I am treading water here - some opinions please

openforbusiness

I have come here for some opinions please as I have a problem I cannot speak to anyone else about.

I've been trading for a number of years now, when I started out the business was huge, I was the only person retailing the things I did online (eBay) and I put the money I earned back into the business buying more and more stock.

A few months on, after spending around 25k on stock, someone else went to my supplier and bought all the stock and put it on eBay BIN for a fraction of what I was selling it for on Auction. They obviously had a HUGE amount of money, which I didn't. I only did - and only still - buy things I have the money for. I do not borrow anything because if I had a problem and needed to close I would still have to work. Although I started my prices low, people would bid up to the high amount they did as I was the only retailer offering these goods.

Then, Primark came to town and killed a lot of the face to face business I had.

However, moving onto the problem I have now. Fast forward a few years and I've still got the stock I bought - I've hardly sold any of it. I'd estimate that my cost price is maybe 25k and it is just sitting around doing nothing. Some of it is deteriorating because it has been in stock a long time. Some of it is bought but comes back as people do not like the fit. I now longer sell on eBay and have a website as well as selling locally by word of mouth - it is really not worth selling on eBay because there are people selling for peanuts and it is too much work for me to manage for a loss to be fair.

However, I cannot shift this older stock for love nor money. I might sell a few pieces a week but that is about it. I have it on my website at cost plus VAT as I am VAT registered - some of it is up for less than cost as I am trying to compete with sellers on eBay, but I am still having no joy. For the product, the prices are great, however, you can buy for the same price or cheaper in Primark and people just want cheap, they do not want quality and cheap. It is very frustrating.

I'd like some opinions on how is the best way forward for now.

I have another side of the business where goods are ordered as the customer requires them, this is my bread and butter and I could make money on this - however, any profit is being wiped out by the losses I am making on other stock and of course, I still have expenses to pay.

I feel I am on a treadmill to nowhere. Today it crossed my mind that I should just wipe out the stock in 2 or 3 lots over the next few years and stop trying to sell it - I'd make a huge loss for the next few years but then I'd be done with it, I could maybe donate the goods to charity.

What started out as a great business has been pushed further and further down because of eBay. It is frustrating to buy stock in and then when you google the stock find out someone has it cheaper than cost on eBay. More so when some of those other people are not registered as businesses Some of the items have to be ordered 6 months in advance and you are committed to buying them - I have to order a few of these lines to make me look like a reputable business and keep ahead of the game - but they are not selling and then I have to sell for a loss to get rid of them so it is catch 22.

Sorry this turned into a long post but I wondered what the best way forward was, how do I get off the treadmill of losing money. I saw on the grabbit board that a company is offering a 'goody bag' with a selection of goods in certain sizes. Do you think this is a feasible way of getting rid of stock - even if it was for £2 an item (RRP is £25) so 5 items for £10? I am really not sure what to do, if anyone could offer any advice that would be great, thanks. I thought someone who was not attached to the situation might be able to see things better, in a way that I can't.

I made a loss last year as I had to have a unit put up in the garden as I was keeping all of this loss making stock in storage so it was catch 22, however, all of this stock is taking up the majority of the room. I do not know what to do.

Thank you if you read the thread, I appreciate it is long but I wanted to explain things properly. Ta.

mum2one

I don't know about the VAT side of the business, so can't offer any help, the thing is the credit crunch as knocked everyone about, and with companies such as Primark and even Claires offering things on offer, eg Claires do a "mystery bag" 10 items for £3 - one the bags I got had a watch worth £15......

Your best bet would be do a 5 for £xx, another variation on that is buy one get one free - but leave the free item as a mystery choice.

I don't know what the items are, but thinking of fetes, even looking as far as xmas fayres, I'm on the PTA at my daughters school, at the xmas fayre, we had a couple of "outsiders" having their own store, but made a donation towards the PTA, they may be another avenue to go by.

Inbetween times ebay may be worth a try, if I can help, or rack my brains, just pm. x

martindow

Unfortunately the situation of being the only seller of a product which is in demand is never going to last long. From what you say, retailing it is not successful and looks as though it would take decades to sell it all. I can see no option but to try to sell it off wholesale even if it means taking a big loss.

If the stock is starting to deteriorate and be worth nothing at all you need to get whatever you can even if it is way below what you paid. The financial loss will be more than balanced by being rid of this problem. Good luck.

COOLTRIKERCHICK

it is better to get something for it, rather than nothing, as now it is dragging your whole business down...

harsh i know, but just get shot of it, and treat waht ever money you get back as a bonus.... you can also put damaged stock down as wastage against your tax...

As i say sell at any cost, as you need money for cashflow, and to get stock that will sell.....

what about Car boot sales, markets, anything......even if you get 50p an item... ( sorry as i dont know what you are selling) that 50p is better than nothing....

welcome to the world of business where nothing is a dead cert....

paulwf

You need to get your head into the right position (easier said than done I know). At the moment if for example it is going to be a loss of £12k you are thinking of it will be less painful to lose £4k a year for 3 years. That of course doesn't make sense, especially if you are having to pay for storage.

You have to take the mental decision that the stock now owes you nothing and that anything you get for it is a bonus. Until you are prepared to accept that you're going to keep holding on to it based on what you paid for it not what it is now worth.

