by Kimberly Burns, Living Room Bookstore, Bastrop, TX
business 101
Returns That Make You Money
by Kimberly Burns, Living Room Bookstore, Bastrop, TX
Think about your store right now. Imagine you’ re walking down the aisles, looking at your shelves. How often do you see some of the same books still sitting there?
To keep your store looking fresh and well maintained, it’ s important to check your shelves regularly to know what products you have. Do books look presentable, or are they starting to look old and worn? Your inventory should be in good condition for your customers and for the appearance of your store as a whole.
Your inventory should either sell or leave your store. So, how do you do that? One solution is returns.
Whether you don’ t want to do returns or don’ t know how to, this article will help you understand why regular returns improve profitability, learn how returns affect cash flow, recognize“ dead inventory” and develop a practical return schedule.
Why Returns Are Important The biggest mistake retailers make is holding on to inventory because of emotion. For me, that was hardest after my mom, who ran the bookstore for over 30 years, passed away. As I looked at our shelves, I would see books that reminded me of her.
When you’ re looking at your inventory, think of books as money sitting on your shelves. The most important thing to do is to turn that into cash flow. Books don’ t become valuable simply because we own them. Unfortunately, it’ s not like wine. They don’ t get better with time. It’ s inventory, so you either need to sell that inventory and turn it into cash flow or you need to return that inventory and turn it into cash flow.
Keeping books because“ I might sell it someday” is expensive. Go back to looking at your shelves and that book that you see sitting there. How many times have you moved that book? How many times have you dusted that book? That book is actually costing you a lot more than what you paid for it. Because now you’ ve paid for somebody to dust that book, you’ ve paid for storage for that book, you’ ve paid for someone to move that book.
What Dead Inventory Really Costs I used to be a math teacher, so let’ s do some simple math. Let’ s say you have a $ 20 retail book that you purchased for $ 10 wholesale, but after four years, it still hasn’ t sold. Instead of holding on to it, you could have returned that $ 10 book and invested it in a new bestseller, children’ s Bible, devotional or seasonal product that could have sold repeatedly over those four years. So instead of not making any money on it, you actually lost money by holding on to it. That $ 10 book ends up costing you hundreds of dollars in missed sales.
Many stores will say,“ I can’ t afford to return books.” But as this illustrates, you can’ t afford not to return books. You’ ve got to keep inventory moving. When you return product, you’ re not admitting defeat. You’ re putting your money back to work. Returns give you the cash flow you need for more books that are going to sell.
Returns give you the cash flow you need for more books that are going to sell
I recently saw a quote that said,“ Inventory is like employees. If they’ re not working, they shouldn’ t stay on payroll.” If your inventory isn’ t working for you, you’ ve got to get rid of it to make cash flow. continued on page 14 >>
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