Monday, July 17, 2023

My Purchasing Process

I made a chart to show how I purchase product, as a buyer. This is using my venerable Open to Buy spreadsheet, which tells me how much money I have available to spend. If you're profitable, you can generally follow such a budget without worrying about the bills. If you're somewhat on the margins, it takes more care. This process has grown dramatically for me over the last three years, especially as I've allowed my role as buyer to expand to most of what I do. When I worked the counter, this would have been a nightmare.

Here's how I do it:

Weekly Orders (Mandatory)

It's inconceivable that I wouldn't have enough funds in a week to make at least one order with my Primary distributor (ACD). Usually it's twice a week, sometimes every day. Pre orders with my primary trigger an order at free freight, so not all the orders from my primary are initiated directly by me. I pre order everything, ignore "dailies" and I have enough sales volume to absorb it.

My Secondary (Alliance) almost always gets one order a week, and usually two. Lately they've been getting more than 50% of my restocks and my improved discount reflects this. I have a small number of items pre ordered from my Secondary, usually things I only get from them or special orders where I'm happy to order from multiple vendors to ensure a timely arrival for the customer.

I have a CCG distributor who I specialize for restocks of collectible card games that almost always has stock of what I need (Magazine Exchange). Magex makes it clear precisely what's in inventory, rather than having to call to find out. This works best for me, working remotely, increasingly abroad. I use them once a week at least, sometimes twice.

Asmodee gets a weekly restock, even if there's not enough for free shipping. About 90% of the time there are enough restocks and new releases to trigger an order, but occasionally it will sit until the next week. If I'm concerned about stock outages, I'll order some safety stock from ACD. I place the Asmodee order before ACD.

Games Workshop always gets a weekly restock, with a poor fill rate of about 33%. I order all the new releases except for a few specialty games that nobody wants. Games Workshop makes me work a schedule, as I add new releases on Monday, photos on Saturday, and have to manage pre orders with customers and street dates. If sales were lower, I would consider dropping them because of the friction. At least Asmodee allows me to pre order in advance, rather than requiring just-in-time labor.

Monthly Orders (Nice to Have)

This is where money can be tight. If I'm swimming in CCG product and I'm over budget, I might hold off on these suppliers for a week or two ... or longer. This is often discretionary spending, although if my purchasing budget is flush, it becomes somewhat obligatory

These "Nice to Have" products are what differentiates my store and I consider them crucial to my operation. However, they take a back seat to the bread and butter products I receive from the more frequent distributors.

Besides direct accounts, I have tertiary distributors that tend to fill in holes that get an order once or twice a month.

The Orbiting Filler Suppliers

There are many orbiting suppliers that provide me baubles and wonders that are not really necessary for my store. If the weekly order suppliers are the cake, and the monthly orders the icing, the orbiting suppliers are the sprinkles that make that cake pop. Orders often get triggered when we notice product is gone. Sometimes we notice product is gone and decide that's good, no more of those.

Orbiting suppliers can be ignored for months at a time without ill effect. We have specialty soaps, plushes, toys, various fire and forget Kickstarter projects, jigsaw puzzles, playing cards, and so much more. At times there have been upwards of 100 of these suppliers. 

Growing The Budget

As my budget grows, the ordering increases. Orbiting filler suppliers become monthly orders, monthly orders become weekly orders, and weekly orders get placed multiple times a week. If you are one of my suppliers, I suppose moving up categories should be pretty desirable. How do you do that? 

Watch how Game Workshop and Asmodee create a portfolio of products that practically require weekly orders. Both have programs that reward weekly restocks. My distributors are always using sales tactics to get me to place additional or larger orders. One will entice me with a tiny amount of desirable product, knowing their minimum order for free shipping is $750. Others have exclusive products.

As for how stores grow budget. It's like the Steve Martin bit about how to be a millionaire and never pay taxes. First, get a million dollars. Profits need to be reinvested into purchasing budgets. I've been very stingy in the past, until COVID era profits allowed me to triple my inventory. My eyes were opened to how I was staving my business, so since then I've added a healthy amount to my purchasing budget each year.

Anyway, I hope this helps. 

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