Well, as I've received quite a few emails, as well as a few nods on this thread (thank you guys), I might as well expound here for a bit. If there were firm orders and things could be worked out to everyone's advantage, I would be willing to help. As Brock pointed out, I do run another company on a full time basis whereas Nor'east Knives is a part time venture with nearly full time hours. Therefore, I guess, not to put too fine a point on things, if everyone wanted the same exact thing, I could help with a group buy. If everyone starts putting little conditions extras/differences/requests, things can tend to spiral out of hand, for which, sadly, I do not have the time (assuming an order of 100 pieces spread out to here and there). I ran a special as one of the first dealers with the E1 and then the E2 and to date have sold a WHOLE lot of each of them. Specials like that keep me busy for a couple of days, which is not a problem. Everyone mostly preordered and I had everything lined up for shipping when they new product finally arrived. I think if you hear from any of my customers, you hear that while I may not be the cheapest (more on that later), I try to give the best customer service I know how- and my pricing is competitive. I generally ship anywhere from 75-200 packages a week, and my sales/specials have essentially been group buys, so if I can make something a whole bunch of you are interested in, work out for all parties, I'd be happy to help. For example, I am a stocking dealer for SureFire (not a lot of accessories, but anything is orderable, even though that's not what your would like based on your initial post). I generally have $2500 in SF product at any given time and went through about $25,000 in SF product last year, down slightly from the year before (market jitters was my guess- less discretionary income). Sales trends dictate what else is in stock per company. I'm not, as you suggest, a filing member of D&B, but if you check my reputation around here, BladeForums, KnifeForums, The Firing Line etc., I don't think you'll find anything amiss. If you require more bona fides than this, I'm guess I'm not the guy for a group buy.
That said I would like to interject a little business diatribe here, so if you're not in the mood for some droll reading, you might want to consider signing off this thread now.
One point that you mention, Ted, is that anyone can become a dealer for this or that company. Pretty much that is true. Get yourself a tax ID/resale license from your state (most states run under a couple hundred dollars for this and must be updated annually- some are much less), present it to a distributor or manufacturer and you can buy their products for resale, subject to their minimum orders and any contractual obligations that they attach. Ok, now you're a dealer who sells products. This opens you up to filing quarterly tax payments for sales made within your state- depending on how much business you do, this can be a headache. If you are doing this as an "at cost" venture to help friends (or yourself- keep in mind that everything you see from a distributor/manufacturer says "for resale only"
), your costs are starting to add up.
-Say you buy that $32 flashlight with a retail of $50 (just a for-instance).
-You sell 10 of them to friends.
-You need to cover your costs of goods ($320) plus shipping to you- figure this is $7 with a credit card. COD fees are $6 UPS but you need a money order (which costs you more money) without three business/trade credit references and usually a three year business history and credit approval, Let's say you can't meet those requirements since you're new at this and doing it mainly to feed your interest and some friends. You tack it onto your credit card (which may incur a 2-4% premium depending on the manufacturer or distributor- some of the manufacturers and distributors I work with do not take credit cards at all, so you might not qualify to work with them at all). Net 30 is the cheapest way to go, but you need that credit history and trade references to achieve this. Let's assume a 2% premium for using your credit card- the cost of getting those 10 units to you is $333.40, or $33.34 each.
-Add shipping. Let's say you use standard, non-priority mail, and the package weighs 5 oz. You use reused boxes and filler so your shipping materials are free, so your cost is maybe $2.28 with insurance for a package $50 and under. Add taxes (say your state is 7%- all of your friends are in-state sales, but not exactly local, so you charge them $35.6738 for each light, plus the shipping of $2.28 and they each owe you $37.9538, which is pretty close to what you predicted- $38. Two of your friends call and say "The wife said I can't buy it now- I have to back out. Sorry. I'll try to get you next month." It WILL happen. So, up front and worst case, you're in the hole for let's say $80- from your pocket- yet you have to send the government a check for $23.34 (you could probably just skip a quarterly payment this low, but you might get a small penalty when you file for non-payment of quarterly business taxes- I'm not an accountant, but I pay my quarterlies for both businesses on time). As it stands now, you're out $103 from your personal (now your business) funds. If you set up a bank checking account for the "business" you also might have a monthly fee there- I pay about $22. So to help out your friends (and they DO thank you, believe me- I started out thinking similar thoughts), you've racked up the following (worst case of course):
$20 for a business license;
$103 from your accounts for taxes and two pals who can't front you a check now;
$10 for a bank fee for a business account
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$133 and you've taken your time and efforts. In addition, you owe taxes on the one you kept for yourself- how unfair!
Also, you should probably get an accountant to look over your taxes (if you don't already) to make sure you're not setting yourself up for a fall. Three out of five years must show a profit or the IRS might conclude you're doing this as a hobby and disallow any deductions you might have taken (say, 90¢ on each shipment) etc. if you're ever audited.
