Spend 11 minutes getting to know more about amlbs.com and Beverly Garrity the General Manager of At My Local Bike Shop. The site is quickly becoming the destination for consumers as the consumer search site helps them find what they are looking for!
With brick and mortar retailers increasingly competing against online retailers for sales, there may be ways to combat online rivals on their own digital turf. One way is to list your available merchandise online. A would be buyer, for example, might be lured by picking up merchandise on their way home from work rather than waiting for (and sometimes paying for) shipping.
At My local Bike Shop (amlbs.com) recently launched a search site that lists available inventory for participating retailers. With a zip code and a product description, online researchers can find if the product they want is available at your shop.
Amlbs.com is a service of Vendor-Link Cycling which aggregates data, providing retailers with helpful analytics along with sell-through inventory levels to suppliers in order to optimize supply chain costs. MerchantOS customers can list with amlbs.com quickly at no extra cost. Sign up here.
We’ve always been very interested in services like this and have attempted but never completed integrations with both Google (Google shelved the project for now) and Milo (Purchased by Paypal) to perform similar functionality. We strongly believe that technologies like this should be embraced by retailers and over time inventory availability information from small retailers will be displayed alongside that of big box and online retailers in places like google product search.
“Buy Local”—you see the decal in the store window, the sign at the farmer’s market, the bright, cheerful logos for Local First Arizona, Think Boise First, Our Milwaukee, and homegrown versions across the states. The apparent message is “let’s-support-local-business”, a kind of community boosterism. But buying close to home may be more than a feel-good, it’s-worth-paying-more-for-local matter. A number of researchers and organizations are taking a closer look at how money flows, and what they’re finding shows the profound economic impact of keeping money in town—and how the fate of many communities around the nation and the world increasingly depend on it.
At the most basic level, when you buy local more money stays in the community. The New Economics Foundation, an independent economic think tank based in London, compared what happens when people buy produce at a supermarket vs. a local farmer’s market or community supported agriculture (CSA) program and found that twice the money stayed in the community when folks bought locally. “That means those purchases are twice as efficient in terms of keeping the local economy alive,” says author and NEF researcher David Boyle. (See the top 10 food trends of 2008.)
Indeed, says Boyle, many local economies are languishing not because too little cash comes in, but as a result of what happens to that money. “Money is like blood. It needs to keep moving around to keep the economy going,” he says, noting that when money is spent elsewhere—at big supermarkets, non-locally owned utilities and other services such as on-line retailers—”it flows out, like a wound.” By shopping at the corner store instead of the big box, consumers keep their communities from becoming what the NEF calls “ghost towns” (areas devoid of neighborhood shops and services) or “clone towns”, where Main Street now looks like every other Main Street with the same fast-food and retail chains.
According to Susan Witt, Executive Director of the E.F. Schumacher Society, “buy local” campaigns serve another function: alerting a community about gaps in the local market. For instance, if consumers keep turning to on-line or big-box stores for a particular product—say, socks—this signals an opportunity for someone local to make and sell socks. This is the way product innovations get made, says Witt. “The local producer adds creative elements that make either the product or materials used more appropriate to the place.” For example, an area where sheep are raised might make lambs wool socks and other goods.
The point is not that communities should suddenly seek to be self-sufficient in all ways, but rather, says Boyle, “to shift the balance. Can you produce more locally? Of course you can if the raw materials are there, and the raw materials are often human beings.”
And what about that higher cost of local goods? After all, big-box stores got to be big because their prices are low. Susan Witt says that the difference falls away once you consider the increase in local employment as well as the relationships that grow when people buy from people they know. (Plus, one could argue, lower transportation, and therefore environmental, costs, and you know what you’re getting—which as we’ve recently seen with suspected contamination in toys and other products from China, can be a concern.)
There’s also the matter of local/regional resilience. Says Witt: “While now we’re largely a service-providing nation, we’re still just a generation away from being a nation of producers. The question is: what economic framework will help us reclaim those skills and that potential.” Say, for example, the exchange rates change or the price of oil rises (and it has started to creep up, if not at last summer’s pace) so that foreign-made goods are no longer cheap to import. We could find ourselves doubly stuck because domestic manufacturing is no longer set up to make all these products. While no community functions in isolation, supporting local trade helps “recreate the diversity of small businesses that are flexible and can adjust” to changing needs and market conditions, says Witt. (Read “How to Know When the Economy Is Turning Up.”)
Another argument for buying local is that it enhances the “velocity” of money, or circulation speed, in the area. The idea is that if currency circulates more quickly, the money passes through more hands—and more people have had the benefit of the money and what it has purchased for them. “If you’re buying local and not at a chain or branch store, chances are that store is not making a huge profit,” says David Morris, Vice President of the Institute for Local Self-Reliance, a nonprofit economic research and development organization based in Minneapolis and Washington, D.C. “That means more goes into input costs—supplies and upkeep, printing, advertising, paying employees—which puts that money right back in the community.”
