Company Stores and Inventory

Posted on 27. Feb, 2010 by David in Strategy

Five quick rules for making money on the web when it comes to company stores and inventory:

1) Decorated inventory is bad

It’s just that simple.  Once you put someone’s logo on something it’s becomes a lot less valuable to anyone else. A $10  hat with a Hertz logo on it is now a worthless hat to anyone but Hertz or maybe some Brooklyn hipster.  Don’t put a logo on anything until someone has agreed to give you money for it…trust me there are not enough hipsters in Brooklyn to buy all those hats no one else wants.

2) Don’t loose money in one place thinking you’ll make it up in another

That’s like agreeing to eat dog food as an appetizer because the main course is Filet Mignon.  Dog food is always dog food no mater what they promise you for dinner.  If you can’t ever make a profit then that is called charity. If you’re feeling like doing some charity work then there are lots of people in Haiti who need your help right now.  You’re in business to make money. Just because a big fancy client suggests you should work at a loss doesn’t mean it’s going to translate into something better later on. Dog food at the Ritz is still dog food!

3) Inventory is worth less every second

Take a look at your watch. Now watch that second hand move. Every tick is your unpaid for inventory becoming worth less.  Tick. Tick. Tick…now you’re poorer than you were three second ago.  Every day your inventory becomes worth less and less until the day when it is worthless.

4) No one cares about the size of your warehouse

The number of times I hear guys (you know who you are!) brag to each other about the size of their warehouse is amazing.  What is exciting about saying I have 50,000 square feet of expensive inventory sitting around making two to three turns a year.  That’s like bragging about your high fee, super risky, emerging market mutual fund that is loosing money or your third wife who just maxed out your American Express on her weekend trip with the tennis pro.   It may sound fantastic when you’re telling the story but everyone listening is not laughing with you.

5) Decorate on Demand is the future of company stores

So now that we know that decorated inventory is bad, loosing money is bad, decorated inventory is worthless and a big warehouse is not always a good thing what can we do about it?

Talk with your suppliers. They want to make money too!

Each large supplier either has or is working on a solution for small and single piece orders.  Buttonwood provides the electronic connection that keeps the order processing cost down and the suppliers can help dramatically reduce your inventory positions while increasing your product offering to your clients.

There are a lot of interesting things going on right now in the world of company stores that can really help distributors make money.  It will involve some new thinking and some up front work setting things up but the rewards are substantial.   Keep an open mind…you might surprise yourself and make some money!

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