Now let's try a concrete example:
Let's say I buy 100 of an item that retails for say... $74.99. Dealer pricing is 38% off (one of the distributors), so my cost is $46.49. Let's say that each package weighs 5oz. Packed together, that's 500 oz or 31.25 lbs. Shipping to me is oh, say, $35. Thus my total outlay for this shipment of 100 units is $4684 in round numbers. I'm on Net 30 so I have 30 days from when they ship to me to come across with $4684 to them- call it 25 days from when I receive the merchandise. That's fine. Now, I've got 100 confirmed orders and I agree to sell them all for $50 (quite an assumption, but let's run with it). Shipping for one item per customer in the US (via Priority Insured Mail with Delivery Confirmation- that's how I ship in the US) is $5.90 ($3.50 postage, plus $2.00 insurance for $74.99, plus Delivery Confirmation at 40¢)- I only charge $5 (flat fee, I know, you want to pay the 90¢ to avoid that flat fee but life is easier for me if you don't) because I'm A.) too lazy to compute the extra 90¢ or B.) too stupid to realize it's costing me money or C.) too nice of a guy- signs point to A.
I also include a receipt (program was a hundred bucks but that's not important) with each shipment as well as email the tracking (I try anyhow) the day the package ships. This takes time, paper and ink- inconsequential (well, not MY time, but maybe the materials) if you send out 100 pages a year, it adds up with 100-200 pages per week. Some customers are gracious enough to accept Adobe .pdf files (another couple hundred for the program that writes them) as receipts- this saves me a bit of time and paper and ink (thank you guys who do this).
So here's how costs are running so far:
-$46.84 unit cost
-$5.90 shipping/insurance per unit
-$1.50 per unit for my time- 15 hours of straight out work boxing/labeling/packing/invoicing- what's time worth? Let's say for sake of an argument that as a self-employed "businessman" I want to make $10 an hour (!!!) as a base- that's $150 (in my other business, I charge $200/hour as a working fee- you do the math) or if I want to lose MORE money "helping out" and get less per hour.
-25¢ per unit. $25 for packing materials (it's tough to keep enough free packing materials on hand for 100 orders- the boxes are free and are shipped directly to me, thankfully).
-$1.51 for each unit with a credit card- total billed to customer of $55 ($50 plus $5 flat fee for shipping) – I pay 2.2% + 30¢ per transaction credit card fee for PayPal as a Verified Business Account (this affords the buyer some measure of protection (like this
https://www.paypal.com/verified/[email protected] ) (yeah, that's the only way I accept credit cards- I never wanted to go through the proctological (try to work that word in at your next party or business meeting
) financial disclosures that the "real" credit card processing companies want- I value my privacy more). Anyhow, let's say everyone agrees to pay that way.
-----
Thus, my total costs for this $55 "favor to friends" is $46.84+5.90+1.50+.25+1.51= $56.00 (it just worked out that way- really). So I've just given each friend a dollar leaving me $100 out of pocket- and I have to send taxes on whatever units went to folks in my state (I had to charge them $3.50 more for taxes). Guess what- I quit!
I didn't even mention the cost of the business license, the added couple hundred my accountant tacks on for this business, the software, the internet fees, the phone bill, the gas to drive to the Post Orifice etc. ad nauseum. Oh- and I want more than $10 for my time- for $10 an hour, I'll tell y'all to pound sand and go enjoy watching and playing with my eight-month old son (Timmy Jr. of course
). At least my friends got one helluva deal. Except for the 5 who backed out at the last minute or never replied to my calls or emails. Or the one that got lost in the mail. Or the overseas one (assuming there was one) that got tied up in Customs. I have replaced items lost in the mail for customers- sometimes in the hundreds of dollars- with the "hope" that the insurance I paid for will actually pay me back in the six months it generally takes. Drat- the distributor wants their money before then- guess that extra $350 is out of my pocket, so I'm out $450 to start. Cool, huh?
Does it sound like I'm whining? Yeah, it probably does. You're thinking- "this jerk keeps a light for himself from every shipment (not quite true) and complains that he doesn't make any money at it- he should be happy to keep himself in lights. What a whiner." Well, just about five years ago when I started this, I'd have agreed with you- because that's how I started – "helping out friends" and getting a good deal for myself. Now that I've been selling knives, lights and gadgets for awhile, I find time is very precious (I've been composing this for over an hour now- I type slow and think a lot before I write things- it's a curse), but I'm willing to put the time in because a) I like knives, lights and gadgets..an awful lot and b) selling knives, lights and gadgets allows me to indulge in my other hobbies (besides knives, lights and gadgets) like home theater, computers etc. As such, and because of a very bad habit I developed in law school in the early '90's, my waking hours stupidly end usually between 3-4AM – it's 2:48AM now. But I enjoy the forums on knives, lights (here and SureFire), guns, HT and spend a lot of "after-hours" time on them when I'm not answering customer emails late into the morning. I also find that after all this time selling things I need to make some money at it to cover my costs plus a little profit to make it worthwhile.
