Different Ways to Make Money in the Parts Business
If you are an independent retailer selling mass produced items such as many types of light bulbs, your competition is mass retailers. Mass retailers are going to win that competition every day of the week. Their cost for product is way below yours, their employees need minimal training and get minimum wages, and their store hours are much longer than yours. Time and again I have seen independent retailers spot a niche and make a good profit filling a niche. For example, suppose that there is an item that only one person in 10,000 will need in a year. A knowledgeable retailer talking with a customer can determine the need for that item and a mass retailer doesn't even want to go there. In that situation the independent retailer might stock the item and sell it for 10 times what he paid for it and the customer is happy to have it. If you do this enough times, you have a business with no competitors. Equally important, your customer will immediately think of you when they need another rare item. A similar business is ordering specialty items for customers. It is a labor intensive business. You must develop a fool proof routine on your Store POS System for tracking deposits, tracking the special orders, contacting customers and returning those items ordered by mistake. Over the years a retailer will learn where to buy those hard to find items. However, even so a retailer has to be willing to search for those odd items that customers sometimes need.
Labels: Independent retailer, mass retailers, niche market, Store POS System
Daily Stock Delivery
I have been interested in how auto parts mass retailers can sell at lower prices than a locally owned jobber store. They are open 16 hours a day and are even open on Sunday. The stores themselves are usually nice buildings at good locations. The stores themselves are usually very clean and the in store displays are excellent. Every where that I look I see high overhead. On the plus side, in the past, they have made a significant profit buying and selling store properties. They also pay their employees low wages. An in-law managed an auto parts mass retailer in my home town. I asked him everything that I could think about concerning their business. He said that corporate headquarters sets the selling prices at their stores. The prices are set to undercut competition and drive competition out of business. Their strategy works. In the past there were several independent jobber stores inn this area and today there is one. What interested me most was their stock delivery. Their store in town is about 460 miles from their warehouse. The warehouse delivers regular stock orders to them once a week. They also use Fed Ex for special order items with next day delivery. In the past they even bought parts from competitors.
Once a week stock orders is an interesting concept. Most independent jobbers get daily deliveries. Below I am going to try to show what daily deliveries cost. I know a warehouse owner that has 23 company owned stores that each get deliveries 5 days a week. The route for the delivery trucks is about 700 miles per day or about 30 miles round trip per store. I figure that it must cost about $1.25 per mile for the truck and driver. This means that for each store it costs the warehouse about $800 per month just to deliver parts. One might want to think of ways to reduce this cost.
Labels: delivery costs, mass retailers, Stock deliveries
