A Retailer’s Perspective: Profitability of Special Orders

Hello Everyone,

On my most recent yearly statistical post for band sizes, Annika asked:

You mention that you special order different sizes and styles, but does it affect your profit? If I asked my local store to do that, would it be a hint that they could expand their size range, or would it be an inconvenience?

While I was formulating my reply, I not only realized my penchant for lengthy explanations created a “tl;dr” comment, but also that people may find the topic to be an interesting entry in my “Retailer’s Perspective” series.  For those of you unfamiliar with the shop, our special order policy is a trusting and generous way of providing another level of service to customers.  Anyone can order or pre-order styles, sizes, or colors not stocked in the store without leaving a deposit or being under obligation to purchase the garment.  However, if the item does work, you receive a 5% discount (10% for pre-orders) as a token of our appreciation for your patience.  The policy was born out of our desire to help as many women as we could within the limitations of our space and budget, and overall, the program succeeds.  Whether the policy is profitable and sustainable depends greatly on the customers taking advantage of the program, and a retailer needs the right mix in order for a special order policy to be feasible.  My business partner/dad and I have discussed our own policy at length and sometimes heatedly because on more than one occasion it has cost us valuable cash flow.  Once an order arrives, several possible scenarios can occur which make the difference between a program that is profitable and one that puts a boutique out of business.

My Current Special Order Rack
My Current Special Order Rack

Quick Pick-Up & Purchase

The ideal scenario, a quick pick-up and purchase involves a customer visiting the shop within two weeks to purchase whatever they ordered.  Not only does this quickly replenish our cash flow, but it also improves overall inventory turnover rate in the shop.  Even though we lose a little of the profit margin because of the special order discount, the instant boost to our bottom line, most likely on an item I do not need to repurchase, makes it worthwhile.  In this scenario, not only is the special order program profitable, but it also improves sales without adding extra time or labor into the mix. 

Long Pick-Up & Purchase

The majority of our customers are not local, and with a strong base of working professional women, time can be a precious, exhausted commodity, the result of which is prolonged pick-up time of several weeks or months.  While still profitable for us because the inventory eventually sells with only a small loss to the profit margin, the extended pick-up time is problematic.  When a customer does not pick up a bra immediately, our cash flow is tied up in an item we cannot sell.  What salvages the situation is the actual purchase because the item does not need to be placed on the sales floor or go into my “oops!” drawers where it is marked down further.

Quick Pick-Up & No Purchase

In some cases, the item does not work while in others, we need a different size.  If a customer visits us quickly however, we can order the correct style or size and still have plenty of time to sell the item which did not work.  Furthermore, if the customer comes back to buy the right size or style, then we recoup some of our costs too.

Long Pick-Up & No Purchase

You may have guessed we have been working down the spectrum of desirability, and this scenario taxes our resources.  As with the above category, there is the chance customers will re-order in a new size or purchase something in the shop, but there are also situations where a customer tries the item on and does not like/want it and does not want to buy or re-order anything.  Even if a customer does want to order another style or buys something in stock, we still tied up our cash flow for a long time on an item for which we now have no buyer.  As a corollary observation to this scenario, one of the most common reasons for the order not to result in a purchase is fluctuations in weight.  My own struggles lately have shown that in as little as five weeks, your weight can drastically change, but in the case of several weeks or a couple months, it’s even easier.

No Pick-Up

Sadly, some customers never even show up to try on the item they ordered or will call to cancel it after the item arrived, typically after I have been following up for several weeks.  Situations like this one are the death of special order programs and the reason many retailers will not consider them.  I do my best to follow-up with customers before attempting to sell a bra, but in the meantime, we paid for a bra we cannot sell.  Eventually, we give up on you, and then we have to find another person to buy it.  In some cases, we have what I call “bra karma,” and a person will walk in the shop that week (or even that day!) and buy the item.  It’s surreal and amazing to see.  Unfortunately, in other instances, we may have a bra in the store for months or even years.

Whether or not a special order policy works for a retailer depends on how many customers fall in the above categories.  Fortunately, 80% of our customers are in the top three categories, which makes it possible to continue offering the program.  In fact, for the first two years of operation, the shop survived because of the special order policy, and even now, a large portion of our business comes from the women ordering other colors of bras they tried in the shop.  Nevertheless, we did make changes to protect ourselves, including holding basic items for a maximum of four weeks, and asking for non-refundable deposits for certain brands, like Comexim.  I also do not advertise the pre-order program on the blog much anymore because I found people who placed pre-orders through emails (as opposed to my regular customers) were only 35% likely to buy it.  This led to an unfortunate hodgepodge of miscellany cluttering up the store or filling up the drawers.

