A friend told me this story. To anyone who considers himself a true entrepreneur, it is almost unbelievable.
My friend found a store in a nearby town that carries a particular brand of slippers that are perfect in every way. They are warm, comfortable, look good, fit well, are well-made and reasonably priced. My friend has been buying them for several years and has gone through about three pairs of these same slippers.
His last pair finally needed to be replaced so he drove to the shoe store where he has been buying them and asked for another pair.
The store owner said, “I’m sorry, we don’t carry those anymore.” And my friend, surprised, said, “Really? Why not?”
The store owner replied, “They sold really well and we had to keep reordering them and it got to be too much trouble.”
Excuse me? You have an item that sells well and because you have to keep replacing them — so that you can sell more of them — that’s why you stopped selling them? By that logic, you probably want to stock your store with items that never sell so you don’t have the bother of having to reorder stuff.
I thought the idea of a retail business was to sell stuff at a profit and thus make money. And the more stuff you sell, the more profit you make and the more successful your business is. Unless, of course, you have more money than you know what to do with and you have your store just so you have a place to go every morning instead of sitting at home doing nothing.
I suppose it never occurred to this store owner to do one of two things. One would be to order larger quantities so he didn’t “have the bother” of reordering. The other option would be to raise the price of the slippers to make more profit on such a popular item. Or do both — order more and raise the price.
This incident reminds me of the manufacturer who related his experience in selling his product. It is an inexpensive item that is both useful and is one that must be constantly replaced by the consumer. (Things like gasoline, paint, shampoo, mouthwash and toothpaste fall into this category.) This product sold well and generated a nice profit for the dealer selling it. However, the manufacturer found that he did not get the expected automatic re-orders. In follow-up calls to his dealers he would ask them if his product sold well and they would say that it had and that they were all out of it. He could never figure out why he had to call to remind them to reorder if the product sold so well.
For the life of me, I cannot understand this sort of logic either. Perhaps one of my readers can explain it to me.
Paul Burri is an entrepreneur, inventor, columnist, engineer and iconoclast. He is not in the advertising business but he is a small business counselor with the Santa Barbara chapter of the Service Corps of Retired Executives (SCORE).