Monday, May 10, 2010

A measly 3%

I gave it a good try, but my attempt to get my DC orders up higher so I could gain 3% on my margin has pretty much failed so far.

This nitty gritty stuff will probably bore most of you, and yet it is the quintessence of business decision making for a small store -- how much to spend on postage, how much to order to get discounts, how much inventory to stockpile, the timing of arrival, etc. etc.

Despite giving up my weekly direct ship orders (getting reorders in two days but paying higher postage) and turning the extra savings into purchases for DC graphic novels, I've consistently come up short by about 10% for about six months now.

10% short?

The temptation is to try for that last 10%, which would two/thirds covered by the 3% extra margin. Except that I have already overreached probably by 15% to get there -- and have started to pile up the graphic novels extras.

Thing is, I'm already ordering all the DC material I need -- even over ordering a bit -- and I'm reaching the end of the graphic novel extras that make sense, and I'm still coming up short.

Frustrating to get so close, and yet see that I probably won't make it over the hump.

It reminds me of the ten years or so that I consistently came up short on the extra Marvel discount, and would occasionally try to reach it and come up short. That didn't change until Marvel changed their terms, ironically about the time I would have reached their plateau anyway. Now I'm way above the numbers I need for Marvel.

Ironic because during that same time, I was getting a better DC discount.

The two companies have flip flopped, which I'm thinking can't be good for DC since they are the second best seller already, and they've -- almost -- raised the plateau so high that I have no real incentive to try to reach it. Maybe they're smart, because I am trying to reach it. But I'll tell you this; if I convince myself that I can't get there, the next best thing to do is cut orders down to just above the lower discount. (Which, strangely, is probably more money than they gain on the upside.)

Another question now is -- do I continue to save the direct ship reorder fee; about 200.00 per month, instead of using it on DC graphic novels?

It's a change in store culture, almost. I was able to do 'just in time' , 'I'll get it for you by Thursday', orders for an extra 50.00 in postage a week for years, and I liked doing it, and it simplified record keeping. But it cost 200.00 per month -- which is the equivalent of 500.00 in sales. I doubt very much I'm losing 500.00 in sales by not direct ship reordering -- not even close.

If I were to get the extra 3%, I'd save another 100.00, or a total of 300.00 -- equivalent of 750.00 in sales.

The way I was trying to rationalize it -- the 300.00 in savings was the same as getting an extra 50 graphic novels per month. I reasoned I could minimize the damage of running short of product by stock piling the DC best sellers.

I see now that I'll not get the benefits of such a strategy at current numbers -- I have to do yet another 10% in orders; and do it consistently for six months or more.

All for a measly 3% margin.

On the other hand, I haven't had too many complaints about having to wait -- the store is damn well stocked as it is....

.....but it's still frustrating to be sold out of a product for 2 weeks instead of 5 days. (Could I be any more wishy washy?)

Then again, the former system was working well, and I think I may go back to it.

I'm probably going to stay the course until the end of summer. Summer is the time I'm most likely to reach the DC discount levels, so I'm thinking I'll keep trying for 3 more months.

But it doesn't feel like I'm going to get there and even if I do, it's only 3 months of the 6 months rolling discount I need.

This is business, folks. Constant decisions like these, around the margins, without a clear cut conclusion. Obviously, I'm still arguing with myself over what to do. If I could snag that extra 3% and save that 200.00 in postage -- the benefits would compound over the next decade.

Do I trade a year of small losses for ten years of small gains? Since the outcome isn't certain?
Am I overreaching? I've already invested six months into this process -- it would be a shame to give up now, only to have some sort of DC resurgence come along....then again, that may be good money after bad.

So there it is -- a lot of gray and not much clarity.


Jack Goodman said...

I have to say I'm seeing why with DC though. Marvel is a marketing machine. I wouldn't be surprised to hear that you are experiencing growth with them. They cross pollenate with movies, tv, and other media so well that I send people in all the time to pick up new books. I know some of them are picking them up.

But the other thing is I think DC has fallen off. The real hardcore geeks that read DC in the '90's with their horrible art teams but great writing brought some of us Marvel Zombies over. But in the end most of us ended up with Vertigo and a couple Wildstorm titles. DC's writing has really fallen off since the heavy hand of Dan DiDio came in as editor. Events are shoehorned with endings that make little sense. It is hard to jump in as a new reader to the dense stories DC has been printing lately that on appeal to the more zealous reader. Even Blackest Night was a bit of a letdown for me. They've got to step up their game. I'm hoping Geoff Johns steps up to the plate in his new role but we'll see.

I'm sure there are a whole ton of factors here but I know that these two certainly play into it. I hope that you make that margin up soon. Vertigo is still amazing. Sweet Tooth, The Unwritten, House of Secrets, Fables, DMZ, and Scalped. Those are must reads every month. These should be impossible to keep on the shelf. Well good luck my friend.

Duncan McGeary said...

Dude! Where you buying these from?

Yeah, I've been trying to up my orders mostly on the back of Vertigo graphic novels, which are also mostly what I read.

Not sure that Marvel's crossovers are any better, but they seem to have a hold on their audience.

Jack Goodman said...

Mostly from you or when I'm out of town. I still love your shop. And agree...Marvel isn't much better.