Increased Competition - need for low costs of goods and time With a surge of online business, much competition is experienced accross all industries. With chess retailing many companies have sprung up to take advantage of what the internet affords us - a relatively easy way to put up a commercial store. The increased competition has had three main effects: 1. Now the goods have to the right goods, be of good quality and be worth their price. 2. The profit margin is reduced through the competition. 3. The cost of being seen by customers through such mediums as web advertising (adwords, etc.) has risen significantly as merchants see the front page as the new High Street/Mall. Therefore more than ever (and clearly set to become more critical) there is a need for suppliers to provide high quality goods for a low price. In the case of chess sets, chess boards and chess pieces, once the goods are imported, tax paid, packaging bought, packers paid, etc. the cost of the goods are such that little profit is seen. Poor quality in terms of scratches, chips and such may well render a sale as just break-even or even a loss. Every area in chess set retailing needs to be watched - but the most difficult factor is dealing with a third world country where quality is just not the same as we have come to expect in the commercial, industrialised and demanding west.
Need to trust suppliersIf time is taken by operatives to examine every item that comes through to the chess warehouse, the product's profit is impacted. but it's not only that - it's difficult to motivate someone that doesn't have a shareholder relationship with the company to even do that kind of time consuming and tedious work. But the need to do this is clear if you can't fully trust that the supplier has quality checked the goods and they are without blemish or defect. The overwhelming need is for the chess set retailer to be able to trust that the supplier has performed due diligence in checing the quality. But it's just too tempting for a third world supplier to ignore one chess piece defect when it impacts the entire set. Further, with some of the more complex chess pieces taking two days or even more to carve a single chess piece (as with some knights), there is an impact on the suppliers profit margin if another two days is required to complete the chess set. The result? 'Include the piece and see what happens - we may get away with it'. The chess retailer needs to be able to trust the supplier with respect to blemishes and defects - if not, the whole chain to market success is precarious. Of all areas for stores selling chess sets - this is the most pressing - we have to get to a point where you can trust the suplier so much that we have confidence that what is labelled on the box is correct and that the contents of the case are appropriate quality.
True cost of customer returns With competiton driving down the price of goods - all good for the consumer - carriage is built into the equation. If a customer returns a faulty chess set, then the merchant would generally cover the cost of the return trip. If a refund is given, two trips have been charged by the courier company, in many cases representing a net loss. If a replacement is sent then the carriage has been paid for three times - only once covered by the original purchase. This too often represents a net loss. But that's not all. Good customers produce - on average - two further customers over a future time period. Once a fault is experienced this is reduced to zero with a slight possibility of recovering the customers confidence and appreciation if handled well. All this because a suppier in India cannot be fully trusted to produce good quality chess sets. The obvious short term solution? The merchants do their own quality control. As earlier discussed, at western salary prices profit is constrained even more.
Urge better supplier quality standards We have to urge our Indian suppliers to change things. We cannot just tell them the issues, insist on replacements or partial/total credit and expect things to improve. Lip service asserting agreement is common but often results in little change - it's not the answer. They must realise that their quality control has to improve, something has to actually change to produce an improvement. Ranting and raving won't necessarily solve the issue, the suppliers must make some changes in the procedure and their attitude to make the stream a healthy one, to result in profit for all parties. But we're here, and they're there. If the supplier makes trips abroad annually, that may be the time to get the 'quality message' over, but the level of exertion needed for this is often underestimated. Visits to the area ourselves may be needed But clearly the mantra is an ongoing message. One factor to assist is to make the suppliers feel the pain by recording each blemish and insisting on rectification. This is an effective way to make the point clear and one which affects his own profitability.
Why not just change suppliers? With chess design being so specialised, when initially setting up an online store, so much is involved in photography and descriptions that changing the supplier to an apparently more worthy one is not an easy step, although in severe cases it's the only sensible one. The supplier may excel in areas of innovative design and just let himself down in the quality control area. Leavin gthe supplier may mean leaving the suppliers designs, the essence of the business. Besides, it may be a case of 'jumping out of the frying pan into the fire' - difficult to know if the new one is even worse. Unless the quality issue is severe, it may well be best when dealing with this sector of the world, to keep the quality message flowing, insist that they feel the pain of blemishes and take every occasion to pump the quality requirement message to an Indian supplier. It's the part in the chain of manufacture to consumer that results in the most gain.
All we need to do now is to get the domestic courier price down. But that's another story.
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