Wednesday, December 11, 2019

Keeping it simple, stupid. Part 2 (x100).

I rarely base my ordering on increased discounts of less than 5%.

I'm not saying this is the right thing to do, but it's worth explaining. My approach has a lot to do with the history of the store.

First of all, I should admit that 5% is a significant difference. If I end up the year at 55% cost-of-goods instead of 60%, it amounts to a good chunk of money.

So why don't I do everything I can to reach the better discount?

Well, I do and I don't.

Basically, the higher discounts are almost always predicated on volume. For instance, my discount for DC comics is 4% less than Marvel, 3% less than Image, IDW, and Dark Horse. For DC comics, we hover just below the level we need to order to get a 3% better discount. It can be done if we're aggressive in our toy and graphic novel ordering, and if we take some chances on pre-orders.

So over the years, we've done that. And we almost always end up with a lot of unsold product. This isn't as worrying as the amount of extra work it takes to get that extra 3%. It requires constant monitoring.  (More about the "extra work" later.)

Eventually, I always throw up my hand and say, "So be it." I accept the 3% less discount.

On the other hand, I used to do direct ordering from my comic distributor, which allowed me to get reorders in 3 days. It was wonderful to tell people, "We can have that for you in a few days."

Unfortunately, every time I special ordered, I had to pay $50 in postage, or $200 a month. That equates to probably 15 - 20 graphic novels. I had to ask myself--am I selling an extra $200 a month in graphic novels, and wouldn't I eventually make just as much by having an extra $200 a month worth of extra graphic novels in stock?

It was painful, but I went to regular shipping, and I haven't looked back. It also eliminated the extra work it took to order and stock the weekly shipments.

On the other hand, every time my comic distributor offers extra discounts of 10% or better, I jump all over it. The higher the extra discount, the more aggressive I am. Over the years, this type of ordering has brought our overall cost-of-goods to a level I would have been getting by ordering more in advance to qualify for higher regular discounts.

Monitoring extra sales discount isn't all that difficult--and can be fun. Monitoring the every day product constantly is much harder work. As I predicated, I'm not saying I'm right to avoid the "extra work," but I do know I've managed not to burn myself out. I still enjoy the store, and I'm pretty sure if I was counting pennies on a constant basis, I wouldn't be having as much fun.

With both books and games, I order from a middle-man distributor--instead of direct from the game manufacturers and book publishers. In both cases, I could probably save at least 5% by ordering direct. Not sure if our volume in games is enough to really make that work with game manufacturers, but because of the collapse of the distribution networks in books, and because of the consolidation of most books into the "Big Five" publishers, it is now at least possible to order product from publishers direct.

There is still a bit of a volume discount problem. For some publishers I might have to order multiple copies and/or marginal titles in order to qualify for direct shipments. It would probably mean constant monitoring to be aware of when we reached a large enough order to pull the trigger. The extra work? I'd have to set up accounts with each of the publishers I want to deal with, and I'd have to constantly assemble reasonable orders, and I'd have to wait until the orders are ready to ship.

On the other hand, by ordering from my book distributor, I need a relatively small volume to get free shipping, and I get the product one to two days later.

So, yeah, I'm giving up 5 - 10% extra discount, but I'm ordering exactly what I want, when I want it.

I will admit, I'm questioning myself on this. If by doing some extra work I can save 10%, it probably would be worth it.

This is where the history of the store comes into play.

The middle-man is a bulwark against the rising and failing trends of product. When I first started ordering, I was often ordering directly from the sources--but almost always I had to take what was offered. The restrictions are removed when you deal with a middle-man. You can get as little or as much as you want, and you can get it quicker. For that service, you may pay an extra 5%, even 10%.

I'm convinced I survived the collapse of several markets because I went through middle-men. Comics, sports cards, beanie babies, pogs, Pokemon, etc. etc. I'm convinced that having the safety of a middle-man to deal with the sources, instead of being aggressive on margins, has saved the store more than once.

Not to mention, it's much less time consuming and aggravating to deal with one middle-man instead of multiple publishers and manufactures.

I'm equally convinced that has saved tons of work, and may be the difference in my not being burned out after 40 years of doing this.

Anyway, this is the way I do it. I will tell you that almost every other store I've ever talked to has preferred to order direct from the manufacturers--but then, I'm still here and most of them are gone. 

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