I’m just back from a week away skiing in France with my family and as usual thoughts of work were never far away. A week isn’t quite long enough to actually switch off and I found myself in work mode even when I was relaxing in the brasserie after a day on the piste.
A prime example of this was last Thursday evening when we took the girls into the centre of Chamonix to grab some honey waffles, hot chocolate and a couple of ‘vin chauds’ (hot choc for them, lovely tummy warming hot wine for me and Gerry!)
The queue for our waffles snaked halfway along the street with more and more people joining the trail by the minute, and I noticed that the longer the queue became, the more people were stopping to look and then also starting to wait in line. And so the amount of customers grew rapidly!
The waffle man was a jolly soul – laughing, chatting with customers and of course very, very smiley! Hoards of children watched in awe as he expertly rolled the dough and then baked it over the flames, producing a gorgeous looking pastry which he then smeared with copious amounts of sweet, local honey… this scene coupled with the smell of fresh baking was enticing indeed!
Now, what struck me was this; if you’re anything like me, usually when I see a long queue I automatically think: “Oh, I can’t be bothered to wait in line – the queue is huge – it will take ages to get served” etc. But this was a different kind of queue – because on this occasion, everyone wanted to be in it – including me and the rest of Chamonix town. And the reason everyone wanted to be in it was actually because there were so many other people already in the queue – and all of these people were endorsing Mr Waffle’s product for him.
Not intentionally of course – but other potential customers walking past were obviously thinking – “Crikey those waffles must be good – look at the queue!” This coupled with the fact that each waffle cost just one euro added to the frenzy!
So, in fact the bigger the demand, the more attractive the offer!
Looking around I found myself comparing this to another attraction positioned just across the road. This was a burly man going by the name of ‘Dr Zhivago’ dressed up in a huge floor length furry coat leading a huge, very furry horse and offering tours in a very furry carriage. Lots of fur. No queue.
I sent one of my girls over to ask how much the rides were (well, I couldn’t go myself as I would have lost my place in the waffle queue) and she dutifully returned a couple of minutes later, quoting 60 euros. Now this was daughter number two and her French isn’t the best but I safely assumed that we were definitely looking at large double figures here!
60 euros for a clippety clop around the clock tower and back!
I know which I’d prefer given the choice of the horse drawn tour or the waffle! So, the question is this. If Dr Zhivago charged less, would he have a bigger queue? And if he had a bigger queue of people all subliminally endorsing his product would he have even more customers’ eager to participate and joining his queue?
Well there are two sides to this. First you could argue that Mr Waffle has to sell 60 waffles to Dr Zhivago’s one horse drawn tour to generate the same amount of turnover. So if he gets lucky and does one tour whilst Mr Waffle is still working hard, busy dishing out his sweet treats then he’s quids in.
On the other hand, Mr Waffle has got a guaranteed steady trade snaking up the street before his very eyes and Dr Zhivago doesn’t really know where his next customer is going to spring from.
Which brings me to the next question…
When it comes to your online sales, is it better to sell in volume for lower prices – or sell less but for a higher price? Or in fact strike a balance between both…
Again there are pro’s and con’s to each option. By selling in volume you’ll have more storing, packing and posting to deal with and your profit per item sold will be less. However, you will make a bigger profit in the long run. This is perfect for hot selling items that you have large quantities of and that you know will sell day in, day out as you’ll have a steady cash flow and you can pretty much predict your sales.
The key to high volume sales (like Mr Waffle’s strategy) is to lower your price to sell your stock rapidly and build a history of sales (which implies that as you are selling in huge quantities your product must be good!) In Mr Waffle’s case, selling each waffle for just one euro. Your price should be enough so that you cover your costs and achieve small profits – and all those small profits add up to bigger profits. This is the strategy I like to use.
Conversely, if you follow Dr Zhivago’s strategy and sell fewer but at a higher price you’ll yield a greater profit per sale which may seem like easy money when it comes, but you may not be able to predict your sales and reach your targets as easily as you would with your hot item selling in volume. So, this high volume strategy is better suited to more unique or rare items.
But what about striking a balance between both of these strategies. If you have a mix of items listed for sale online – some selling in volume on a daily basis and others selling at a rate of 2 or 3 a week but earning more per sale you’ll have a good strategy going.
You can apply this to your online sales by ensuring you research possible hot selling items before ordering any stock, making sure it’s in demand and setting the price low and aiming for multiple quantity daily sales. Do this with 5 products and you’ll see the profits rolling in.
For example, lets say you have one product which makes you £2.00 net profit per sale and you sell 10 per day. That’s £20.00 profit per day.
Added to this you have a second product that also makes you £2.00 profit per sale – and again you sell 10 per day – so that’s another £20.00 profit per day. We’re up to £40.00 profit per day with two products.
Now imagine if you have 5 products all selling in volume on a daily basis – each making you £20.00 per day – that’s £100 a day or £700 a week. Or £3,000 every 30 days.
Those small profits add up don’t they! And I have to say that the core of my online sales has always come from low profit, high volume sales. You can see examples and profit calculations for products that fit this strategy over on The Source Report – if you haven’t already subscribed, .
But look, whichever strategy you choose – you should do what’s right for you and you should always ensure that profitability is at the forefront of your mind.