Welcome back readers! Sorry for the mini-hiatus, my job had me fly overseas for the past week (and I don't get back to the states until the 27th) and I was super busy working. That being said, I've had some time to catch up (and more importantly get all my questionnaire responses in). Today's article will focus on the costs of doing business for online (only) stores.

Unfortunately, exact numbers weren't given by my respondents (but I still greatly appreciate their input), so instead of anything exact think of this one as more of a macro-level look at the costs of running an online MTG business.

For a little background information, I put together a small questionnaire that I then sent to three respondents (Mr. Nick Becvar, formerly of Affinityforcards.com; Mr. Phillipe Durand, and Mr. Mark Pomerantz). Mr. Durand is located in Santiago, Chile (so it will be awesome to get a non-US perspective on this subject). To make things easier I will be formatting each person's answers under the question using their initials (i.e. NB=Nick Becvar, PD=Phillipe Durand, MP=Mark Pomerantz). Now to the action!

What was the biggest unexpected cost you ran into when you started your online business?

PD: "Not counting the card stock, it was only the hosting and domain costs, because I do all the coding, and of course all the legal stuff, but in the beginning our site was informal and we just did all the legal stuff last year. We don't need a platform connecting to something like TCGPlayer or any other third party business, because here in Chile nothing like that exists. So I spend very little money to put the site online."

NB: "Probably the cost for my logos. I was thinking I would be able to get something fairly cheap, but it turned out that everywhere I looked wanted $200+. For some reason, I just figured I would be able to find something for around $50. Its not like it broke my bank, but was just more than I was anticipating. Outside of that, I knew pretty much all the costs going in."

MP: "Sunk costs. A lot of my stock happens to be in hard-to-move cards. EDH foils, and specs I went deep on. Most of these pay off in the long run but the deeper you go in a spec the harder it is to turn a profit. For example, around 15 months ago I went deep on several hundred Restoration Angels for under $5, and I'm only just recently in the black on these. Overstock is a blessing and a curse. If you can get a good price on a card that you can sell high, going deep means more profit in the long run but you're stuck with the card for a long time."

Did you require additional personnel to assist you with your online business?

PD: "At first I was alone on part time and my wife joined me in the first weeks and when we formalized the business we hired two more people full time."

NB: "No. I did everything myself. At times, it would have been awesome having staff (mainly during new set releases when I had hundreds of preorders to fill). I was small enough to where I was able to manage all the work on my own, yet still be decent size for an online-only retailer. I packed all my orders, sorted and listed all cards, took care of customer service, etc. "

MP: "Nope."

What was the most painful cost lesson you've learned through your online business?

PD: "Shipping cost and time from USA really hurt, but is part of the business and of course that make this hobby more expensive here."

NB: "Don't buy oddball things. While some stuff may be neat, its just not worth the hassle of trying to find the right buyer for it. Stuff like that is so niche and you have to do a lot of work to actually get something higher than what you paid, or finding someone who wants it. An example? I, very stupidly, bought a sealed copy of the first Pro Tour on VHS, for $100. Months later, I got rid of it for $20. While it may have been worth more than $100, it was only worth more than that to the right buyer. And I never found them."

MP: "'Cut your losses short and let your winners run.' It's hard sometimes not to be too proud or too stubborn to cut your losses when an investment turns sour. I bought heavily into Armada Wurm and Temple of Abandon and had to dump them for a fraction of what I paid because I held on too long hoping they'd turn around. In general when you speculate on Standard-legal cards, you should be working on getting rid of them as soon as you get them, whether its for a profit or not. Because if they're not being played in the top decks, they will turn sour. And even if they are being played in top decks, everything in Standard has an expiration date so get out when you can. And don't get discouraged from investing in Standard just because you have to take losses sometimes. Successful investors can lose over half the time as long as losses are not allowed to compound. Cut your losses and let your winners pay for them."

What administrative costs are associated with running your online business?

PD: "Mainly account, the site management I do it for myself because I'm an informatic civil engineer, but normally you will need someone to do the site maintenance, and I have someone that is a graphic designer to do all the pretty stuff."

NB: "Really, for me, it was only supplies. Toploaders, envelopes, etc. I had zero overhead since I did everything from my house, and I didnt have a staff. My time, I suppose, was a cost, but I realistically just valued it at $0 in terms of the business, because if I wasn't working on the business stuff, I would likely just be sitting watching TV or playing games and not making any money. I'm different from most in that I really had hardly any costs outside of supplies and cost of inventory."

MP: "None really. I run it by myself from my apartment."

How do you typically “restock” on cards?

PD: "Standard and newer editions opening boxes, MTGO redemption and local buylist, older stuff buy singles in different sites in the US."

NB: "Events (mainly PTQs when they were still going). I would purchase and run a booth at the events, and buy cards all day. The local collection buying is pretty chock full of people wanting to buy, so it was rarer that I bought collections locally. My main source of inventory was those booths."

MP: "I buy from stores, tcgplayer, collections on craigslist, internet forums, and get cards from puca trade."

Do you sell to other dealers on a relatively consistent basis?

PD: "Not that I know, but sometimes I receive big orders that could be probably for business on others regions in Chile."

NB: "Yes. I would sell a lot of stuff that had a very high buylist, to where I would basically net the same if I sold on TCG when you figure in the fees. Also if there was stuff that just wasn't moving well, I would sell to another vendor. I would also get other vendor's hotlists, and sell stuff to them that was very high compared to what I was paying."

MP: "Yup. Cardkingdom, ABU, Adventures on, MythicMTG, and Strike Zone buylists. There are several names I recognize that often buy from me in large quantities from TCGplayer so I'm guessing they're 'dealers.'"

Do you have any suggestions/tricks when it comes to shipping costs you'd like to share?

PD: "We only use courier shipping and have an agreement and an account with the relative best local shipping enterprise, so I don't think the I'd be much help in this point."

NB: "Never go to the post office and pay to ship. Everything can be done online (even international), and it's cheaper."

MP: "Buy your toploaders in bulk and packaging is a lot cheaper. Use a 40 cent stamp when shipping a plain white envelope with 7 cards or less. I always thought you had to use a 70 cent stamp until recently. Could have saved a lot of money if I had been using the .40c. "

Have you found any specific pricing strategies to be extremely helpful running your online business (note you're not expected to share said strategy, only asking if you have one)?

PD: "We base our pricing on local demand, normally use SCG price for new cards and then the price correct itself based on local demand."

NB: "Be around the top 10-15 listings on TCG. Anything past that, you don't really sell very well."

MP: "Yes, a lot of them. If I think a card is going to sell one at a time (like an EDH card) I usually price it so my price plus shipping makes it the cheapest copy available. But if it's a card that is likely to sell in multiples, I only have to worry about making it the cheapest playset available."

Do you have a “safety net” of savings set aside to assist your business during the more difficult times?

PD: "Yes, we always try to maintain a reserve of money."

NB: "I always had cash readily available. Never really needed a safety net. Magic cards are VERY liquid too."

MP: "Yup"

How much of your business is Magic the Gathering specific?

PD: "Like 80%, 10% is for accessories and the rest for other TCGs, LCG and boards. Most of our money is invested in stock in singles, we are the biggest online site of singles in Chile, considering there isn't much competition in our zone."

NB: "All of it."

MP: "100%"