Re: RE: Husabergfanatic, Please read and respond
risky1 said:
...However when I went to buy, they still wanted an unreasonable price for a two year old machine and would not budge. unreasonable I guess is an understatement, because he still has/has them for over 980 DAYS! that should say something about what they are willing to do. You can't tell me that they just have not had any buyers, because they have.
when I was in there, I told him I would let people know that he had some bikes that he was willing to deal on (whatever that means) but the sales guy stated he won't sell them out of state. I don't know if that is personal thing or an issue with interstate commerce, taxes etc.
If he sold those bikes at cost 2 years ago, he would be more profitable. He wouldn't be "in the hole'" paying interest. That is what I meant when I said most m/c don't understand the basic concepts of retailing.
The 'out of state' thing is probably due to an agreement that he had to make with BMG to carry the line.
IF he sold those bikes 2 years ago at cost as a marketing move, he would have stirred more interest in the product and he would have sold many more bikes as a result of the referals of those satisfied owners.
Example of how "inventory turns" works:
Take $30,000 and buy 5 bikes. Sell 2 for $7000 and sit on 3. You have $16000 sitting for 3 years not making money.
Instead, sell 5 bikes $600 over cost. You now have $33,000. Buy 5 bikes, sell again for $600 over cost. You now have $36,000.
Your $30,000 earned you $6000. That is a 20% return even though you only marked up each bike 10%. That is how successful retailers (including Walmart) look at their inventory.
When I managed retail, we used that system to earn a return on investment in excess of 70%.
An example of how selling at cost would have made him more money:
Take $30,000. Buy 5 bikes. Sell 2 for $7000. sell remainder at cost. He now has $32,000. Most likely, his 5 sold bikes will send him more prospective buyers. He buys 5 bikes. Sells 2 for $7000 and 3 at cost. He now has $34,000. So he is way ahead of the game by unloading inventory and repeating the cycle.
Right now he has $20,000 + in inventory losing money and he can't see a way out. He thinks he will recover his investment, but that is highly unlikely (we all agree on that; right?)