My personal suggestion, Annika, is to ask your local store if they would consider a special order policy (if they don’t already have one) and to discuss your personal needs with the sales staff or owner.  Most boutique owners I know crave feedback from their customers, and if there is a portion of the market they are not serving, I know they would want to hear how they can do this better.  However, if they choose not to have a special order policy, trust me when I say it’s because in their experience, it hurt the store more than it helped.

Erica

A Retailer’s Perspective: Profitability of Special Orders
Erica
Erica is a lover all things lingerie and is passionate about helping people find the bra which fits and flatters. Side passions include reading, writing, hiking, dairy-free food, walking her Jack Russell terrorists, and dying her hair everything from black to red.

21 thoughts on “A Retailer’s Perspective: Profitability of Special Orders

  • August 19, 2014 at 1:41 pm
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    I would love to go to your shop and buy from you but I live in NH. I hope that I can get there someday.

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    • Erica
      August 20, 2014 at 10:30 am
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      Well, if you’re ever in NC, please feel free to stop by!

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  • August 19, 2014 at 2:47 pm
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    Erica, I don’t see the point in offering a discount for a special order. It ties up your cash flow for an item that the customer is not going to be able to get anywhere else. I understand that special orders are special sizes and it’s a terrific program to be able to offer, but it needs to be win-win and right now it’s totally skewed in favour of the customer. (If anything, offer a discount for frequent purchases.)

    I would think someone who needs a special size would be so happy that you offer to order for them that (a) they’d be willing to pay full price and (b) they should expect to pay at least 25% down. You can always offer to refund that down payment if the item doesn’t work out, so in the end the customer won’t lose. You could even have a sliding scale where if a customer doesn’t come in within 2 weeks of notification that their item is in, if they chose not to buy the bra, they will only get a portion of their down payment back and if they don’t come in within a month they lose their entire down payment. Another option would be to not refund the down payment but apply it to the purchase of a different item if they do not buy the bra they special ordered.

    You’re not a charity shop. You are a business with bills to pay and a salary to earn. It’s not unreasonable to expect your customers to work with you.

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    • Erica
      August 20, 2014 at 10:37 am
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      You make some excellent points, Joanne, and my dad was applauding your comment from his computer as he feels the same way. 🙂 The discount originally came because we were having to special order so much stuff when we first opened that we thought a discount would keep customers loyal to us rather than pursuing other color or style options online. Essentially, the concern was people would shop us once for the fitting, and then go online to get more colors. With the discount, we thought it would thwart this potential to a degree, and overall, the program has been very successful. Our pre-order program, for example, is one of our most popular services because customers in harder-to-find sizes never have to worry about missing out on favorite styles.

      I do like the idea of working with a scale though, particularly with discounts or deposits. Most of the time, we do not have issues, and many of our customers either stay in contact or come in quickly. Typically what see now is the need for more colors than what we carry in-store. In the beginning, it was more about getting extra sizes, but now that we have quadrupled our inventory, it’s a little easier to meet sizing demands. Instead, it’s become more about colors, and hopefully, within the next two years we will be able to carry at least two colors per style so that the orders are further diminished. Thanks for sharing your insights with me! I find the feedback to be helpful when making policy decisions in the future.

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  • August 19, 2014 at 3:57 pm
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    I am so thankful for your special orders. I came to your shop (2 hours away from me) a couple of years ago and because of your special service helping me find just the right size I can now order from you and not have that drive. I just called you about a month ago, told you my band size (it had went down from my last visit) and you ordered me two bras to try. I love them both!! You and your services are wonderful!! I tell everyone they should make the trip!

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    • Erica
      August 20, 2014 at 10:31 am
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      Thanks, Brenda! It’s stories like yours which keep the special order program going. So many of our customers are not local, and some, like you, live a couple hours away. As a result, being able to order other colors or styles for them aids in keeping a strong, loyal customer base even if they live far away. Thanks for commenting!

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  • August 19, 2014 at 5:14 pm
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    This post was a very interesting read. I’d be interested also to see what percentage is online shopping, and how often people with online orders send things back or decide not to purchase them. Personally, I research the heck out of a bra before purchasing because I want things to go smoothly for everyone, and it’s easier (obviously) if I don’t have to do an exchange. Plus I want them to fit me so I can have the pretty bra right away!

    I have been enjoying your ‘from a retailer’s perspective’ posts especially because it gives good insight into how things work and why they are done a specific way. It’s really quite fascinating.

