Solomon Bruce Consulting Blog

Tuesday, August 7, 2012

Are Warehouse Stores Always A Good Deal?

    Many business owners shop at big warehouse stores for products.  These stores, set up for small business, large families and corporate functions work-- if you use the product frequently!  If you buy a whole pack of pens, use 5 or 6 and then when you need some more, the ink is dried up and the pen is no good, you have wasted money, time and storage space buying a jumbo size package.
     Warehouse stores work best when you buy products in quantity and use those same products in quantity.  Let's take the pen example-- it makes great sense to buy a big pack of pens if yours "walk off" frequently.  You may have a business where people need to sign credit card slips, bills/invoices/customer orders.  If that is the case and the pen "walks off", then probably a warehouse store purchase is in order.  However, if you are a small jewelry store and only have 3 employees, each has his/her own pen, then buying the big pack of pens is probably not a wise expenditure.
      Having your money expended in inventory which is not returning your investment is not good business sense.
      Taking the pen example again.  If your pens find a home other than your counter, you may wish to consider some promotional marketing pieces with your name, address, website and phone number on the pen.  In that way, your pen becomes a walking billboard for your business!
       The warehouse store purchase is good if you use the product frequently, are able to turn it over rapidly, sell it rapidly and don't need to store it.  If that is NOT the case, you are probably money ahead to buy fewer product, albeit at a higher nominal cost, but overall, probably a cheaper functional cost for each item.


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