Debating starting an aquarium store

[Montiman]

While I also will choose not to disclose what the exact margins are to protect local stores I will say that according to NYU surveys of business across the US in 2020 the average gross margin for specialty retail is between 28 and 29% This is in line with the aquarium hobby which is closer to specialty retail than anything else in their break down.

It is ridiculous to not consider net margin. Otherwise financial services like banking would look great because they have close to 100% margin. Not knowing the net margin can be a big problem for stores. When I was at the LFS I was under the impression that I was making more money on livestock than dry goods but after doing a cost analysis of extra employee hours, salt, food, losses, electricity, and water I found that the net margin was about the same as with dry goods. Dry goods sit on a shelf, don't die and most don't expire. The overhead cost of X square-foot of dry goods compared to X square feet of livestock is huge. Live stock has far more overhead.

 

[PicassoClown04]

I 100% support LFS and go to them as often as possible. 99% of my fish have been LFS and over 70% of my coral have as well. I have great relationships with my LFS owners and employees. Having a great saltwater (or mixed salt and fresh) LFS will provide lots of new hobbyists with good info, rather than them getting “facts” from untrained petco employees.

As for equipment, I would advise away from that market. The people earlier than me in this thread are right, you cannot compete with online prices. But having things like calcium reactor pellets, fish food, carbon, test kits, and dosing supplements (sea chem, apex/trident stuff) will be best sellers. Things that people need often will usually be bought over expensive one time purchases like a light or reactor. Having a used section is also great for providing things like lights at almost no cost to yourself (as the store owner) so it’s almost 100% profit on that.

the LFS near me that focus on providing quality livestock for fair prices are the ones that have been successful for 10+ years. The ones that tried to focus on equipment or wildly overpriced their livestock failed. Keep your passion for the hobby alive and you’ll be fine

If you decide to do this, good luck!!! Make sure you pick a good location

 

[austinsreef]

I owned an online coral shop and eventually merged with an LFS. I ended up getting out of it for a couple of years while I moved and took care of some personal things. Here's my advice:

1. WRITE A BUSINESS PLAN!! Be HONEST when you're writing it. If you don't have a plan and goals, you have no way to know where you want to go and no way to measure how successful you've been in getting there. It will also force you to ask yourself some of the hard questions about the feasibility of your business. The Small Business Administration has a ton of free resources & mentorship programs. I'd look at some of those. If you look close enough at a business, it becomes fairly simple to see who did this research at all and who didn't.

2. You're not going to compete with BRS, Marine Depot, or Amazon. Own that and lean in to it. Amazon may be cheaper, but you have the expertise, you can guide your customer on making the right decision and be a resource for them. Build that customer relationship, and they won't even have online retail as the consideration set.

3. Write a business plan (please!!!!)

4. think about what makes you different. Idk if there are SW stores nearby. If so, why should I try yours? No, your differentiator isn't "customer service". It needs to be something real. Do you QT your livestock before selling it and your competition doesn't? Do you have more experience than them? Do you have a better return policy? Think hard about this. Consumer habits can be hard (but not impossible) to change.

5. WRITE. A. BUSINESS. PLAN.

6. Know ALL of your expenses. Some things people don't think about: insurance (it's going to be expensive with that much water in a location), electricity (you have tanks running 24/7. that's expensive).

7. Know your margins. How much are you making on dry goods? Livestock? Maint. services?

8. Know what you want to accomplish. You'll figure this out when you're writing your business plan. Is your goal to compete with WWC in online sales? Maybe it's to just own the local market and be the "go to" store? Find that out. Remember it.

9. YOU are not your customer/market. You have a passion for this, but how many people in your area (really) also care? Statesboro has a pop of ~32k people. How many of these people are interested in starting or tank or already have one? Of those, how many are willing to check your store out? Of people who already have tanks and shop with your competitors, just because you think your value prop is valuable, doesn't mean it is to them. Find out what's important to them.

10. WRITE. A. BUSINESS. PLAN. (!!!!!)

I sincerely hope this helps. best of luck!!

 

[lpsouth1978]

The price you can buy it for are given to you by the manufacturer or whokesaler. The amount you can get for it is given you you by map or general market pricing. Neither are going to move much. So because your rent is super cheap or super expensive has zero bearing on the markup of the hard goods.

Now those factors should be thought about prior to starting a business to determine profitability in general.

In part yes. There is often negotiation that can take place with the wholesalers and/or distributors, and sale price can be manipulated to a degree to make up for things like higher rent, electric costs, etc. I say to a degree because you clearly do not want to raise the cost so high that you drive business away, but prices can be increased marginally to offset some of your expenses. It may not seem like much, but even an increase of only $1 or $2 on all goods, can make a huge difference without driving customers elsewhere.

We recently increased our prices by a buck or two across the board due to increased expenses. Business do it ALL the time.

 

[Lowell Lemon]

While those are factors in profitability, they are not factors in mark ups of hard goods. Buy for this, sell for that.

Spoken like a true hobbiest! Lol...I was one of those until I decided to run a business and not a hobby. All those factors are the very bedrock of cost per unit sold! Your mark up must align with those factors or you are out of business but you just don't know it yet. Yep, the slow bleed of capital to margins or volumns that are too low to create a profit.

It is a good idea to run a ROI (return on investment) and develop a business plan first to see if you are going to survive.

 

[Lowell Lemon]

The price you can buy it for are given to you by the manufacturer or whokesaler. The amount you can get for it is given you you by map or general market pricing. Neither are going to move much. So because your rent is super cheap or super expensive has zero bearing on the markup of the hard goods.

Now those factors should be thought about prior to starting a business to determine profitability in general.

In some cases Map pricing may be illegal but people at the bottom of the market don't have the money to take it up in court. I sell products from Dupont and they do not even suggest retail prices. You are free to price yourself out of the market (to high) or sell to low and burn out.

