When you don’t have money to worry about…

So revenue flow is odd with our particular model. This is probably one of our biggest obstacles to work through in this business. We have a ton of great customers with excellent orders. The problem we face is that a large number of these customers are monthly. It is definitely the the most common way customers want their orders shipped. What this essentially means is we are “stocking” unsellable product for 1-3 weeks before we see it sold through on the last week. To make things even more interesting, as our subscription base grows (which it has been doing every month since we’ve opened) it means we are carrying even MORE throughout the month until that last week payday.

Here’s the conundrum. I hate the thought of a prepayment/deposit in this industry. Don’t get me wrong. If you’re not an established customer and you order a $100 hardcover we will require a deposit on it. Even if you are a good customer, if you order a $300 statue we will require a deposit on that also. However if you’re a regular comic buyer ordering $20-150 worth of floppy boks with a few trades a month, I don’t see what sense it makes in making you pay for that upfront. Ok, I see what sense it makes from OUR perspective, but I don’t think it makes for good customer relations, especially in this industry. If I would have had you pay for Ultimates 2 #13 back in October, you would have been out that $2.39 for eight months with nothing to show for it. Heck, under most merchant account agreements you are not even ALLOWED to charge a credit card for product shipping more than 14-30 days (depending on the provider) after the charge. It just doesn’t make sense to me as a part-time consumer. A customer who buys 20 small press independent books in a particular month will have to pay for them upfront, and then over the next year see them show up one or two at a time? No way.

Our philosophy has been to charge for normal purchases when they ship. Not when you place your Previews order, not a month or so before the order should ship, but when the items actually make it out the door. This has worked fine and has definitely kept customers ordering, but what I failed to take into consideration was that I was essentially extending our AR terms. Even though we aren’t shipping the product until scheduled, we are taking on the cost of the product (AP) and taking it off the market for sale to scheduled customers until we collect (AR). We are essentially working on NET terms, even if our customers don’t operate under these terms. So what I’m finding now is that I’m having to realign a portion of the business under essentially these NET terms. Not a major factor, but one I’m having to learn about as we go so I can keep things moving while I work terms to essentially float the inventory for 1-3 weeks until billing.

Quite a ways off from the ebay store I originally envisioned managing.


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