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Sunday, August 25, 2013

A lot of people will be watching Breaking Bad tonight and I’ll be avoiding their tweets to the best of my ability, because I just started catching up on the show this week. I got through the first season and about four episodes into the second. I’m watching as fast as I can!

I was amused to see a good example of one of the business issues I’ve written about in Season 1, Episode 6. In “Crazy Handful of Nothin,’” we see the hapless Jesse Pinkman bustling around with the pound of meth that Walter White has cooked up. He is selling small quantities of meth to numerous buyers.  After a lot of work — and some partaking of the product — he is pleased to come back to Walt with $2,600. Walt, who was envisioning something more like $26,000, is pissed off.

imdb

From IMDB.

Walt demands that Jesse find someone who will buy ALL of their meth at once and then resell it — in other words, a wholesaler who has a distribution system.

I’ve written about economy of scale several times. My Huffington Post story called “The Agony and Ecstasy of a Small Business” has a Jesse-worthy example. Usually I produce my jewelry designs one at a time (except for my silver stud earrings, which I produce 10 at a time) in New York City. Each piece costs a lot of money to produce that way. But, in order to produce the designs for much less per item, I have to spend even more money to make at least 100 units at once in Asia. A couple of times, I’ve done that to see how it played out. That’s when I wound up having the experience that made me empathize with Jesse. To quote my own story:

“I sold 30 of one style — a large quantity for me — all to individual customers. I made $20 on each sale and 30 trips to the post office. I’d rather hold out for one big engagement ring that nets $5,000 than do that again.”

Thirty trips to the post office — not to mention using up 30 jewelry boxes, and wrapping/addressing 30 packages  — for a whopping $600. The return was too little for the (financial) risk and certainly too little for the effort. It would have been much better if a retailer had placed an order for my entire inventory of 100 units. Then I’d have one shipment to make, for a profit of $2,000. The retailer, with stores that are open to foot traffic, has the distribution system that enables it to sell to individuals without anyone needing to make 30 trips to the post office. That’s why I’m always looking for a retailer who will buy in quantity. Of course, as Jesse and Walt find out, it’s not easy to find the right person or company to purchase your quantity goods. Especially when, by “purchase,” one means “Write me a damn check in exchange for the goods.” Not “consignment,” which means “Give us all your jewelry and we’ll pay you when this sells … if it sells.” In that Breaking Bad episode, Jesse winds up meeting with Tuco — the psychotic, meth-snorting distributor. Tuco beats Jesse nearly to death and takes the meth without paying. That’s consignment for you! Admittedly, I’ve never ended up in the hospital because of it but I’ve certainly wanted to send some other people there.

Here’s the blog week in review:

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11 Responses to “Breaking Bad, Business and the Blog Week in Review”

  1. Lara says:

    Oooh! I’m so excited to hear you’re watching Breaking Bad. You should at least DVR these new episodes so they’re ready when you are! Have you gotten to the twins yet? Lawd have mercy.
    Isn’t the drug business insane? Have you ever read the stuff by the Freakonomics guy talking about gang economy? Fascinating… and really like any other business!

  2. We have a similar issue because we can’t afford to have our pattern printed by McCalls. Our patterns are single sized, in 36 sizes and McCalls has a 1,000 minimum per size. $36,000 is out of the question! We will print one at a time on our plotter and go to the post office. This is how we can offer 36 single sizes in half sizes, unheard of in this market, and keep inventory low to invest funds/time in developing new patterns.

    We’ve learned a lot from you Wendy!

    • WendyB
      Twitter: WendyBrandes
      says:

      Yeah, sometimes it seems like a minimum of 100 (now 150 for me with sterling silver jewelry) isn’t too bad — but then I remember it’s just one style and I would need 150 of 10 styles to get started!

  3. stacy says:

    Brilliant post. I’m right there with ya!
    That is all.
    :-)

  4. Gabriala says:

    It is a ton of work to sell one by one. I built my business that way but it turns the company into a fulfillment house unless you outsource, but who can afford that? The easier way is wholesaling of course, but then there is the procuring of distribution chains which is really about knowing the gatekeeper. Small business is truly agony and ecstasy. Headed to Huff Post to read that piece. xo

    • WendyB
      Twitter: WendyBrandes
      says:

      You sum it up very nicely there.

      So far I haven’t gotten past any worthwhile gatekeepers! I’m actually pulling my stuff back from a couple of retailers now. They’re not doing anything for me.

  5. Consider Me Lovely
    Twitter: ConsiderMeLuvly
    says:

    You can certainly catch up. I started watching at the beginning of the month, and now I’m fully caught up!