One way to really make sure money stays in the community is through creating a local currency. Christian Gelleri, a former Waldorf high school teacher in the Lake Chiem area in Germany, has launched a regional currency, the Chiemgauer, equivalent in value to the Euro. According to Gelleri, the Chiemgauer, accepted at more than 600 businesses in the region and with about $3,000,000 Euros worth in circulation, has three times the velocity of the Euro, circling through the economy an average of 18 times a year as opposed to 6. One reason for the fast turnaround is that the Chiemgauer is designed to encourage spending: there is a 2% demurrage fee for holding onto the bills beyond three months.
As an economic principle, velocity has been considered a constant. According to Gelleri, it was stable in the 1950s, ’60s, and ’70s but starting in the ’80s velocity has decreased as more money has been diverted to the financial sector. This scenario may benefit financial centers, but money tends to drain away from other places. Gelleri says that both the Euro and the U.S. dollar have slowed way down. “In the last several months velocity has declined sharply because there’s less GDP and more money,” he says. “The money doesn’t flow. More money is being printed, but it’s not going into circulation.”
As the nation limps through the recession, many towns and cities are hurting. “Buy-local” campaigns can help local economies withstand the downturn. Says Boyle: “For communities, this is a hopeful message in a recession because it’s not about how much money you’ve got, but how much you can keep circulating without letting it leak out.”
I was in the middle of updating my 2012 budget the other day and it occurred to me that I was just kind of throwing a dart at the board to a large degree. Yes, I have historical numbers and trends to go off of, but in the end I am making a leap of faith on what is going to happen. I don’t think what I’m doing is any different than what countless sales managers and product managers are doing around our industry on a daily basis. So it begs the question “whose crystal ball is the clearest?”
As an industry it’s my opinion that we really do a terrible job of managing our inventory. From retail to supply there is a huge disconnection and as of today the problem hasn’t really been addressed. The solution of course to making better forecasting decisions is to know exactly what you are selling today so you can order more or less tomorrow. As a retailer, you can go to the shelf and see that you sold a product and order more on a daily basis from multiple suppliers in many cases. But as a supplier, it becomes much more complicated. You have 90 to 180 day lead times from date of order with your factories in many cases, you might have multiple warehouses to keep in stock, and because it’s a new product you may not have historical numbers to base your orders on. So how do you know what to order?
Well you have a few options to choose from:
you can look at similar products for comparison purposes
you can demand detailed pre-season orders from your dealers, which we all know how they love to do
you can access industry data that is available today, but is often slanted in its value based on the contributors and is usually too late to help you
or lastly, you can trust your gut which we all know how well that can work out
None of these solutions are really ideal. As suppliers you are being asked to guess right for your retailers and over commit to inventory that may or may not flow through the way you have brought it in. To me, this is a fundamentally flawed model, which ultimately leads to overstock situations at retail and wholesale and significant margin erosion for both parties.
So what’s the long-term resolution? The right way to look at this in my opinion is sharing data between retail and supply. Retailers need to share what is happening at the cash register with their suppliers, so they can better plan the inventory needs. The fear of suppliers taking advantage of having this data just simply needs to be put aside and gotten over by retailers. If you don’t trust that supplier, get the assurances in writing that they won’t re-sell the data and if they do, then don’t do business with that supplier anymore. There are companies out there providing these services for suppliers and the information flow from retail POS to suppliers is seamless.
I know nobody wants to hear about our friends at Wal-Mart and Target, but we really should give it consideration as they seem to have figured it out quite some time ago. They demand 95% – 98% fulfillment rates with their suppliers and they get it. Why? Because they share their sell-through data by sku, by store, by the minute with their suppliers. It is a true partnership and a model that we as an industry could do well to imitate.
The title of this first VLC Blog entry triggered memories of a John Lennon song, which of course, led us to an insightful quote from him;
“How can I go forward, if I don’t know which way I’m facing?”
Being a unique solution for the bicycle industry, Vendor-Link is now part of both the retailer and supplier communities, helping both ends of the supply chain. In our new voice of this blog – we’d like to bring valuable content to both the retailer seeking smarter business practices and ways to profit better, along with the supplier who wants to improve forecasting, planning and streamline their supply chain.
Hearing a repeated message of how “messed up” the cycling industry has been, we sought which way the retailers can face, which way the suppliers are facing, and where we can have a positive impact. Retailers: tired of empty shelves when your customer comes in seeking a specific product? Suppliers: weary of not knowing sell-through and unable to plan with confidence? Let’s apply proven practices from other industries, even big box retailers, and make smarter decisions based on real-time accurate data.
“The reality is that close relationships can often make the difference between long-term sustainability of the business and short-run dissolution,” says Matthew B. Myers, University of Tennessee-Knoxville. He continues, “In fact, many companies credit their own survival largely to their working relationships with buyers and suppliers.” (Read more). By collaborating, retailers now have a vote in what a supplier puts in to production. Suppliers can now see beyond what leaves the warehouse, but what consumer demand is. Seems to me that we are facing each other now John Lennon.