Greek mathematician Archimedes once wrote, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”
The concept of leverage — using small efforts to achieve great results — is a curriculum basic to both engineering and business schools. Business owners and investors who use leverage wisely can turn a small investment into a big gain. And if a big gain doesn’t materialize, then it’s easier to lose a small investment than a big one.
Over the past five years, this column has discussed dozens of topics designed to help dealers sell more, manage better and plan effectively. The ideas presented were not original to me; rather, they were compiled from discussions with dealers who had used such ideas successfully. A common thread running through these discussions is that the Internet is a tremendous tool for leveraging an antique business if it’s used properly. It’s easy to spend thousands — or tens of thousands — of dollars to develop a strong online presence in your market. But if you were to spend thousands of dollars, you wouldn’t be leveraging, you’d just be spending.
Thirty-eight-year-old Kevin Mayeu of North Carolina’s Raleigh Furniture Gallery is an antique dealer who understands how to leverage his marketing efforts and operating policies to produce outstanding results. His website, incorporates email, Facebook, and Twitter.
Kevin doesn’t use the DIY GoDaddy site due to any lack of technical or business skills: He holds a MBA from St. Johns Fisher College in Rochester, New York, and before going into the antique business he worked in the IT department of a major corporation. When I asked him why he chose to go with the GoDaddy website, he replied “GoDaddy has all the bases covered; why should I spend a lot of money on a programmer to provide what GoDaddy already offers me?”
On his website, Kevin provides two short videos featuring a panoramic view of his store using a (free) link to his YouTube video (http://youtu.be/0LYm71j2Sdc). Kevin’s customers can also view almost his entire inventory online. No cost and great ROI (return on investment). Here are a couple of customer comments from online reviews:
“I live an hour away so I really appreciate that all the items and prices are on their website so I can browse before I make the trip.”
“The convenience of browsing their items online is a huge plus.”
The costs involved in photographing the inventory, placing the items online and linking them to eBay are minimal compared to the return: another example of leverage. Kevin’s employees (three of them) actively seek online reviews from customers. The cost to do so? Zip. Once again, a good example of leverage.
Customer-friendly payment and return policies are also a strong point for Raleigh Furniture
Gallery: cash discounts, layaway and trade credits are offered in addition to the usual credit card options. The store’s return policy (24 hours full refund, 90 percent within one week) encourages customers to take an item home to see how it looks. Most customers keep their purchases, so offering a flexible return policy removes much of a customer’s resistance to buying. Flexible payment options and a generous return policy cost little but result in more sales: another example of leverage in action.
All leveraging involves some risk. Some leveraging tactics —like Internet marketing — don’t cost very much. But how many dealers would be willing to give expensive inventory away for free to develop customer loyalty? Kevin would.
Kevin understands that fresh inventory keeps customers coming back, and that old inventory can be the death of a retail business. So, every item in his inventory is reduced by 10 percent a month until it sells. So far, he hasn’t had to give any away, although he admits that he has had to take a loss on some items. Kevin says that this pricing strategy is a core concept of his business. As he explains on the FAQs on his website:
“We believe that our customers are best equipped to determine the value of our items for sale…if an item is put up for sale in mid-November for $100 it will be reduced to $90 in January…(etc.) until it is FREE in October. You may ask ‘Why don’t I just wait until it’s free before ‘buying’ it’? The reason is that the way we reduce our prices is similar to an auction. If you gamble waiting for the price to be reduced somebody may purchase it before you and it would no longer be available. Since we price our items so reasonably, most items sell within the first two months.”
Regular markdowns are not just for his customers’ benefit, says Kevin. Such markdowns force inventory turnover, and faster inventory turnover results in more profit (when sales and margins remain constant). High turnover keeps customers coming back and keeps the “bottom line” healthy.
How has Raleigh Furniture Gallery’s leveraging techniques worked out for them? Very well, according to Kevin. He just expanded his store into an adjacent space to provide more room for displays.
It’s refreshing to see an antique furniture business doing so well at a time when many dealers are abandoning brick-and-mortar stores and cutting back on their furniture inventory. Indeed, Kevin started his business during the last recession. Says Kevin of his timing: “I knew that if I was going to make a career of the antique business I would have to stay afloat in good times and bad. So, I just took the plunge regardless of the state of the economy.”
Antique furniture buyers in Raleigh, North Carolina, are glad that he did “take the plunge.” Raleigh Furniture Gallery is an antique business to keep an eye on.
|About our columnist: Wayne Jordan is a Virginia licensed auctioneer, certified personal property appraiser, and accredited business broker. He specializes in the valuation and liquidation of estate and business assets. His column Behind the Gavel appears in every issue of Antique Trader. Learn more at Wayne’s site ResaleRetailing.com, 276-730-5197 or firstname.lastname@example.org.|