Tales Of A Fourth Generation Textile Executive: The First Loss Is Your Best Loss: The Cancellation Of A Line Before Printing
Recently we had to ask our sales reps to stop selling some lines due to poor sales. This is problematic on many levels and I will briefly discuss how it affects customers, sales reps and our company. In spite of all the problems, one of our (my family’s) mantras is that the first loss is the best loss…in business and in life. I can think of many occasions when I relied on this mantra and looking back it saved me further damage and stress. Cancelling the printing of a line is definitely a situation where the first loss is the best loss as continuing to sell the line and trying to make it work only exacerbates the problem. In other words, we need to stop the bleeding and refocus on what is working for us, our customers and our reps. Fabric lines should not have to be forced.
For our customers, when we decide not to print a line it is unfortunate for them as they relied on us printing the line. They may have spent time planning an event around this line or had other plans in mind. One saving grace, however, is that we sell on paper and the cancelled lines are intended for the future i.e. months from now. Therefore, there is no immediate shock like OMG I needed this for my shop hop next week. That gives the shop time to recover and hopefully they could mitigate the damages if any. We make sure to contact each customer that ordered the cancelled line. Typically this communication is appreciated as opposed to a real surprise when the goods don’t show up at all. Another silver lining would be that since the line sold so badly for us, maybe we are saving the shops from having a line that would end up being a dog for them. It just is what it is and everyone has to realize that every line can’t be a homerun. We try to handle this bad situation the best we can and I believe our customers appreciate the communication and honesty. I have called several shops myself to advise them of the cancellation of a line and they all have taken it very well.
When we recently cancelled lines, I got emails from reps about being disappointed. To be honest, I am not sure what their biggest disappointment was…maybe embarrassment, maybe surprise, maybe losing the sale, maybe having to face an angry customer or maybe something else. To me, I think it is more annoying, but we are fully aware of how badly said line sold and we are saving the reps from selling a loser to their valued customers. That is why we try to make these cancellation decisions asap and try to take the first loss for us and them. These are business decisions and we need to be able to make those decisions without worrying about emotions as emotions get in the way of logical thinking sometimes. Since this is a fairly new occurrence for us, I will make sure to talk this through with the reps so that they understand where we are coming from and they can explain to their customers. In the end, I think everyone will agree with us and see what we see. Most importantly, I think everyone will benefit from our hard decision to cancel.
The truth is that the biggest problems are ours and they are mostly financial. At the point where we decide to cancel a line, we have already printed the selling swatchcards, shipped the selling cards, created free projects, started the engraving process, promoted & marketed the line, spent a lot of time designing and redesigning the line, posted the line on our website, etc. The selling swatchcards are obviously a big expense, but the other big expense is that we had these lines engraved and now have to compensate the mills for the unused engraving. Aside from these financial problems, the real crux of the problem is that we need to meet minimum order quantities set by the mill….typically 1000 yards of a sku. Regarding the lines that we are cancelling, there may not have been a sku that sold over 200 yards. Therefore, if we printed this line, we would have to worry about and carry the other 800 yards of this pattern and the majority of that would be a closeout sold out at loss. So for example if a line has 15 skus and we have 800 yards extra that would be 12,000 yards of closeouts and that is a significant amount. Closeouts are negative energy for everyone and a big waste of time. Moreover, it takes away from selling full priced lines. When it is all said and done, we just want to sell good lines and not closeouts.
I could discuss this in much more detail, but I am trying to stick to my blog criteria of keeping my blogs short. I haven’t even done that here, but I tried. In any case, thanks for listening. As a customer, rep or consumer, what do you think of this? Can you understand where we are coming from? I want to hear from you.
Consider following our mantra…the first loss is the best loss!
Wishing you a great December!
Scott