Another aspect of the group buy that you mention that I know a large percentage of you aren't aware of is that some of the company names bandied about are not only competing dealers, but are, in fact distributors of the same product lines. As a distributor, they buy for anywhere from 20-30% LESS than the dealer, then make their profit selling to the dealer. Or, as some are prone to do, and I won't name names, buy at distributor cost and sell to the public at or near the actual dealer cost. I get emails ALL THE TIME asking to match this and that price- if it's a standard dealer, I'm usually happy to oblige- or point out that with shipping I may be cheaper anyhow. If it's one of these distributor/dealers who sell to the public at or near my cost, there's no way I can match that price. Sorry- I just won't lose money to make a sale and hope to make it up in volume later. Yep- this sounds like more whining. Sorry.
Anyhow, the group buy idea sounds good on its face, but in practical working- note how it's worked out in the past year or two. Mercata.com, was one big group buying "dot-coms" that really offered some good deals- I bought from them a couple of times when I built my last computer. Customer service was horrible. Found this out after the fact. The more people who bought, the lower the price went- "make it up in volume" were the watchwords. I bought a real nice Nvidia video card at under dealer price- about 15% under. With the razor thin margins of computer parts that turned out to be under their price- so they lost money on me and the other 230 or so people that purchased that video card. Maybe only $10 on each ($2300 total of that limitless venture capital they had). Oops. I was wrong- there was a limit. They're now a "dot-gone," having closed up shop in the past 6 months or so (I forget when exactly). Or look at Onvia.com- they used to be GREAT on computer part pricing- until they figured out they were losing money at a rate that would close them up as of March 2001. Accordingly, they changed suppliers and raised their prices a lot. They are still open but who shops there? Not the folks out for a deal. Did they whine- no. They changed their policy one weekend and lost a LOT of customers. There are a whole lot of the group-buy companies online who aren't online anymore. The internet economy has had a huge shakeout and pricing has pretty much settled in a lot of areas. Are knives and flashlights part of this? I still see them being "wh- - ed" out all over the place, but these "companies" tend to disappear in a few months once they realize that they're losing money by undercutting everyone to "make the sale." You want to buy from me, fine. You'll pay a fair price and get good customer service- I guarantee that. I do make mistakes. I recently goofed on some math some early morning in replying to a customer- it was an honest mistake- I don't even know how I arrived at the number I did, but in any event, I goofed and overcharged $26.20. I notified the customer as soon as I caught it (when I made out the invoice) and ended up sending him a check for $27. I threw in a little apology gift of an MN03 lamp ($10 item) for the E2's that he had bought. Oops. It made him happy (I think and sincerely hope) and made me happy to have taken care of a goof up. It happens. "Mistakes were made."
I also have granted credit to a very select few based on their word (and what I know of their character)- I doubt you'll find (m)any other dealers or distributor/dealers who will do this. Obviously, I can't do this for everyone as I have gotten burned to the tune of about $1000 from two inDUHviduals in the past. I've been told by a few of the customers who I did this for that I was being naïve/stupid for trusting folks on the 'net. Chalk that up to stupidity or faith in my fellow light/knife/gadget addicts or the fact that I'll post the facts on the forums, ruining your reputation (I had to do this twice- not here and not recently) if you try to abscond without paying (I try to be a little more aware nowadays, but I'm probably still too trusting).
Another thing that is sometimes overlooked is customer service- this does cost money. Personally, I'd rather pay a little more and get treated well than get the absolute rock-bottom price and get treated lousy. My wife hates that about me. But service is a component of retail - especially on the net- that's very often overlooked. To blatantly steal (and alter a bit) a quote from one of my knifemaker pals- Darrel Ralph- "The Bitterness of Poor Service Remains Long After the Sweet Taste of Low Price is Forgotten." I like the way that came out.
Thanks DR!
Anyhow, does this make you want to buy anything from me? Did it turn you off completely? Did it make your eyes hurt? Does it add anything to your thoughts on a group buy or trying to get better pricing (reasonable versus unreasonable?)? Does it add to your understanding of what the typical dealer goes through to earn and retain your business? Did it entertain you? I hope it does at least one of the above because I think it's caused carpal tunnel syndrome in my left hand.
Or maybe that's from the Luminox watch? I dunno. In any event, I hope this helps someone out, or if not, at least I achieved king whiner status for an hour or so.
If anyone is interested in a group buy and I can help out, please feel free to inquire and I'll do my best.
It's 3:59AM and I'm off to answer three customer emails and then to bed- maybe by 4:15AM tonight. Take care and thank you for reading if you made it this far. Says I have too many images- are smilies images? I'll edit 'em and find out.
[edited 2:22AM 20 June 2001 to correct some minor spelling errors - I think I caught them all- and to point out that you can't have more than eight smilies/images in your posts.]
