Why do we have "specials"?
Our "Specials" are lines that are available to customers registered on our website available at a price that would not generally be achievable in the normal market.
They are not "Loss Leaders" or "Sale Reductions" but are avialable at these prices because it suits our business model.
Let me explain
Although we stock over 15,000 line items we have many customers that need or want other lines. Through our extensive network of suppliers we can find it if it exists - we can even commission it.
Unfortunately such lines are frequently only available in large quantities - far larger than our customers require. Because we have a large. world-wide customer base we know that we will eventually be able to sell the excess quantity so we are able to help the customer with the initial requirement obtain exactly what they need at an attractive price.
This is good for our customers and good for us - we are always adding new customers who appreciate what we can do.
However it does mean we are left holding significant quantities of, frequently, high value metal. Clearly, we will sell it on eventually but we would rather sell it quickly than delay and achieve a higher price.
Profit v ROCE
The traditional business model seeks to maximise % profit but we believe this is actually a very poor strategy. Actually we are not really interested in the end of year % profit figure.
What we are intersted in is the ROCE. This is one of those strange ratios that your accountants might produce for you when they complete your accounts. It stands for "Return on Capital Employed" and we believe it is the most important figure in the/any business.
We will explain ROCE in more detail in a future blog but in essence, the faster you turn a profit the higher your ROCE. Half the profit in half the time is the same as double the profit in double the time.
But better than that, if I convert my excess stock back into cash quickly I am ready to use the money to help another customer. - Which wins us more happy satisfied customers.
Which is why we sell off our excess stock at remarkably good prices.
The initail customer gets exactly they need, other customers can access speials at great prices, the mills sell their standard quantities in the way they wish and we build stronger customer base while turning our Capital Employed over quickly.
The primary objective of any business investment is to generate a satisfactory return on that investment!