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.
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:
- Monday: Cats are always funny.
- Tuesday: Dark and dangerous jewelry is hot for fall. Once again, I’m on trend.
- Wednesday: What Wendy Wore to Coney Island.
- Thursday: Haoui Montaug was one of Madonna’s early supporters.
- Friday: Eminem shows us what makes him a great jewelry model.