Setting Goals & Defining Objectives
VALUABLE TIPS FOR WINDSURFING RETAILERS - CHAPTER #1
It's best to start with the basics and set some kind of target to aim for. Whether you're established, a startup, a webshop, walk-in store - or both - you need a plan, a framework to stick to so that your investment is in line with potential returns.
1.How Much Turnover can I realistically Expect to Generate?
And, therefore, what kind of turnover and margins do I need to cover my expenses? (Use an Operating Expenses spreadsheet to keep track). The answers to your margin question will determine what products you then choose to specialist in and focus stock investment on.
- Identify footfall and/or online traffic.
- Ask yourself how many orders a day can you process or afford to spend time with customers on?
- Research what will be the average order value be - and what types of products will those common transactions represent?
- Calculate how many sales can you actually fulfill and process between yourself and any staff per day?
- Determine a Cost per Acquisition that you are prepared to spend in line with average customer value. E.g., online advertising spend related to order value, other marketing costs related to sales (try and keep everything trackable, even physical promotions with voucher/print campaign discount codes and coupons just as you would online.)
EXAMPLE 1 - PHYSICAL STORE
To pay overheads, you figure you need to sell one board and 3 sails a week, year-round, for steady cashflow. Are you in the right location - and will you have enough footfall to make that likely? If your least time-consuming customers and most common requests are not going to be for sails and boards, but for SUPs or Kayaks instead, focus your stock investment there and keep windsurfing stock to a minimum and concentrate on spares to service potential and existing windsurfers. Consider offering lessons/taster sessions at low prices to fuel demand of future customers. If purist windsurfing is your only interest and you can't rely on walk-in demand, maybe assess if a mobile store present at busy spots is a smarter solution?
EXAMPLE 2 - WEBSHOP
Keyword research tells you that windsurfing masts, booms and spare parts are popular searches and hit the 'sweetspot' between search volume, higher order value and reasonable onward shipping costs to customers. Customers seem happy to buy these 'sight unseen', so put your stock investment focus on buying smaller items in bulk for better margin and reduced delivery costs and leverage drop-shipping terms with suppliers to satisfy demand for heavier, more expensive items. (Bear in mind that if you offer too many brands on a drop-ship basis, that customers may leave you with a headache in terms of multiple delivery costs from your wholesale source.)
2.What Will my Brand Selection Criteria Be?
Of course there are always 'hot' brands. And, sure, these brands may fuel some amount of demand. But this is business and you have to make decisions based on numbers rather than just what you personally like the image of, or even believe is the best quality manufacturer. This is the time to temporarily forget you are a windsurfer and be sure you are a business person.
Ask yourself 'what do my customers need?' Is that the latest shape from Maui or high-end gear? No, it's probably a competitively-priced freeride board and sail package. Of course the in-vogue brand may have that combo too - maybe even the best-in-class material. But, does that supplier match your margin and price requirements as above through their full range, even if they supply multiple brands?
You have turnover and profitability targets - as above - to meet and don't want to have additional suppliers and time-consuming points of contact to deal with for either core or peripheral products.
So make sure you can meet customers' demands rather than just going for the obvious names. If you are influential then you will have no need to convince your customers which is best.
There are several more factors to consider when you assess potential supplier - and we look forward to introducing and outlining them to you in the rest of the series in the coming weeks - thanks for reading!