Common Sense Business #1 – Rough
OK, this is one of my pet peeves… I will admit to having very little patience when some one does this too me.
It was pointed out by a friend that I should explain to people why I and almost all other dealers for that matter do not like this type of customer and order.
Even if a lot of the other rough dealers will not say so publicly. Believe me they do not want these types of orders either.
For people already in business I should not really have to explain this, they should know better, sadly some people do not know better. For some one new in the business or some one that wants to be in the gemstone business…. Well here is my point of view.
What is the issue? The problem is that some people/customers order multiple pieces of rough from me as well as several other dealers at the same time with no intention of buying all the rough they are ordering from the various dealers.
Their intent is to buy the “best” piece of rough. While in theory I would not argue with some one wanting the best piece of rough for their project. In practice they are going about getting the “best piece” the wrong way and it will cost all the dealers that send rough to these people time and money. It is costing the people ordering like this time and money too, they just do not realize it.
Here is a typical scenario… A person that has a stone/job that they want to cut orders from several suppliers. What typically happens is they order a piece of rough from many different dealers with the idea that they will “pick and keep” the one piece of rough they want and send the rest back to the various suppliers for a refund.
What is wrong with this? Many things… Mainly the problem is that the customer doing this is wasting the time and resources of most if not all the multiple dealers they are ordering from. As well as their own time which is worth some thing even if they do not realize it.
Note: This situations is completely different than a good customer seriously ordering some rough with good intentions of buying it, but returning the rough because it did not meet the need. In the case above the “customer” has no intention of buying most or even all the rough they are ordering from the various rough dealers in the first place.
Here is how it breaks down from my point of view. Say I have an employee that handles this order… I pay the employee $16/hour, and by the time I pay the employment taxes, unemployment, et… The cost to me is $25/hour for the employee. This is just the cost of my employee, not counting overhead, electricity, material… the list of costs is pretty long. This is 2008 costs…
Also remember there is a credit card fee to the merchant that averages around 3% (it may vary slightly) that has to be paid irregardless of whether the sale is made or not. If some thing is charged the fees is paid to the bank, if the rough comes back and a refund is made, the fee is still paid to the bank.
So lets say a person wants to “look at a piece of rough” from me as well as lets say 3 other dealers at the same time. He/she only intends to buy one piece of the rough that is sent to them. So any way you look at this 3 of the dealers sending rough to this person are going to loose money and time.
A typical order by the time the rough is pulled, the order is billed, the packaging is done… probably takes about one hour to process. So if the order takes one hour of my employees time that is $25 at my cost to process the customer’s order for shipping to the customer. Not counting anything else.
If and when the rough comes back another 30 minutes at the minimum can be figured to check the rough, process the paper work and credit the customer on the returned rough. Not counting re-posting the stone on the web site, pictures, descriptions, et…
So potentially there is 1.5 to 2 hours of labor/cost in a transaction that I did not sell anything when I transacted the order and there fore there is no profit, but there is a loss. The loss translates to $35-$50 hard cost. Not counting other costs and credit card fees.
Note: My time? Well it is more valuable at least to me than my employees time. What is an hour of my personal faceting time worth?
So at this time the customer who is just wanting to look at my rough as well as rough from 3 other dealers, has cost me one 1-2 hours and $25 to $50 minimum.
Now assuming the customer keeps my rough, then I will make a little money depending on the cost of the rough. However the odds of the person buying my rough is only 1 in 4 or about 25% if they order from 4 suppliers. Often people that do this order from many more than 4 suppliers at once so the odds of a sale are even lower. I have seen it happen…
Note: I should point out here that in these situations the rough in question is usually not expensive, the orders are usually a few hundred dollars or less on these situations.
The odds are 75% that my rough will come back and I will loose money. Would you as a business person want to loose money and labor 75% of the time on these orders?
You begin to see my point?
Consider that at any given time I may have several people trying to pull this “order from multiple dealers and send the rest back” type of deal on me…
So how much of my time and money am I willing to have wasted by these types of orders? The answer is as few as possible. Remember that I have real customers that are being straight with me wanting to buy what they are actually ordering. Not just shopping. I would much rather spend my time with serious customers. So would anybody.
Now there can be variables in the situation. For example if the customer tells me up front that they just want to look and compare. Usually I am not thrilled with this either, but the customer has been honest and told me up front that is the situation and if they are a good customer… I will usually try to work some thing out. Especially if the rough in question has some value and is worth the time.
If the rough the customer wants is a piece of inexpensive blue Topaz for example (yes, I have actually had this happen on blue Topaz). My answer will usually be… If you are in business or wanting to be in business do the math and be cost effective. Just buy the Topaz, it is cheap and why waste every ones time?
After all the customer will have to ship back the extra pieces of rough they do not want to the various dealers any way. Not only is my time valuable, but if they are in business the customer should consider their time valuable too. If they are not in business… well time is still valuable.
Problems? I have explained my problems in this case… The customer will have problems themselves if they try this. There are several potential problems to the person trying to do business this way.
Potential problems are…
Loss or damage of the goods.
Getting all the goods back by the return deadlines.
Cost of insurance and shipping.
The labor, we all have better things to do.
Restocking fees – I almost never charge one, but I do charge the credit card fees and depending on the situation a restocking fee. If I figure this is the situation, I will charge a restocking fee.
Costs – When does the customer wanting a $100 piece of rough and paying shipping to and from 4 rough suppliers realize they are wasting money?
Last… Here is the biggest problem and I guarantee that anybody that try’s this type of deal on me will have it. The rough stone dealers figure out what you are doing and they will not supply you.
I can flat out tell you when some one does this to me, I tell them up front that I do not do business this way and that I do not want the business if that is how they want to do it. I am pretty out spoken and tend to say what I think. There are no hard feeling and I mean no harm, but I just do not want to do this. It is my choice… I choose not to do this.
Other dealers? They will not be any happier than I am about some one doing this to them, but most of them will not be as up front about it as I am. Most of the other dealers will just not ship things, loose the order, say they do not have the rough in question, and so on.
Either way the person trying this type of deal will be shown the door eventually and once they have a reputation of being a “look and return” kind of customer most all rough dealers will not spend time on them. Remember this is a business.
Think this will not happen? You are wrong I have a list (a short one thankfully) of these type of customers and I do not deal with them. This is a list… that as some one wanting to buy good rough, believe me you do not want to be on.
Once more I have told my friends in the business the problems and passed information along. ALL rough dealers compare notes. NO we do not share confidential information… But we definitely will say ” that guy was a waste of my time, watch for him.”
As I have said these are my opinions and experiences and I hope that maybe I showed you the other side of the coin and that it may help you understand why a dealer may not want to do some thing that you think they should or that does not appear to be an issue from your point of view.
Basically if I see some one ordering a lot of rough from various dealers with obviously no intention of keeping what they are ordering. I say… “No offense, but please do that with my competition.”
If other dealers want to put up with type of customer, that is certainly their option. But I do not need the problem. Just my point of view, but I think most people will agree with me when they understand the problem.