl Records, LPs, 45s, 33s, Cassette Tapes and Memorabilia Items from over 20,000 record stores and independent record collections worldwide.

MusicStack boasts 19 Million Vinyl Records, Albums & Used CDs from 3500 Record Stores.

The differences between these two are:
GEMM: pays 10% affiliate commission for first time orders
MusicStack: pays 6% for all orders generated via my affiliate link.

Note: it is possible to talk GEMM into paying you 10% on all purchases ever made by a
customer. I emailed Roger (who’s in charge of affiliate programs at GEMM ) explaining him my business model and asking whether it’s possible to earn commision on all purchases made by a particular customer, and he kindly agreed. In personal message he said: “We can do as you request. However, our development staff would need to have one programmer spend an entire day coding that up. Unfortunately, our staff is buried with a lot of projects at this time. We can set aside time to do that for you some time during the next month (September) if that’s OK with you.”

Another advantage of GEMM over MusicStack is that GEMM handles all payments by itself (and thus can guarantee hassle-free transactions for certain kind of sellers, whose who earned 4 stars status) - while MusicStack leaves it to seller-buyer.

Considerably larger sellerbase at GEMM is also a plus (although I noticed that some sellers carry their outlets at both palces, but I always - I repeat, always - check all the titles I’m after both at GEMM and MusicStack, because rare music is often definitely rare. More to this - I do not limit my search to these two marketplaces - more on this in Part III of the opus

Speaking in MBA guys terms, my and my partner’s core competencies (for this kind of business) are:

Mine:
- I’m absolutely the best “Internet Lost & Found service” guy in that neck of the woods I happen to live in
- I’m a seasoned musichead who knows every huge, large, little and tiny online music store on the Net
- I’ve got extensive experience in ordering music from abroad of Russia and 100% success rate in so doing.

My partner’s:
- He’s got established OFFLINE presence and customerbase which maintains trust in him
- he’s got an employee who can do the rough job of taking in wantlists, accepting cash, depositing it to card and handing over received CDs.

Advantages that I can see for myself:
- To make money, I just have to spend some time online looking up wanted titles and paying for found items.
- Even if the money involved are not that big, I have _nothing_ to loose and _much_ to gain. All I have to invest into the venture is just my time - and being an Internet geek, it doesnt take me much time to locate the item I’m after.

Also, I’m spared of lots of obligatory things this kind of endevour implies:
- I do not have to advertise or somehow else attract customers - they come to my friend’s shop themselves.
- I do not have to go to bank - my friend’s employee does that.
- I do not have to go to post office to pick up packages - my friend’s employee does that.
- I do not have to meet the customer - my friend’s employee does that.

Continued in Part III.

Filed under: Success stories - Offline meets Online