Feb 26, 2008

My Money is as Green as Anyone Elses

I didn't attend CHA this year. But there was a large ScrapBiz group there. Most of these people are running successful businesses from their homes. And, I mean AMAZINGLY successful businesses that continue to grow and thrive. Yet, from all accounts, several new manufacturers turned up their noses at them because they were either online stores or kit clubs. Other manufacturers had astronomically high minimum orders (which is bad for everyone - including bricks and mortar stores). Who can afford to buy $1000 of ONE line - especially if the line is small?

A manufacturer can sell to anyone they want to and cut out any type of business they want to. I'm suggesting, though, that cutting such a narrow sales channel may not be the most prudent business move.

When I started ScrapBiz 5 1/2 years ago and attended my first CHA show in 2003, I got plenty of "we don't sell to home-based businesses" answers. One of the SNOTTIEST about it was ScrapYard 329. They essentially invited me to leave their booth. The second runner up was Scrapbook Sally who laughed like Cruella Da'Vil when I asked about home-based. Then she lectured me for 10 minutes on the evils of home-based businesses. I literally just walked away in the middle of her rant. Remember them? I didn't think so... :-)

Fast forward 5 years. The industry has slowed WAAAAAY down and online stores and kit clubs are everywhere. Stores are closing at an alarming rate. We have had the conversation at ScrapBiz about outlasting stores. Many of our members continue to grow in their business while 3, 4, 5 or 7 stores have opened and closed around them.

Successful kit club owners buy products in HUGE quantities. Online stores that are run well - such as those you'll find at ScrapBiz - have a longer shelf life than a local scrapbook store in many areas. Personally, I'd rather have a small customer buying from me over a 10 year period than a big customer buying for just 2 or 3 years.

With the scrapbook industry limping along, trying to recover, I have some suggestions for manufacturers who want to survive in this industry.

  • Get over yourselves with regards to mixing your products in kits. If a kit maker leaves your brand on your product, who cares? A customer would do the same thing at the scrapbook store. People often don't buy the "matchy-matchy" look and construct a page from just ONE line. If your product goes nicely with someone else's, then be glad your product is in the kit and not someone elses.
  • Sell to legitimate home-based businesses and online stores. You can tell who's in the business of being in business and who's not. It's not that hard.
  • treat both big and small customers with the same respect - the $1000 a month store might last a year while the $1000 dollar a year home-based business might last 10. Do the math.
  • Stop harassing retailers about pricing if you don't "eat your own cooking". It makes no sense to say, "You can't sell it for under MSRP" and then blast it out on QVC in mega pack at 75% of MSRP. Nothing makes a retailer angrier.
  • Don't lie to retailers. If you inked a deal with a major chain an hour earlier, don't stand there and blow hot air about supporting independents only! You don't have to tell me WHO you signed with, but be honest about your products going someplace big so I can make the same economic decision about your products that you just did.
  • Offer me ideas to sell what you have. I love the manufacturers who say, "Hey, look what you can show your customers how to do with OUR products!"
There are so many ways for us (the industry) to maximize sales. I have already talked about bringing in new scrappers. The next thing is for retailers and manufacturers to play fair and nice with each other. Sometimes there seems to be an arrogant, "Us vs. Them" attitude at trade shows. I know new vendors especially are ultra-proud of their accomplishment of just BEING at the show. But, what many fail to remember is that they themselves are running their business out of their home and no one has told them they aren't legit.

I will say that it is infinitely easier for a home-based retailer to open accounts with manufacturers in this industry than it was 5 years ago. But, it seems that some new vendors have misguided ideas about the industry and an over-blown sense of "worth" in it. Basically, if someone walks up with a business license and a credit card, start writing an order. You'll need a LOT more of those to survive than you think you do.


Anonymous said...

love reading your posts about the "common sense" business side of things. But I did chuckle a bit tonight:

$1000 a month store for 1 year = 12K

$1000 a year store for 10 years = 10K

So yeah...on a pure financial, I WOULD go with the $1k a month store and only have to maintain them for that year if I know that in the end, that one year is more profitable than the 10 years at $1k a year. Just food for thought. But otherwise really good points--especially given current economic indicators.

Kim Guymon said...

Thanks for getting my point. I should learn to not try to blog before the school bus leaves... :-)

Anonymous said...

i am home based - and did not have a hard time with MANY manus. Making Memories did want to see my store front and I sent them my web page. No problems! I do not however advertise the fact that I am a homebased business, or a kit club. They do need to take us seriously though, i know for a fact I order TONS more than my LSS's