Tuesday, December 9, 2008

My first Recession, PT 2.

In my previous entry, I made the comment: "Most of it (the diversified half of my product lines) is much less dependent on regulars and much less of a cash-flow drain."

What's that mean?

Regular customers are both a curse and blessing. Or, maybe I should rephrase that: regular customers for whom I have to buy specific product to satisfy can be both a curse and a blessing.

It's great to have them coming in on the regular basis; to buy other stuff, hopefully, while they're here, to show other customers some activity, and to have a baseline of sales to work from.

On the other hand, I'm ordering this material months in advance, without any commitment on the part of my customers other than "Sure, I'll show up." Most of the time, I have only a vague idea of the content, and I can't count on the shipping date whatsoever, and, well, I love my customers but they do change their minds, they do quit unexpectedly, they do cut back suddenly, they do reject material that I was so sure they wanted that I ordered on spec.

I remember excitedly telling a bank loan officer about my subscription lists, and he asked for the details, and then looked at me with raised eyebrows: "We would consider that a negative, but we'll just put that aside for now."

It's a bit like having accounts receivable -- only without the legal obligation.
(I know, I know. I could have binding contract, or get their credit cards or something, but comics have always been just a little too weak for me to demand that, and I'm not sure I wouldn't still have problems.)

So for most of the first two/thirds of my career, I was dependent on selling product that became quickly outdated, buying it in advance, depending on my customers to come through.

The thing about games and toys and books is; I can carry a very good selection, but since it's impossible anyway, I can't carry everything. So...If I have a few thousand good classic books, I'll be able to make a sale to a book reader. I may not have a specific books, (since it's impossible for any bookstore to carry every book or even every good book) but I'll have something for the serious reader.

If I have instead of 2000 classics, only 1800 classics, I may lose a specific book sale but not a book customer.

Whereas, if I don't carry pretty much the full line of comics, I could lose not only a sale but a customer.

Customers are what it is all about.

So I can order books when I want to, instead of worrying about losing customers. Especially my store, which is in Downtown with lots of foot traffic and which probably sells 90% of my books and toys to people who just happened to come in the store.

That makes the cash flow situation much more comfortable. No unexpected large shipments, which are so late that no one wants them anymore, no more need to buy the 'hottest' title in bulk even though my customers aren't currently coming in.

Years ago, I remember my sport card supplier telling me: "Well, at least you can stop buying....as a distributer I have to get everything." Interesting that he thought so, because at the time it wasn't true. I had to pretty much buy most of the comics and cards that were coming out or lose my customer base.

Thankfully, for at least half my product, that is no longer true.

1 comment:

RDC said...

If you have regular customers for which you specifically order product a down turn such has this can actually be far worse. The reason why is often it is not just a case of them coming in and telling you that they have changed their mind about an item, instead they just stop coming in at all. If someone feels bad about something they will often just avoid it, instead of just coming in and saying that they have changed their mind.

I would suspect that a higher percentage of regulars with specific requests that you order for will vanish during the down turn then regualrs that just come in often and browse the store and buying something that peaks their interest.