Thursday, June 25, 2020

Acquiring inventory for your perfume store

    Last week I wrote the first in a series of articles about opening your own perfume store. I promised to write about acquiring inventory this week. One way to do it is to create your own fragrance products -- perfumes, colognes, soaps, candles, incense, etc. -- I've written about creating your own perfume here and here and about developing a wholesale fragrance business here. But suppose you just want to sell fragranced products in your store. How do you go about finding products for your store? You need to find products people will buy and you have to obtain them at the "right" price. If your store is small and your business is new it can surprise you to discover that established brands won't sell to you, nor will they allow their distributors sell to you. What do you do now?

    Obtaining inventory for a small perfume store is an art.

    While you may not be able to obtain the famous stuff, you should note that your competitors can't get it either, yet they are obtaining inventory and making sales. Before we look at what your competitors are doing, a word of warning.

    When you are setting up your new store (or folding table) and are in need of inventory, there are easily found sources that are happy to sell you all the off-brand perfume you want at their non-negotiable "list" prices. They will encourage you by telling you how to set your retail price and, from that price, show you what a great markup you will have, a "standard" markup they may call it, but beware. In the first place, their perfume might not sell in your store at the retail price they suggest to you. Then, if you are a novice, you might not realize the markup they promise is really inadequate. And, when you find you can't sell their fragrances for the retail prices they suggest, when you have to slash your prices to make sales, you are also cutting your markups. Now what you get from a sale will be far less that what you anticipated. This issue is discussed in depth in my book, Creating Your Own Perfume With A 1700 Percent Markup! Now it's time to look at your successful competitors and study what they are doing.

    You can learn a lot about what your customers will like and buy by studying your competitors. Whether your competitors are online or in local shops, see what they are offering and promoting with advertising or social media week after week. These will be the items that are selling and these will be the items you will want to acquire for your store. If it sells for them, it will sell for you. The question now is how to obtain the items your competitors are selling successfully and how to get those items at the same or a similar price.

    In most cases the same wholesalers and distributors who are selling to your competitors will also sell to you. In most cases it is unlikely your competitors are buying enough of any one item to get an exclusive on it. So your first step is to track down the vendors that are selling to your competitors.

    How do you track down these vendors? Sometimes it is as simple as asking a competitor where they get their merchandise. It may sound unlikely but it happens more often than you might imagine, particularly when there is a major source that "everybody" (but you!) knows about and they are confident that, if they don't share the information with you, you will soon enough discover it on your own.

    If this strategy fails, a standard strategy is to buy a popular item from a competitor -- provided it is packaged and labeled -- and then look to the packaging for clues as to its source and the source's address. Even a few initials on a box or bottle combined with a Google search can often turn up the original source. A wily competitor will obscure this information on the items they sell but most of your competitors will be too lazy or too unaware to do this.

    The issue now will be price. You want to be sure the vendor is giving you the same price your competitors are getting. Here you may have to do some negotiating, to convince the vendor that in time you are likely to become a very good customer, so the vendor should treat you well now. And it doesn't hurt to ask what you would have to do to get lower prices.

    Aside from supplying your current needs, vendors can be useful because they are aware of trends and what might become a hot item tomorrow. It helps to cultivate a good relationship with vendors. Pay what you agreed to pay and pay on time. Don't try to get tricky with payments to save a few dollars now. This could cost you some needed good will later.

    A starting point for stocking your store is to offer the same or similar merchandise as your competitors are selling. This won't make you rich but it will help you start to generate a cash flow.

Go for variety

    As you don't yet know what your customers want (since you haven't yet opened your store!) get some variety in your offerings -- don't have it all the same. Why? Because by having a variety of scented products, for example, you will get a sense of what will sell profitably and what won't sell. In going for variety keep your ordering for each item minimal. If it sells profitably, you can get more . If it doesn't sell, you haven't lost much. Information is your best friend and, by being able to see what people select out of a range of products -- especially a variety of perfumes and scented products -- you'll become a more effective buyer going forward.

    Copying your competitors is a starting point. Do it carefully and thoughtfully and you should be able to get your business started. Hard work will keep your shop going but, if you want to make more than just a living, you should look into some "advanced" merchandise acquisition strategies. I'll write about them next week.


Friday, June 19, 2020

Starting a perfume business with a shop of your own

    Is starting a perfume business in India or the Philippines any different than starting a perfume business in North America or Europe? While regulatory issues and supply chains differ from country to country and sometimes from region to region, the business fundamentals are the same. To have a perfume business you must be able to make profitable sales. To make profitable sales you must have product you can sell at a profit. Today I want to write about getting started.
    How does a business that sells goods to consumers get started? Sometimes it gets started when you buy a franchise or when you put up a lot of money to open your own store. But how can you do it if you don't have that kind of money? Would you be surprised to learn that people have been doing it, successfully, for years?

    More than one American fortune was founded by someone who peddled goods from town to town, traveling on foot, working out of a backpack. In New York City I recall seeing African men staking out sidewalk spaces and, seated on the sidewalk, selling out of duffel bags.

    American peddlers who started out on foot invested their profits, first in a horse so they could travel farther, then in a wagon so they could carry more merchandise, and finally in a store. As profits grew, sometimes they opened a second store.

    Today we have shopkeepers whose "shop" is a folding table set up at a flea market, craft fair, or farm market. And some people sell out of the trunk of their car. They have found that even with these low profile "store fronts" they can make money.

    Regardless of whether you start with a peddlers pack, a folding table, or a  store, the dynamics of your business are the same. You have set yourself up as a "shopkeeper" or "retailer" and you confront all the problems and opportunities of others in your trade. Let's look at some of what is involved.

    First of all, your shop must become the center of your life. You must be passionate about it, proud of it, and totally committed to it. You must be constantly focused on making your shop, no matter how small, a more effective money making machine. Making your shop spin money must become everything.

    Whether your store is brick and mortar or a folding table, feeling comfortable with the "traffic" is essential. If you want people to take an interest in your merchandise, your first step is to take an interest in them.

    Always be clean, neat, and nicely dressed. You want people to feel comfortable with you. You don't, by your dress or mannerisms, want to distract them from the merchandise.

    Charm your customers by talking to them, finding out what they might like  and helping them find it and buy it.

    Honest dealings build trust and trust brings additional sales and new customers.

    Be prepared to be present at regular hours. You are the store's image. People will want to talk to you and feel they know you. Schmoozing with customers helps build business. Arrive before opening time and stay a bit past closing time. Show that you are the captain of the ship.

    How you display your merchandise matters, even when you are selling off the top of a folding table. Make your display an example of the pride you take in your business. Feature the items that should be featured. Highlight the winners. Don't give every item the same amount of shelf space or the same treatment.

    Start-up money isn't really an issue because, if you have the right motivation, you can get started with a folding table. If you invest in a store but don't have the right motivation (perhaps because someone gave you the money to open the store and you didn't earn that money yourself), you are likely to fail. To succeed you are really going to have to put your back into it.

    One final warning. Ego and the wrong kind of pride can block you from opportunities. If you have no money but could sell successfully off a folding table BUT are too proud to "lower yourself" to that level, beware! If you have money to rent an inexpensive store but, due to your ego, will only consider a fancier store and location, beware! Starting your own business may be a bad idea for you. (FOOTNOTE: Barneys, the famous clothing store which became a chain, was started by Barney Pressman at 7th Avenue and 17th Street, for clothing a very obscure location. I remember buying some very nice Burberry trousers there before the store became famous and the goods became far more expensive.)

    I haven't mentioned inventory; how to find it and how to buy it. Buying right  is your ticket to success and I'll write about it next week.