Selling Your Merchandise
by Owen Jones
If you want to sell stuff, there are two basic decisions that you have to make: 1] what price are you going to sell at? 2] what degree of customer service are you going to provide? Price is always a role of cost and overheads, but customer service is an overhead.
Based on the results of these two decisions, you will either be 'stacking 'em high and selling 'em cheap', you will have a high-end department store like Harrods or you will be somewhere in between, where most shops are positioned.
This is the situation whether your business aims to provide wholesale or retail and whether it is based mainly on or off line. The trick is to sell at a low enough price, but all the time providing decent-to-excellent customer service and maintaining a decent cash flow.
Cash flow is vital if you are to keep your stock rotating. Stock is also called merchandise inventory. Cash flow relies on positioning the company correctly according to the first two decisions and using a viable operating cycle.
The first stage in a typical operating cycle is the purchasing of merchandise inventory; the second stage is to sell that inventory for cash, which may be either hard cash from the customer or a loan to the customer from a credit card company.
This might sound all right, until you understand that you part with the merchandise long before the credit card company pays you for it. If most of your dealings are done with credit cards, this can have an adverse impact on your cash flow.
If you have to borrow to replace the money, that will be an additional overhead. Negotiating a more favourable credit period of grace from your suppliers will partially offset these extra costs.
Thirty days grace is standard, but if you can negotiate sixty or even ninety, then you are a step ahead of most of your competitors. This is part of the calculations called the financial or financing period. The financing period is actually the timespan between purchasing and being in receipt of the cash after selling the items.
This is also commonly referred to as the 'cash gap'. A typical cash gap in a clothing store where most goods are sold on credit cards is 60-90 days. During this time, the shelves and storeroom will be full, but there will be little cash in the bank.
The store manager's task is to strike a fine balance between full shelves, the number of different items of inventory and the cash held in the bank to pay salaries and other bills. This is extremely hard and one of the main reasons for substantial discount sales and bankruptcies.
Traditionally, money-lenders such as banks stepped in at this juncture to 'help out'. However, in recent years companies and governments have criticized banks for not lending an adequate amount which has raised the number of bankruptcies to a higher level than usual.
In general, the lower the cost per device of inventory, the more sales will be made in cash, which is a useful thing. However, the banks also charge for handling cash and coinage. Counting it and bagging it may also be time-consuming
One method for avoiding the extra cost of collecting cash, while reaping all the advantages for cash flow, is to permit customers 'cash back'. This means that you permit the customer to withdraw supplementary cash whilst shopping.
You can suspend this facility while it is inconvenient or merely permit it for debit cards, which pay the shop more quickly than normal credit cards.
Owen Jones, the author of this article, writes on many of subjects, but is now involved with <a href="http://wherecanibuyshippingboxes.com/large-boxes-for-shipping.html">large boxes for shipping</a>. If you want to know more go to <a href="http://wherecanibuyshippingboxes.com">Where Can I Buy Shipping Boxes</a>?
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New Unique Article!
Title: Selling Your Merchandise
Author: Owen Jones
Email: owen@amiabledragon.com
Keywords: stock control,sales,shopping,business,marketing,department stores,merchants,advertising,clothing,gifts,hobbies,families,other,unclassified,uncategorized
Word Count: 595
Category: Sales
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