Sunday, October 2, 2011

"....making up for it in volume."

"Sweatshop Conditions at" Bulletin, 10/2/11

Shop locally. The better my neighbors do, the better I do.

I've argued that large corporations are cheaper at the cost of losing local jobs on the sales side of things.

They are also cheaper at the cost of losing local jobs on the supply side of things. Hell, not only locally, but nationally. They ship the jobs overseas.

Corporations hurt the local economy from the back of the store as well as the front of the store.

Oh well. We'll never get it, will we?


Well, it was bound to happen. This week's Sunday New York Times showed up, and I still haven't read last weeks....


"Coupon sites are fading...." Bulletin, 10/2/11.

"There was no loyalty...."

Well, duh. I could have told them that. It is built into the genetic structure of the American small business that if you have a "Sale" or you sell things cheaper, that you'll more than compensate the loss of profits by an increase in sales.

I can't tell you the number of times I've been told, "If you sold this cheaper, I would buy more." Except, they don't. I know they think they will, but they simply don't.

The whole ad industry is built on this idea.

What you've got to remember is -- a 10% markdown, is 25% of my profits. A 20% markdown. is 50% of my profits. A 50% markdown, I'm losing money. Then giving half of THAT to Groupon? Insanity.

Besides who ever responds to a measly 10 or 20% sale anymore?

That, and the inescapable fact that I have to sell something between 3 and 4 times at regular price if I want to keep it in stock to get the profit I would have gotten from selling once if I didn't want to keep it in stock.

That multiplier increases with every discount level.

A store without stock isn't a store for very long.

Not the mention the cost of the ads, which add even more to the multiplier. So, by offering 20% off, and buying ads, I probably have to sell something yet another 6 or 7 times as often to make the same profit...

Selling something 9 to 11 times is something I just rarely do, no matter how popular the item is. (I'll sell types of product that many times, but not individual items...) At least, not during the period of the 'Sale.'

In my opinion, this concept only really works for very large businesses. And even there, I suspect they finagled some deal on the supply side that really give them close the same margin they would have gotten by paying the normal wholesale price and selling at the normal retail price.

Again, the effect of the finagled deal on the supplier, manufacturer base.

A discount that, as a small business, I just don't have the bully power to get.

(A 'service' business doesn't have a cost of goods, so offering discounts doesn't affect the bottom line so much -- but even that is devaluing time and service.)

As far as giving product away to get people in the door? Been there, done that. I had thousands and thousands of extra customers from the various fads over the years: beanie babies, pogs, Pokemon, etc. When the fad was over, the 'customers' disappeared.

So gaining 'customers' by bribing them with giveaways -- well, they'll take the giveaways, thank you very much -- but you won't see them again until you give something away again.

The more you train your customer to expect deals, the more they'll expect deals.

The more you train your customer that you sell at "regular" price, the more they'll be willing to pay regular price. They'll decide if what you offer -- your selection, location, knowledge, etc. etc. is worth it to them.

You simply build on those customers, and let the others go. Really, Amazon customers are Amazon customers. Walmart customers are Walmart customers. It seem utterly foolhardy to try to compete on price.

(One thing I'm noticing, is that the customers I should be losing to the internet are often the same customers I already lost to the big box stores ---so I'm not noticing e-book readers, because they were often the same readers who were buying from Barnes and Noble and/or Amazon already.)

But...well, if you're reading this blog, I know you value the local merchant at least to some extent. You may not even know you value the local merchant, but if you think about it you're not going to be talking to or listening to anyone at Walmart or Amazon who actually makes decisions....

But you can talk to me any old day of the week, and I'll be upfront with you.

In the end, the only solid way to gain business is to have the product people want, but charge enough for you to pay your bills. Sounds simple, but most people wander the deserts of advertising and discounts before they get around to the oasis of a fully stocked store that can afford to let the deal-seekers go.

It takes some guts to make that move, but if you can survive it, you'll be healthier in the end.


Occupy Wall Street?

I wish I was there, man.

Hey, we have a Wall Street too! Oh, I better not say that. My fellow merchants would hate me if anything started happening.

Besides, we already have the beer revelers occupying downtown Bend every freakin' weekend.

1 comment:

H. Bruce Miller said...

There's going to be an Occupy Bend event on Oct. 15. At present I don't know any details.