Saturday, January 31, 2009

Trapped by theory.

******NOTICE******

Before you read anything else from me, go to my wife's poetry blog, SAGEWIND VOICES, and read the "Sportscard Dealer's Ode...." Just because it's so cute, and to explain my fear of sports card trading....

******END OF NOTICE*****

Back to regularly scheduled blathering....


NEVER LET THE FACTS GET IN THE WAY OF A GOOD THEORY.


Over the years, I've made many a business decision based strictly on a theory. Either because of something I read or something I heard.. Sometimes, the theory was based on (what seemed to me) common sense or every day observation.

And then, for some reason, I would try the opposite. Maybe I was forced to, because it came down to -----try something else or quit. Or I accidentally tried something that worked, saw the light, and followed it up.

I find out I was wrong all along, sometimes wrong for years.

I call this being "trapped by a theory."

PET THEORIES.

The theory that captured me the most and the longest was -- a Mom and Pop can't compete head to head with the mass market.

It made sense at the time.

I had good reasons to believe this:

1.) My own experience with sports cards, where I had my head handed to me.

2.) Just about every article I ever read.

3.) Just plain old common sense.

DEVILISH DETAILS.

But like any theory, the devil was in the details. I was right about not competing with the mass market on prices. Especially is the product is a common commodity. Commodities are something that is the pretty much the same for everyone. Sports cards turned out to be a commodity; a box of 2008 Topps Baseball is a box of 2008 Topps Baseball.

There may be differences in packaging, but if you have to explain the differences, it doesn't matter.

If it's a commodity, and everyone has it, then price becomes the only thing that matters.

SRP IS EVERYTHING.

If the product doesn't have a Suggested Retail Price (SRP) then it will have such a low profit margin that the chainstore pretty much can sell it for very close to what you're buying it for.

I HAVE WHAT YOU'RE LOOKING FOR AND CAN PUT IT IN YOUR HANDS.


I didn't realize until I started carrying books that items which have a Cover Price are different. Products such as games and books. Especially if the mark-up is in the 40% range.

Even if the chainstore has discounts, it usually isn't a killer discount. Either that or the customer seems willing to overlook that I'm selling it for retail because it's marked right on the cover.

And because I have it in stock. Never underestimate the impact of having the item you want in your hot little hands. Sure it's cheaper on Amazon. But it's there, in your hot little hands.

Books are a very big world, and it actually does matter what I chose to carry, and how I chose to display it. The customer holds a book they remember fondly, or have always been looking for, or have heard about....and they often buy it.

TEST THE THEORY.

Like any theory, I should have tested this. Easier said than done. It's a pretty pricey proposition to attempt a new product line, but if you try just a small amount you can never be sure that you've done enough to affect the outcome.

Sometimes you have to go with the theory.

THE NEW THEORY.

There are always exceptions to every theory, and there are probably ways to make anything work if the details are changed.

2 comments:

Duncan McGeary said...

I should say -- how easy I forget -- that I stayed away from new books for years as a courtesy to the Book Barn.

So there was that, too.

Olde Dame Penniwig said...
This comment has been removed by the author.