Had an appointment at a busy, established office. As I was showing frames, both buyers were trying on each frame and remarking how it didn’t look good on them, and finally one of the buyers said, “I can’t buy today, my face is too fat!” True Story ! You may laugh, and say that doesn’t ever happen, believe it or not, similar type of scenarios occur constantly and most probably in your office.
I think, I really learned about buying when I started working with some of the chain stores. As a vendor, I really had to struggle to find products that sold through, provided the right merchandising materials that would fit in the store and most importantly that were turn- key. Turn- Key, meaning, the product and POP had to make the sale. This chain based all inventory decisions on 1 thing- Inventory Turns. That’s it, If a product did not sell as least 3x, you were out. No wait till next time, no emotional decisions, nothing. It either sold or it didn’t. If it didn’t, you were out. The buyer never tried on product. If they put in a color, it was based upon whether or not other similar colors were selling. They may have loved the product, but if the price point was not moving in other styles, they wouldn’t put it in.
There are several points to this stories:
- Any product you buy is for your customers, not the buyer.
- Just because it didn’t look good on a buyer- does not mean you shouldn’t buy it.
- Product you buy fills a patient need, not the buyers spending habits.
- Poor buying habits affect the office in which you are buying for. In the case of this office, the OD was constantly struggling to pay his bills. Reps talk among each other, no rep wanted to work with this office, return rates were over 40%, they dealt with too many reps, and the no-show rate was very high.
- Poor buying costs money, lots of money to the office.
- Good buying habits are based upon inventory turns and profitability.
Many buyers say they can’t sell what they don’t like. Here’s a reality check- The most successful buyers at retailers such as Nordstroms, Lenscrafters, Pearle Vision do not ask their opticians if they like the products. Successful buying, meaning products that sell through and are profitable- rely on 1 thing. BUY WHAT IS SELLING! That’s it. Buying is not an emotional issue, is not about spending money frivolously and ‘just because’. Successful buying is based upon facts, the image you want to portray and your business plan.
How do you know if you need to work on your buying habits?
- Too much understock.
- Total inventory Turn Rates are under 3%
- Patients are walking out the door without making a purchase. Patients say, I don’t see anything I like.
- Not enough money to pay for merchandise (although this could involve other factors as well.)
- Return rates per vendor are over 15%
- You have no concrete facts about what is actually selling
- Inventory fluctuates too much.
- Too much dead stock- not turning. (may reflect, you carry too much inventory)
Keys to Success in Buying
Key #1 Know Your Market
I’ve been in Compton (CA) where they have Eyewear priced at $600 (and they sell it), I have also been in Beverly Hills, where they buy closeouts. Determining your market, your image you want to portray and your competition is crucial to good buying habits. I recommend you write down your demographics and goals before you start. Some questions to ask yourself:
- What is your competition selling?
- What is the percentage of patients that walk away without making a purchase
- What is the percentage of patients that keep their own frame
- How many patients ask you for another color? Size?
- What percentage of your business comes from frame sales
- Do your boards look alike?
- Identify the customers you want
Key #2 – Set up an inventory System that will work for you.
You can do this by hand or computer. Either way, good buying habits rely on facts not emotions. The only way you can get the facts is to have a consistent inventory system. You are not relying on your vendors for information, you can track total inventory, inventory turns, and if really sophisticated, colors, sizes, sex, add-ons, private pay and more.
Key #3- Track- Track- Track.
Keep careful records of what is being sold
Set annual and semi annual physical inventory dates to establish and average price per brand.
Key #4- Know Your Space
There is nothing worse when you have space on the board for 500 frames but have 700 frames in stock. That is 200 frames you must get rid of, as it can cost you money. If your office sells 20 frames a day- 200 is probably pretty good, as it is a 10 day inventory. If your office sells 5 frames a day that is a month and a half worth of inventory. In some cases (usually delivery) buying big several times a year and carrying inventory works. (There are Advantages and Disadvantages to those types of Programs) Other offices, may not have space, so product gets ‘lost’ (shoved in shelves and not found for months) Either way, how much inventory to carry is part of your office individual plan and should be adhered to.
Key # 5- Work with Your Reps
- Meet with your reps on a consistent basis- Set up your schedule for the year.
- Learn how to read their printouts- it helps to compare your info with theirs.
- Know their Product and pass product knowledge on to staff
- Communicate and define your expectations and goals to reps
- Trust their judgement on what is selling.
Key #6 Order Right
- Buy in kits of you top 20 sellers- These are your ‘Cash Cows’- and can assure profitability.
- Re-Order Your best sellers consistently – if you need back up stock- back up with your best sellers. Reordering will give you a clearer idea of exactly what is selling. It eliminates guesswork.
- If you want Trendy, colorful product- set aside a limited amount of space for ‘testing’
Key # 7 Price the Products Right
Different locations and depending on overhead, may have different pricing strategies. What you need to know, if you have to price that Dior more than the Optician across the street, it may not move. Buy Product that will move within your pricing strategy.
Key #8 Buy as if you can’t Return
Many buyers buy on a whim, thinking they can always return it. Returns cost the office money and they are a hassle. So before you sit with a rep, let them know you only want product that sells through, your new motto, is to buy as if you can’t return.
- Take personal responsibility for what you buy.
- Make buying decisions based upon facts
Key #9 Control Cost
It is important to recognize that the money spent is profit potential, not a necessary evil! The key is making sure all product sell through. What is not profit potential is products hidden underneath in storage, (out of sight, out of mind) and spending more than you are making. Cost control is extremely important in any business, and inventory is one of the top ways to overspend.
What not to do:
- Purchase Products and Say ‘I can always return it’
- Order products, when you may have 100 extras in stock.
- Buy without a plan
- Buy what looks good on you
- Buy only what you like.