    Also, I super appreciate the special orders. Like Joanne said, I’d be happy to pay full price because I have come to like you and have been enjoying your reviews and posts for over a year now. People will pay for quality service and yours is top notch. I much appreciate any discount, but I am very happy to support your store at full prices. I also like to send anyone your way that I can (and I know of at least one person in a boob group who purchased a bra from you after I suggested she contact you, which makes my heart happy) because you are just that awesome. I hope to go to your store at some point and pick up lots of bras (I have several family members around 45 minutes away from your store, so next time I visit them).

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    • Erica
      August 20, 2014 at 10:45 am
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      Thank you, Cate, for the sweet words about our service! I aim to provide the best customer service as well as advice to anyone who needs it, and it’s nice to hear we are successful. To answer your query about online ordering: Typically, anything bought online without feedback has a higher chance of a return, but with special orders, we found it wasn’t so much an issue of returns as it was people just cancelling them. For example, when Parfait was releasing their higher cup size Charlotte, we fielded about fourteen different pre-orders for the bra from non-customers who heard about our program via the blog. Of the 14, only four ended up purchasing and one returned it. The other ten sent me emails (after I followed up with them at least twice) saying they changed their mind. After that experience (along with seeing similar phenomenon on my preview posts), I stopped advertising the program. Local or existing customers know about it, but I don’t actively promote it because too many people jumped on ordering without an intention to purchase. It’s actually the reason why I required deposits on Comexim because I saw a lot of people wanting to order, and once I mentioned the non-refundable deposit, the number dropped. It worked out great because the ones willing to pay the deposit, like yourself, were the ones who were serious about ordering in the first place. Thanks again for the nice comment, and I look forward to helping you and your mom in the future!

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  • August 19, 2014 at 6:11 pm
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    Terrific window into the retailer’s perspective. I agree with Joanne, btw. I think you’re being too generous with your discount on top of taking on risk to special order. But you’re the kind of vendor I love!

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    • Erica
      August 20, 2014 at 10:47 am
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      Thanks for the feedback, K-Line! I’m glad you enjoy the post and appreciate the service. 🙂

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  • August 19, 2014 at 7:07 pm
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    I really appreciate the special orders. I am on the edge of sizing out of a lot of bra styles, and the ones that seem to fit me best are fashion styles that probably aren’t practical to carry in the store. I have found a bunch of lovely bras that way, and you are always great about suggesting things that will work best for me. The preorders also, quite frankly, get my feet in the store more often. It’s an hour drive from my house, but when I know there is a bra waiting for me, I am more motivated to find time to drive to Burlington. Where I promptly order 2 more bras.

    I am willing to pay full price, but I will be honest that the discount really helps me and my limited budget. I don’t think I would be able to put down a deposit for every bra that I order, particularly the Panache bras that are so erratic in their shipping times. That being said, having the discount apply only for orders picked up in less than two weeks is a nice compromise.

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    • Erica
      August 20, 2014 at 10:51 am
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      Kerri, you and Ashley are two shining examples of why I started the pre-order program in the first place. It’s a great way of helping women in those harder-to-find sizes, and the discount helps your budget and maybe even makes room for an extra bra per year. Not to mention, you two are always prompt with coming by the shop, which helps me immensely. 🙂

      I actually like the compromise point between you and Joanne on offering a sliding scale discount for pick-ups. It would help encourage faster pick-ups without really penalizing anyone. Also, the point about ship times is another reason why I am so hesitant about a deposit. Most of our vendors screw up weekly, and it’s very easy for something to get dropped off an order or cancelled. I hate to tie up people’s cash for several weeks when I don’t have to pay for the item until after it ships anyway. Thanks for the feedback!

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  • August 19, 2014 at 9:11 pm
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    I think a small deposit would be more than reasonable and might deter customers from taking so long to pick up. Or you could offer customers a choice: put down a deposit, OR leave your credit card info–with the latter option, if they don’t show up to try it on within the 2 week period, you could mail them the item and charge them for it after the 2 weeks are up.

    For customers that are repeat special-orderers, like Kerri, you could choose to waive some of the requirements and offer those same discounts you currently have, but call them loyalty discounts.

    I honestly see retailers who special order something for me as THEM doing ME a favor. I don’t think of my wait time as me doing them a favor, for which I should be rewarded by a discount! Now, if I were a 28JJ/K and went to you for all my bras, with half a dozen special orders every year, then a loyalty discount would keep me coming back instead of just doing the Amazon thing (less footwork but more waiting and more frequent disappointments as there is nobody advising me).

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    • Erica
      August 20, 2014 at 10:56 am
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      Thanks for the feedback, Wendy! I have really enjoyed reading everyone’s suggestions for improving the program as well as what they are willing to spend/pay from their own personal perspective. It’s been eye-opening for me and exceedingly helpful.