 

[monkeyCmonkeyDo]

Get a creeper van and lots of buckets. Start a maintence gig and breed coral and fish at home for your customers or others. Move on after that.
Something and lighting co. Was a big wholesaler. You woulda never guessed but it was.
D

 

[Lowell Lemon]

What @austinsreef said is money! 32000 is not enough population...but what is your drawing area population? What is your business plan?

Wish you well no matter what you decide!

 

[monkeyCmonkeyDo]

Champion Lighting & Supply

Champion Lighting & Supply

www.championlighting.com

Think this is them. Champion and light co.
They might give u a wholesale acct.
D

 

[sharpimage]

In some cases Map pricing may be illegal but people at the bottom of the market don't have the money to take it up in court. I sell products from Dupont and they do not even suggest retail prices. You are free to price yourself out of the market (to high) or sell to low and burn out.

In most markets yes. But this is a opening a lfs thread. You can buy random lights for say 750, and sell them for 839. No one is going to buy them for more than that. The mark up is fairly fixed. The mark up on that specific product.
Now your service or your livestock can vary more or less depending on other factors

 

[Lollipop]

well too late for me to choose a major but at least i have a retirement to choose. I would have chosen marine biology if i discovered this hobby early enough. i also thought about being a coral supplier after i retire (well i think it will be at least 10-20 years from now) but at this time, i would love to retire to Solomon Island! i don't think my kids will approve it though. Follow your gut- where your passion lies is your career that you will excel at. But i agree there should be a econ analysis if you like to give up an income source for it.

 

[Lollipop]

plus you must open an online business as well as storefront- a must in this omnichannel environment! you should not be limited to geographic area unless you are a service provider! even service providers are developing network to offer the same service through partners! storefront is served as an experience and display yet you must expand the audience if you want to sell livestock and equipment. Look into the aquarium specialty model.

 

[t3ddy]

plus you must open an online business as well as storefront- a must in this omnichannel environment! you should not be limited to geographic area unless you are a service provider! even service providers are developing network to offer the same service through partners! storefront is served as an experience and display yet you must expand the audience if you want to sell livestock and equipment. Look into the aquarium specialty model.

Yes we are going to have an online store as well, already have a point of sale system that does both inventories. So everything in the store, will show up on the website as well for purchase.

 

[AquaBiomics]

One mistake I see a lot is people setting up shop in high cost areas, and spending way too much on their lease.

Most of your business should be online anyway, so IMO you should focus on the absolute lowest cost lease you can find. Accept a commute. Forget about random foot traffic IMO. Avoid shiny main street spaces with huge windows like the money pits they are. Minimize overhead.

The customers you want can find you and won't mind driving an extra couple minutes to get to you.

When I was shopping around for a space to set up my lab I found literally a 10-fold range in costs for comparable spaces, within a 30 minute drive. Its insane how much this varies. I can't think of any other cost in setting up my business that had such a huge range.

 

[JAC-]

Tossing my hat in, I support LFS's as much as I can. I've had many emergencies that I had to run out and grab something over the years, and I enjoy shopping at them. I hate that I had to move away from the last one I frequented as I was there so often I got to personally know everyone and I'd help customers out during rushes. I never asked for it, but was exchanged discounts and freebies for helping out. I'm still close to the owner and he's about to open another store, I'm trying to talk him into doing it on my new side of the state.

My real point is that sure it's a tough market, but I think that if you and your staff are knowledgeable, honest, and focus on the customers it can go a long way. The amount of people that would walk in out of curiosity and decide to join the hobby was amazing. The success rate they would have from getting the knowledge to start off right, turned many of them into long time customers.

Best of luck in whatever you choose friend,

 

[gpd124]

There is a lot of good advice here. It has already been referenced, but it is worth mentioning again - setup a business plan which contemplates your competitive advantage (why you and not someone else), location, marketing, etc. Also, I would spend a lot of time with an honest budget.

Calculating overhead will include fixed costs (ie rent, insurance, etc.) and variable costs (ie labor, utilities, etc.). In addition, you will need to consider direct costs of inventory (dry goods and livestock). In doing so, you should consider inventory turnover for each and include allowances for loss, spoilage, etc.

You should also include contingencies in your budget planning. It is difficult to predict the future, so you should have some allowance for “what could go wrong”. I normally look at a budget and think about the vulnerabilities that may exist in certain revenues or expenses.

It was alluded to above, I think it is important to accurately group together the revenues and expenses of certain activities or cost centers (i.e. revenue from maintenance services and all of the related expenses - gas, labor, allocated overhead, etc.).

 

[fishlover1478]

this video is amazing
the guy who made it owns a store in Edmonds Washington and has an amazing online store
also it is about a freshwater store so I'm not sure how much changes

 

[t3ddy]

One mistake I see a lot is people setting up shop in high cost areas, and spending way too much on their lease.

Most of your business should be online anyway, so IMO you should focus on the absolute lowest cost lease you can find. Accept a commute. Forget about random foot traffic IMO. Avoid shiny main street spaces with huge windows like the money pits they are. Minimize overhead.

The customers you want can find you and won't mind driving an extra couple minutes to get to you.

When I was shopping around for a space to set up my lab I found literally a 10-fold range in costs for comparable spaces, within a 30 minute drive. Its insane how much this varies. I can't think of any other cost in setting up my business that had such a huge range.

I already own the building we are going to put the store in, its 100% paid off.

 

[jskidds2294]

Create an LLC to distance yourself from any issues that occur. If you run it from your own home all of your bills are now tax write offs.

This is what I’m actively doing. This is the future of fish stores not physical stores but online. The savings are great, even better if your or your other knows web design and coding. Then it’s a no brainer.