Vendor distribution channels… Is there profit for the industry?

The Shot Show 2007 is coming up and many in the industry are starting to work up their programs for the 2007 year.  In 2001 I reported that many of the industry would be struggling at this point in time if they didn’t refocus how they think about the consumer. History is about to repeat itself with Democrats in perceived power once again.  The letters from the Brady people are already flying that the anti-gun movement was the reason for the shift.  Every one of the Democrats niche left-wing groups thinks their agenda was the reason for the Republicans losses.

   Here are some upcoming unscheduled events that all dealers and consumers should be looking for as we wind into the 2007 selling season.

Panic buying- Unfortunately many manufactures will see the opportunity to make money off panic buying which is the trend that got us in the mess that we are in today.  Panic buying makes more money for manufactures but puts dealers out of business because it also means hording of trade-in’s.  Retailers across the country are not in a financial position to trade properly anymore.  This spells weakness for the industry as a whole as our foundation is based on the barter system.   It takes a large pot of money to take used trade-in's for Hot new selling guns.  Washing of profits for the retailers by the manufactures and THE RETAILERS THEMSELVES is hurting the consumers ability to barter for better equipment.

 

Retailers should be asking three questions of the vendors at the shot show this year.  Ask them aloud not just in your mind.  Force the vendors to answer these 3 questions and the sub questions to your full satisfaction.

 

1. Do I make money selling this vendors products.(The answer to this will always be of course it does. Buy low sell high its just that easy. In the real world outside the shot show its not that simple.)
   1. What’s the expected turn-over rate?
   2. How much quantity do I have to buy to break even on the remaining inventory of that product.
   3. Is this vendor putting me in a white hat or black hat when it comes to servicing the customer on this product line. (White hat service is allowing the dealer to say “no problem” while standing in front of the customer knowing the vendor will back up the service call of the retailers.  Black hat “You need to contact the manufacture about that.”)
   4. Does the vendor allow market testing? (Will they let you display and return if it doesn’t sell to your customer base)
   5. Is there a no box-store guarantee(finding the item you paid $19 whole-sale for in Wal-mart, Cabelas, Bass Pro for $12 doesn’t do your bottom line much good, and this is a common practice to entice dealerships from you, just to close those box store deals)
   6. Is the company in a full price protection racket with online sales. ( Companies that have strict MAP prices generally means they are dealing with low quality retailers to have to resort these practices.  MAP pricing is price fixing with a nicer sound and usually means higher profits for the vendor and lower profits for the retailer, due to less advertising leading to less product excitement from the customer base.)
2. Is this vendor dealing with me fairly.
   1. Is this vendor chasing two tails?  Are they trying to get you to stock what the “distributors won’t carry”  Remington ran its profits into the ground telling retailers to ignore the bread and butter guns they had on the shelf at the box stores retailing below dealer cost, while getting dealers to stock the slower moving rifles off-season. Don't do business with anyone who tells you to ignore customers and profits.
   2. Is the vendor focusing on fad’s.  Again Remington is fine example of a fad trending company that doesn’t seem to deliver.  New calibers in the rifles 6 months to deliver and retailers can’t find a box of ammo to support the customer for 6 months further down the road.  This is called artificial demand driven productivity.  Artificially creating a demand for product before producing it.  Only it’s a proven aggravation factor to repeat customers leaving the retailers dealing with the upset consumer blaming them for up-line production problems at the manufacture.
   3. Are your dealer programs guaranteed?  The space in your store used to advertise the vendors products this shouldn’t come at a sole cost to you.  When you make a commitment to buy a minimum quantity of product, display and promote that product through direct consumer contact.  Expect your territory to be yours exclusively or your profits to be extremely high.  Don’t take on the job of salesman and marketer for the same price as someone with a web store and a drop shipper.
   4. Has the vendor put the product in a package with Pre-printed suggested retail pricing on it. (This has been the proven factor to prevent market low-balling of profits.  Vendors not moving towards this simple effort in their packaging are usually lying to you about their current sales, marketing strategy, and the actual profitablity of their product in your store.)
3. Does this product line make sense for me strategically.
   1. Do I really know what’s in the hearts and minds of my customers?(If you’re a retailer who thinks their customers are broke and need the cheapest product you can find….Your customers are better salesmen than you are.   Broke people buy groceries not rangefinders, gps’s, or new rifles.  Don’t low brow your inventory and your profits by buying your customers barter sales pitch of hard times. Don’t be afraid of the high end toys with a low priced wal-mart version right next to it.  Give your customer a chance to dream big.)
   2. Will I be able to good, better, best this product line? (10% of your customers will buy the cheapest thing you offer, 10% will buy the most expensive, but it’s the 80% that don’t want to be stupid nor frugal with their money that pick the product in the middle price range and quality.  This is the place for the highest profit, always has been always will be.)
   3. Am I proud to be selling this product? Sounds silly but its true, if you like the product and would use it yourself you just became an honest salesman and the profits go up.
   4. Did I buy it because I like it or because it works for my customers?  The counterpoint to the previous point.  You may like Blue 1911’s but stainless steel guns deliver more cash profit and quality trades.  Don’t let your store become your personal gun collection, it’s the food on your table first, enjoyment second.
   5. Are these patriot sales?  Patriot sales is what the firearm industry did to retailers over the past 20 years. “There is no money in new guns.”, “ You make your money on the trades”  If the vendor can’t show you a profit in selling his product directly don’t sell it, don’t transfer it, don’t be afraid to take stand for your business’s survival.  If you don’t no one else will.  You gave them your vote, you gave them donations, you gave your time, expect to make a minimum profit of at least 30% like every other product on the market.  You are not in business to protect manufactures, customers constitutional rights, or to spite liberals.

 

Eliminating profits does that sound like good thing for the survival of this industry, or the Brady campaign? 

 

Shot show is your ability to protest your vendors.  Nothing is healthier in America than good competition.   Don’t be afraid to tell your long time vendors to take a hike until they get their act together.    

 

Vendors have MAP’s(minimum advertised prices) because the distributors they do business with have lied for decades about cleaning up the price whore's.  Manufactures has to take steps to stop the guys from throwing wholesale catalogs out in the mail because distributors said they would and didn't, EVER, never even tried.

I don’t want to bash the Kitchen table guys but 10% over cost is doesn't cover anyones costs and is more of an Anti-gun effort than a pro-gun.  Closing a kitchen table account doesn’t kill industry sales, it increases it at storefront locations and that increases stocked inventory.

The other attempts to start a gun dealer and kill your local competition, you may think it’s a good thing but facts say otherwise.  More sales takes place in a town with 4 retailers than with 3, the kill thy neighbor business philosophy will be the death of us all. Most people who start a business with this strategy in mind are the ones out of business within 2 years.

 

Here at GunMuse we hope that table dealers are moving toward store-fronts, but if you wouldn’t dare feed your family off 10% over cost out of storefront overhead, why belittle and kill the guy who is?

 

Be in this business for the right reasons. PROFIT or don’t be in it at all.  Respect yourself enough to be paid well for your tolerance, hard work and sacrifice for your sport.