A Great Business Model Lesson from Gun Control
In business, change is not usually your friend. . You work hard to create and work your plan, and then competitive, economic, and sociological changes degrade it. .
Clever entrepreneurs are capitalizing on the politically charged changes to the gun business. As eBay, Google Shopping, and other large marketplaces are prohibiting gun listings, savvy entrepreneurs are creating niche marketplaces like freegunshow.com to connect gun buyers with sellers.
Let’s set personal and political positions aside and confine the conversation to the business aspects of gun sales. . Annual gun sales in the U.S. total around $3.5 billion, a fraction of total sales for large e-tailers like eBay and Google. To sidestep potential damage to their primary business lines, eBay and Google have walked away from a profitable niche.
Orphaned business units or customers
One of the tenets of a strong business model is outstanding margins. Easy to say, but hard to do. Serving unserved or under-served markets is a terrific way to command excellent margins.
These savvy guntrepreneurs saw a soon-to-be underserved market for gun buyers and pounced.
Pitfalls such as governmental action, regulation, or even Mother Nature can harm an otherwise solid business model. These guntrepreneurs certainly face a few pitfalls with their opportunistic business model.
First, if the political climate cools down, Google and eBay may reenter the market and will probably cut into the customer base.
Second, the market could fragment from a few large sites like eBay to dozens of gun sites, not allowing any one site to gain enough critical mass to effectively serve customers.
Third, were gun sales on eBay and Google peripheral to many other purchases/sales or were they primary? The answer is certainly a little of both. Some gun enthusiasts will gladly move to other sites to purchase their wares. However, others may move out of the gun market altogether without the convenience and credibility of eBay.
Fourth, customers could shift to offline purchases at sporting goods stores or local gun shops.
Fifth, the political climate that caused eBay and Google to cease selling guns could adversely affect the new sites. Political pressure and uncertainty was strong enough for large operators to choose to exit the business. Guns were one of many items sold on these sites. A site devoted solely to gun sales might create even more attacks from anti-gun groups than Google or eBay endured.
Lastly, the government could regulate away the business by disallowing gun sales on the web or prohibiting sales altogether.
Maybe a Kayak Business Model Version 2
To play on Kayak’s “Search one and done” slogan, this opportunistic business model is probably good for a profitable quick hit and then it may be over. If the political climate returns to normal, the big boys become competitors again. If the government steps in, the lights are instantly shut off.
Today, the business model of these niche sites looks good. A website is inexpensive to create and to shut down. However, this business model still capitalizes on a trend that is probably temporary.
Do you think this business model will work and have staying power?
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