Have Sales Gone Down In the Poor Economy?

Here’s a question I’ve been getting more and more geared towards my business House Of Rave:

Have your sales gone down in the poor economy?

It’s actually a fantastic question and relatively interesting to hear different answers from different business owners.

So, have your sales gone down in the poor economy?

MY ANSWER:
YES…..but not in the traditional sense. Let me explain:

Most people expect that sales simply stopped coming in after the economic downturn, this hasn’t been true even though House Of Rave sells things people buy only on disposable income.  In fact, if you never told me there was a “recession” going on, I probably wouldn’t have noticed too much….people still order all the time (although I’ve seen a very significant drop in big orders from large corporations).

The MAIN problem I’ve had which takes a DIRECT shot at lowering my sales is all the cool products are out of stock.  Almost all of my previous best sellers are no longer being manufactured.

HouseOfRave sells “hard to find” and “unique” products….which often means “they don’t sell it in big stores”.  This has been great so far, but a problem I’m seeing now is manufacturers are on tight budgets and don’t have the capital required to mass produce slower selling items.  I may be able to sell 10 per day of an item, but a manufacturer might need to sell 10,000 of them per day to keep cash flow moving.

….so unless an item can move HUGE quantities quick, the product might be discontinued.

This has been the predominate way that my business has been affected.  The cool part is, with more marketing and more effort I’ve been able to maintain and grow both the profit and sales of the business, but it’s required more effort than in the past (keep in mind I used to put NO effort into it at all).  Before, I would just slap products on the site and they sold….it doesn’t seem to be quite as easy anymore.

Many smaller manufacturers and product patent holders are going out of business now.  Think about it, to manufacture just ONE simple product you must spend hundreds of thousands of dollars for materials and labor, store them, then find people to buy them.  Before you make even one CENT from the product, you could blow through a half-million dollars on credit.  If the product is a flop (note the importance of beforehand PRODUCT RESEARCH) you’re screwed…..and I’m just using the example of small-scale manufacturing of novelty products.

While my business doesn’t have the extreme overhead of these manufacturers, I feel their pain indirectly when a cool product of theirs goes out of stock.

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    Blog posted on: March 11, 2010

    7 comments on “Have Sales Gone Down In the Poor Economy?

    1. Nathan McInnis

      This is a very true article. I am on the manufacturing side of promotional products and we have seen all our competitors dropping their inventory levels way down.

      We have also seen the orders keep coming and at their normal price value, however, the number of orders has dropped 30%-50%.

      I guess whether your in pens or rave products, most industries are behaving relatively the same with this fantastic economy.

      Reply
    2. Neville Post author

      Nathan,

      I’ve seen roughly the same thing. As a retailer it’s a little frustrating to promote a product, have it reach a critical mass…then it just goes out of stock.

      People will ALWAYS spend money on stuff they really want.

      As for your business, it seems you’re catering mostly to businesses getting promotional items made. I’ve definitely noticed a huge cutback on corporate spending at my store….hopefully you’ve come up with clever ways to gain that lost business back!

      Reply
    3. Varun Kumar

      well these times do cause a llot of people to loose money and hence debt consultancey becomes very cruicial .
      By the way you have some really interesting blogs.
      I not yet 22 but surely i have someone to look up to now.

      Reply
    4. Pingback: Effort - Neville's Financial Blog

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