Is Buying More Really Saving You Money?
Jun 16, 2019
We see breweries tossing money down the proverbial drain.
We talked about it in our "From Marketing Expense to Profit Center - Transforming Your Brewery’s Retail Merchandise" workshop but we still see breweries tossing money down the proverbial drain.
Buy less more often
We are firm believers that when you buy less product, but buy more often you save money in the long run. Yes, you may pay a little more per item, but you will tie up less of your money. For example, let say you buy 144 $5 t-shirt's in 5 different colors or 720 shirts. At $5 per unit you have $3600 in inventory. Let's say in 6 months you sell 1/2 of that inventory or 360 shirts for $1800.
Now, let's say you buy 48 shirts at $6.50 each in 5 colors or 240 pieces at $1560 total. If you still sell 360 shirts over a 6 month period you would have had to order in extra shirts 2.5 times for an additional $780 or a total of $2340.
Let's say that you sell these shirts for $15 each. In the first scenario you would have had to sell 240 shirts to reach your break even point. In the buy less more often scenario you would have hit that at 104 shirts.
In our world we like to reduce to the ridiculous, so let's take those 360 shirts and divide them by 6 months you get 60 shirts per month. 26 weeks = 13.85 per week or 182 days = 1.98 shirts per day. To hit your break even in scenario #1 it would have taken you 121 days and only 54 in scenario #2.
Bottom line is that when you buy less more often you might lose a few dollars in revenue, but make that up in usable capitol not sitting on a shelve soaking up carrying cost or interest rates on your line of credit.
If you would like to talk with us about your retail program, please fill out the “Contact Us” form and we will be in touch.