Shop Talk: Practical answers for tough business questions.
Question: Should I take advantage of vendor specials such as free shipping with a $500 order? That seems like a lot to me, but shipping is really expensive, especially on things like candles and personal care products. I have a small store (900 sq. ft.) and most of my orders are $200 or less. Am I missing a savings opportunity by being scared to order more?
Answer: Good question—and good for you for thinking about it instead of just placing the larger order to save the freight. First, we have to look at the product and its track record in your store. Is this a product you have sold consistently for a year or two? If so, I would consider making the investment in the larger order to save on shipping. I would also ask the vendor to consider terms of N30/N60 (half in 30 days, half in 60 days) just for the first time you try this—it can’t hurt to ask!
If the product is new to your store and you’re not sure if it will sell well, what you save on the shipping will not be worth the risk. I would place a smaller first order, pay the shipping, and test the product in your store. Not all products sell well in every area. And, if your customers don’t want an item, they’re not going to change their minds just because you bought a bunch of it at a good price.
First published in Vol. 27 No. 5 of Retailing Insight. © 2013 Continuity Publishing Inc. All rights reserved.