As you've now had the stock for several years I would just try and clear it in job lots. Perhaps Ebay or there are probably companies that specialise in clearance job lots (a lot of Poundland stuff is very heavily discounted clearance lines so there must be distributors that specialise in this area).

I've cleared out stuff at 10% of its rrp before, more small retailers need to be prepared to let their dead stock go. I think the Ebay bubble burst years ago, any new product you can make money from becomes a saturated market within a month so bulk buying just doesn't make sense.

On the plus side OP clearing the stock will bring in money you didn't already have so it will help your business...it might look like a loss on paper but going forward clearing it will give you a financial boost. Plus you can offset some of it against tax.

stebiz

I have to agree with the above. You either get shut all in one go, and take a loss. Or you reduce it and compete with the others, and sell it off over a period of time. The latter has its advantages as it can reduce your profit over a few years, rather than all in one go.

I have nearly been in a situation like you. I was selling Disney badges for £2.50 that I was buying for 50p a unit. The wholesaler upped the anti. He wanted a minimum of about 5k - I bowed out. It turned out to be the right decision as the market dipped fast. I have made bad decisions over the years though, and this is something you have to accept in business, from time to time.

Good Luck

Alison_B

I am in a similar situation to you. I have a baby clothing business that I started a few years ago. Our intention was to make up gift boxes that people could purchase when someone had a baby. Did OK originally but then things went quiet, so we decided to ditch the box idea and try to sell the clothing alone. We have to contend with the supermarkets and people stopped buying. I have about £1,000 worth of stock and have now got a 50% off sale (where we were selling for less than we bought it for) but nobody is buying, so after chatting with my accountant, have decided to write the stock off.

Good luck with shifting your stock.

openforbusiness

I know it has been a while since I posted this but I kept in intending to update here but things got in the way and I thought I would come back today and let you know what I have done and how the business is doing.

After reading all of your messages I decided to cut my prices right down rather than writing the stock off. I have shifted a lot of stock since - albeit it below cost - but it means I am selling all that I need but without losing all of the money we have put in. I know I will still lose money, just not as much as I would have done.

I have customers that seem to be buying the stuff to sell on elsewhere (huge bulk orders in different sizes) - maybe eBay, I have not checked. It was odd to start with but now I just figure 'good luck to them' as I did not have the time to do it and the stuff I tried to sell before never went anywhere. They come back and buy more and more each time. I just make sure I cover myself with Insured mail (even if they do not pay for it) in case the package goes missing along the way.

I also seem to be having a lot of stock that is going to Russia. I have no idea why in all honesty, but I am clearing the stock I have had for years so we are slowly getting some money trickling back in that is 'ours' and that we put into the business a long time ago. The business currently owes us a scary 20k - this is our own money we have used for stock, expenses, etc.. £100 here, 50 there, it soon mounts up and now I try not to spend anything of our own money on business stuff. I cannot see I am going to get anything like this back which is kind of scary, however, I am hoping that once this stock finally sells I will have more stock that makes me money rather than making £5 on one line to lose £5 on another.

What is hard is the 'Fashion' ranges. These have to be pre-ordered, without them I just look like any other run of the mill retailer, with them it gives me the chance to look like a reputable retailer as these lines have to be ordered anything up to a year in advance and if you do not order them then chances are you will not get a chance to have them - I do need them as many of my competitors have them and it keeps me on the same par. Thing is, not all sizes will sell so I'll sell around 1/3rd at full price and the rest will have to go at cost - or less.

I have also employed a couple of casuals that work about 6-10 houus a week between them. I have someone who is going to keep on top of Facebook as well as doing regular emails to customers to keep them informed on new ranges. I am worried about over-kill and sending too many emails that people just do not bother reading, it is catch 22 though. Someone else is also learning how to run the day to day side of the business, processing and dispatching orders. We recently went away and put a note up to say we were closed but were shipping when we got back and still has loads of orders which I did when I got back. For longer periods of holiday I do not want to close as I have in the past, but have someone who can take over the day to day stuff and keep the business open. I could easily afford their 'wage' if taking the sort of money I recently did so I am giving it a year to see if it cost effective, however, I need to shift this old stock before starting to see any sort of return on the current ranges.

Thank you all for your messages of encouragement when I first posted, it gave me the courage to do what I should have done a long time ago and I did them that very night, I reduced the prices and done what I should have done instead of trying to hang on in there with goods that could not sell. I do have lots of odds and ends knocking around that I still need to get onto the site but as I chip away at the stock on the site, the more room I will have to actually get organised. People are really pleased with their bargains and are coming back for more - which is what I wanted.

Thank you all once again for you help. I can see light at the end of the tunnel, albeit a small one, I hope that by the end of Mar 2011, ready for the new financial year, I'll be on par to start afresh and start making money instead of losing it. The last few years have taught me a hard lesson.

patman99

Good luck in turning your business round.
Me and a mate used to sell 2nd-hand computers and parts at weekend computer fairs, but noticed a down-turn in trade so off-loaded the rest of the stock via freeads. A month later, the whole market collapsed as PC superstores introduced ranges of PCs from £300 (our 2nd-hand ones sold for £200 with a £25 mark-up). We watched from the sidelines as loads of fellow traders went bust.

downs523

what is all the stock you have... clothing? whats your ebay id... just out of couriosity?