Elderly Instruments - Marketing and Business Model

Marketing and Business Model

In addition to a printed catalog, Elderly sends lists of available vintage instruments to subscribers in the U.S. and several other countries by mail and e-mail. Elderly purchases some of its used instruments from customers and then offers them for sale, while others are offered on consignment. Although larger retailers dominate the Internet market share (Elderly grossed $12 million in 1999, larger retail outlets such as Guitar Center grossed $297 million), Elderly attempts to serve vertical markets by offering specialized or rare items on its web site, such as left-handed guitars and instrument-specific books.

Werbin notes that while discounting products by 40 percent set his business apart from the local competition in the 1970s, outlets such as Guitar Center now also offer discounts. In response to questions about his strategy for competing with larger retailers such as Guitar Center and American Musical Supply, which also operate mail order and Internet businesses, Werbin states that he has learned to operate on small margins to stay competitive: "The mom-and-pop businesses that have survived have learned to operate on narrow margins."