      We have actually been toying with the idea of a loyalty program, but I have never been sure how to go about it so that it is the most fair. One idea we had was scaling rewards on a yearly basis like Nordstrom for example, so if you spend X dollars with the shop, you receive certain benefits and so on. the problem would be keeping track of everyone’s purchases without adding a lot of extra time. Some people use cards to track bras bought, but I worry people will lose cards or that I’ll need to manually track everything. It’s been a bit of a conundrum for us as we are frequently asked about them.

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  • August 20, 2014 at 4:59 am
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    Great article Erica!
    At my shop we also do special orders and we are also struggling quite a bit. With the incertainties of shipping times, some customers tend to be fed up with the wait, and never come to pick up the item, although being repeatedly informed on the delivery delay. It’s beginning to impact our cash flow as well. What I do is I only offer it in store, as you do. I do not offer a discount but we do have a shop card with gives you discounts (for 100 euros purchased, you get 5 euros off, etc). I try to only offer it to customers I “feel” and trust. But it is a great option and I don’t want to abandon it as well. Good luck and thanks for this amazing post 🙂

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    • Erica
      August 20, 2014 at 10:58 am
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      The uncertain ship times bother me a lot too. Some companies are so reliable that I rarely ever have an issue (Thank you, Parfait!), but other companies are erratic or plagued with issues (No Thank You, Eveden) that I never know what I am going to get or when. I hate to charge people deposits or take money in advance when an item I thought would take two weeks to arrive actually takes six. 🙁 It’s hard to strike the right balance between being fair to customers and protecting yourself. Like you, I tend to offer to order things for customers I think I can trust although I am perhaps a bit too trusting by nature. 🙂 My dad certainly seems to think so!

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  • August 20, 2014 at 5:20 pm
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    Erica,

    This is really fantastic! This makes me really appreciate my local lingerie shop for the special order policy :). I am really enjoying your retailer series.

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    • Erica
      August 22, 2014 at 2:16 pm
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      Thanks, Florence! I thought it would be interesting to talk about why retailers make some of their decisions since I know many people are used to the big box retailers and less so with a small businesses. Glad you enjoyed it!

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  • August 21, 2014 at 8:40 am
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    Thanks, Erica! I never imagined getting such a thorough and quick response.

    This has been on my mind for some time. If I could, I would visit your shop, alas I’d have to cross the Atlantics, so I need other options. 🙂 In my city the boutiques often advertise having bras for every woman etc. Upon further inspection the cups sizes stop at H(EU) and the band sizes go down to 70. They might have some bras in 65B-C. Most of those stores don’t have any cup sizes above E out, in one case I’ve never found anything above C. As someone who typically needs a 30GG I won’t risk having a 70H, at best, pushed on me. Not to mention risking being met with the all too common rude and unprofessional attitude towards bra wearers with a slimmer bone structures. I’ve personally been sized by what can only described as the +8/less-than-half-the-cup-volume-required method. (I don’t recommend it.) So I’m taking my business online for now. It’s frustrating that the local selection is so slim, when I see women like me everywhere. Seeing them pass the specialty stores that claim to serve us is tragicomic. It’s upsetting, since many of those who would need it don’t have the means to order and return a gazillion bras from abroad, which is what I’m mostly left at. I’m sure this is a familiar story.

    Thanks for giving an insight into the reality of running a business under these circumstances! I will continue to watch my nearest retailers to get an idea of their attitudes towards the small band/big cup market. I will take you advice and ask for special orders if it seems at all feasible. This gives me a better understanding of what I would be asking of them and how to approach it. It’s clear that I must be willing to build some trust with the retailer and vice versa for it to work and that I should try to minimize their risk. So what comes to mind is that I could show retailers what I’m wearing and why and if I’m trying to optimize the fit somehow. I could start out with offering to pay a deposit up front. If I ever want to try a new cut, it might be considerate to stick to basic colors. 🙂 Thanks again!

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    • Erica
      August 22, 2014 at 2:19 pm
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      No, thank you for being the muse of this post! Unfortunately, a lot of boutiques both here in the US as well as abroad still focus on a smaller range of cup sizes, and I am sure they have their reasons for doing so. However, it does make it difficult for women outside of that the mainstream sizing system to find local options, and they are forced to resort to online orders–a process which has a lot of risk too. I think your plan for discussing special orders with retailers is a sound one. Not to mention, if you show them your 30G and how well it fits, you can gauge whether or not they use proper techniques too. If they see the 30G and try to tell you a 34F would be fine too, then you know you may not be the right establishment. Not to mention, new boutiques pop up all the time, so in the future, there may be one which caters to a larger demographic. You’re most welcome for the response, and thanks again for giving me the idea!

      Reply
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