Recent conversations with friends of retailers have found some classical ideas through their business methods, but after careful consideration, they have found that this is not the case. In fact, these views are also errors in the daily business of some retailers, which deserve our attention and consideration.
Myth 1: The bigger the sales volume, the higher the profit.
When sales are large, profits will naturally be high. Sales and profits are directly proportional to each other. Usually this is true, but in reality, it is not necessarily the same.
It was found that a small number of retailers had very good business and strong popularity. They had great influence in the local market. However, their funds were always very tight, and they often owed large amounts of money to upstream wholesalers. Shop opening time is not short, the total sales are not small, some annual sales are even more than a million, credit sales ratio is slightly controlled, debt is less frequent, it should be a good annual income, sufficient funds is, what is the reason for that?
After a thorough understanding of the situation, it is found that the main reason is the low total profit.
In fact, as a whole, the profit of agricultural retail stores is considerable, and the average profit rate is the highest in the whole channel chain. But what about the retailers mentioned above? In order to attract farmers to buy and steal customers, conventional products do not make money, or even sell at a loss. The most important thing is that the sales of conventional products are large, and upstream wholesalers often require cash operations, farmers also like to take advantage of this advantage, you sell at a loss, of course, people flock to. For example, if ammonium bicarbonate loses one dollar a bag, ten bags and one hundred bags are nothing, but what about ten thousand bags and ten thousand bags?
Where does the retail store owner consider and calculate these when selling goods and snatching business? On the contrary, I think that I do a big business anyway. If I don't make money, then I can make money. The total sales are large and the profits are high. There are also some retailers who are busy with their daily business operations, do not set up accounts and neglect to make accounts by hand. Therefore, they have no idea what kind of products they are, which main manufacturers have contributed to the main profits, which kinds of products and which main manufacturers are selling at a loss, seldom settle down to calculate their business, seldom spend time sitting down to account for their own accounts. They sell goods according to the buying habits of their competitors and farmers.
Myth 2: Increase in Sales and Market Share
Some retailers believe that the sales volume has not changed much or even increased slightly in recent years. The previous year's sales volume was 1 million, but now it is still about 1 million. They are more satisfied with the current situation. They believe that the competition is becoming more and more fierce. The number of new agricultural stores has been increasing in recent years. They can keep their sales unchanged. They are already making progress, even slightly increasing their sales volume. It is obvious that they are themselves. Market share has also increased, of course, market share has increased.
The actual situation is not the same. The survey found that in recent years, the level of drug use in China has increased dramatically. The cost of prevention and control has risen rapidly. Farmers are gradually willing to use good drugs and high-priced drugs. The unit price of products has increased greatly. The cost of water per barrel has risen a lot. In the past, it may be an average of 2-3 yuan/barrel, but now it has risen to an average of 6-8 yuan/barrel. Some highly toxic organic phosphatization has occurred. Compounds have been phased out and their products are relatively cheaper.
At the same time, the price level has risen sharply and the RMB has depreciated. Generally speaking, it means "money is not worth money". If the retailer keeps the sales unchanged, the number of farmers he radiates will certainly decrease, and the market share will also decrease. His market share will not increase, but decrease.
For example, a retailer used to sell 1 million yuan a year and buy 2000 yuan of agricultural assets per capita. It can radiate about 500 farmers. Now the annual sales are still 1 million yuan and the per capita planting area remains unchanged. But the per capita annual purchase of agricultural assets is already 2500 yuan, so it can only radiate about 400 farmers, and 100 farmers have purchased agricultural assets from other sources. The product is ready.
Myth 3: The bigger the cost, the less the profit.
Many retailers dare not spend money, which is reflected in the decoration of storefronts, shop recruitment, promotional materials, promotion and hiring personnel. They think that these are expenses and expenses. The less money they spend, the better they can save and earn, because the total profit is fixed. For every extra penny they spend, there will be less profit. The larger the cost, the less the profit will naturally be. We often say that we should "open source and reduce expenditure" in business, that is, to develop water sources and control water flow. This is a metaphor for increasing income and saving expenses economically.
I have no objection to the retailer's "throttling" consciousness and behavior. The cost control of retail business is very important. It is a way to increase profits. But we should pay more attention to "open source" and devote more efforts and willingness to "open source", because "open source" is the real way to generate profits.
If we can "open source", we need to invest some money, just like building pipelines to introduce water, to make the water flow more smoothly and quickly, and to make the efficiency more efficient, then this investment is very necessary. This pipeline must be built. Only with pipeline water can it flow faster and more, and repairing pipelines will cost 1,000 yuan, but the imported water can earn 5,000 yuan, which is clear. With this account, do you still want to spend money to build pipelines? Do you still think that the construction of pipelines is just a cost increase? Are you sure that the higher the cost, the less the profit?
Therefore, the money saved must be saved, but the money spent must also be spent in order to produce returns, as long as the input-output ratio is reasonable, as long as it can bring sales and profits, of course, some returns are long-term, and some are difficult to quantify. "The money spent" is not a cost, but should be regarded as an investment. It needs to be willing to invest. It can produce returns and is helpful to the long-term operation of the business.