|Posted on October 11, 2010 at 4:07 PM|
If you’ve read the latest posts, you’ll know that I just got back from a little dealer expo/summit thingy at Talking Stick Resort on an Indian Reservation in Phoenix, Arizona. (If you want to know what items stood out to me at the Expo, read the blog I filed for Jeremy G at Resi, 12 things that caught my eye.)
I learned a few things about myself at this expo. (Must have been the
clean smoke-filled Reservation casino air; good for clearin' the head and some real soul-searchin' thinkin'. A virtual walk-around, smoke 'em peace pipe except played out to the the background sounds of the near constant ding-ding-ding! and "No! No! DEAR GOD, NOOOOO!!!" sounds of casino living.) Thing 1: When getting out of the shower post vigorous Chaparral shampooing and Cholla Bud conditioning treatment, immediately followed by repeated applications of all-over, full body Mesquite Bean washing, perhaps my body – normally unaccustomed to any special treatments that don’t involve Irish Spring, random bottle of shampoo and a vigorous towel dry – was not at its height of manly readiness for me to attempt a full chestal and arm region Mission Fig lotioning session. Perhaps it was the combination of scents and textures and rejuvenatory unguents, but after about 10 minutes I broke out in this horrible upper body sweat. Like shirt sticking to chest, oozing through the material sweat in what was a relatively cool and totally humidity free 70-degree Phoenix morning. In the elevator ride down, I discreetly popped a button and slipped my hand inside my shirt to feel this horrible oily-greasiness as my body was donor-rejecting each topical droplet of the Mission Fig. (Apparently the fig’s mission – totally accomplished, by the way – is a cruel one, intent on trying to humiliate the wearer and give the momentary sensation of an all-over menopausal hot flash.) Thing 2: If the dinner conversation across from me is to be believed, all men are either A) horrible, sweaty, hairy monsters that are put on this earth for no other reason than to slowly ruin the lives of the women around them or B) slowly evolving to the point where they are ready to be A. Thing 3: I thought I did a lot of business with DBL, but in reality my yearly business might be what some others do in literally a SINGLE PO.
Let me elaborate... We don’t do a lot of business with distributors in general because we primarily purchase directly from manufacturers whenever possible. Often it is cheaper and they give us better payment terms. When we buy Sharp, it is from Sharp, Denon from Denon, Yamaha from Yamaha. When we buy Sony, it is from Sony. (Actually from Tech Data, Sony’s nearly impossible to keep up with Web portal, where pricing and crazy back-end deals fluctuate more rapidly than pig bellies on contract expiration day.) When we buy Defintive Technology it is from Def Tech. (And comes with the unspoken promise of future sushi dinners where Woody and I will attempt to look manly as we drink the gayest Sake in the joint.) But some companies (Panasonic, Samsung, Toshiba) require SO much volume to go direct, that it isn’t possible. Others are just one-off items that we purchase so rarely that filling out all the dealer paperwork and going direct doesn’t make sense. Other times, it is easier to order something to raise the bill enough to meet free freight. For these times, we reach out to DBL. And for the past 10 years or so, we have done a pretty steady business of like $55,000 yearly at wholesale. (This translates to roughly $57,213 at retail with the huge mark-up still remaining in CE gear.) So, I always thought, hmm, we must be a pretty GOOD account for Brian, our rep.
Turns out, we’re not. We’re small time. Like miniscule. We are the aglet, on the shoelace, on the shoe being worn by a massive-sized-wallet carrying giant. I met two other of Brian’s customers who do $2 and $4 MILLION worth of business. A year. That’s mill-yun. Per annum. Or like 36 and 72 TIMES the volume of business that we’re doing. But you know what? I would have NEVER known this from Brian. No matter how many times I call or e-mail, he is always available and gets the info that we need. He’s never like, “Oh, sweet holy Christ!!! Why are you bothering me again?! Don’t you know that I need to keep this phone line open in case one of my REAL customers needs to talk?! Jot it into an e-mail and if I remember to retrieve your message out of my spam folder then maybe – MAYBE – I’ll get back to you.Click! That’s right! I just said, ‘Click!’”
Quite the contrary, I thought we were one of his most important accounts because he makes us feel like we are. I’m sure he has tons of clients he works with, but you know how many were invited out to the Expo? Six. So even though our numbers have to make up a small-small percent of his business (ie: paycheck), he appreciated us enough to make us 17% of the people he invited. That’s pretty awesome. And that’s a great sales rep.
So, of course my question to the guys doing the millions – and I DO MEAN MILLIONS! – in business was, “How in the HELL are you doing that much business?” (Subtext: How in the HELL can I do that much business? Back of mind subtext: This is totally the secret key to entering AmEx Black Card Nirvana!)
The answer? Like everything else these days, it's those crazy Internets.
These guys are all using Amazon.com to churn through thousands of items at almost no mark-up or profit whatsoever, just turning over an insane volume. Where they would buy 10,000 memory cards and mark them up ten to twenty-five cents and then just blow through them. Pick some other hot item, like a Wii accessory, order and ass-ton of them, make a few bits o’ silver and blew through them. All without ever having to dirty their hands by touching a single SKU of merchandise. It’s eerily beautiful and frightening.
DBL ships everything directly to Amazon’s warehouse where Amazon then receives it, inventories it, stores it, packs it up, ships it out and handles billing to the customer. I asked one of the guys how many of his customers he actually interacts with and he said maybe 1 out of 500. ONE out of FIVE HUNDRED! Crazy...crazy awesome!
Fortunately most of these e-tailers are focused on selling quick-turn items like accessories and doo-dads and gizmos, so I don’t have to compete with them on price, because, frankly, you can’t! When it is a race to the bottom with literally pennies making up the difference between red and black, this is a war that will see a lot of casualties. (Let’s say that even one person wants to return something that the vendor gets stuck with. And let’s say that item was $20. At a $.10 profit margin, he will have to sell 200 additional items just to break free on that one return!)
What these churn-and-burners can’t offer is ANY kind of service. Like none. Which is clear by the interaction with 1 out of 500 customers. So, what we aren’t doing in quantity, we are making up for in quality. And ultimately selling the product that people have the hardest time finding somewhere else: Us and our service. Which makes me want to appreciate all of our customers – even the little ones – a little more. (I say “makes me want to” because, you know, it’s hard for me and my how-I-am-ness.)