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My Worst Vendor -- Guess Who?

April 8, 2006, 8:36 am

Every small business probably has stories about vendors who are particularly difficult to work with.  Let me describe my most difficult and irritating vendor, someone who sells me products that we resell in our stores:

  • Most vendors try to set your retail price for you, but are seldom successful.  Only in countries like Germany that make retail discounting illegal are such attempts universally successful.  However, this one vendor is always successful at setting my retail price.
  • Most vendors allow me a retail gross margin of at least 30-50% of sales to help me to make money on the sale of their product.  They like me to make money, since that gives me the incentive to sell more of their product.  However, this one particular vendor only allows me a 5% gross margin.  Ironically, this products is on of the most difficult and time-consuming for our stores to sell, requiring ten minutes of sales time to gather all the necessary customer information and complete the transaction.  Every single one we sell is a dead loss to us.
  • Every small business has some vendors it struggles with on credit terms.  I usually have to fill out a detailed credit application, and as the owner have to personally guarantee the company's payment on the account.  Sometimes vendors will require a few orders be consummated COD so we can develop a history before they will go to a 30-day invoicing approach.  However, this particular vendor goes even further.  I had to set up a dedicated bank account into which I deposit funds for this vendors products every week.  In addition, I had to obtain a $4000 bond to cover any non-payment in the account, and I have to hold the bond as long as I want to do business with this vendor -- in other words, there is no credit given for a long track record of performance on the account.
  • This particular vendor has an "in" with the State of Colorado, which protects it by allowing no other competitive product to be sold in the state.

Give up?  Well, most of you have probably guessed that this vendor is... the government!  Or specifically, the Colorado Department of Wildlife and the specific product discussed is fishing licenses.  That is why this particular vendor can get away with practices that no company that actually has to compete in the market place would ever attempt, and, in a couple of cases, gets aways with practices that would be illegal for a private company.

When I bought this company, we used to sell fishing licenses at many of our locations.  I have pared this down to only the bare minimum number of locations, like marinas, where customers absolutely expect me to be able to sell them a license.

Tags: , ,
Category: Government

3 Comments

  1. Jay:

    Heh. At the beginning I thought you were going to say newspapers. When I worked for a convenience store chain, the news agency that had a monopoly on distributing the Boston Globe charged almost the entire dollar the Sunday paper sold for, yet you had to carry it because customers expected it. It was also a ton of work for us, because they delivered it in sections and we had to put each copy together into recognizable form.

    Then I was on the right track, because I thought you were going to say it was the lottery. But with that they at least give you money connected to winnings, in addition to the 5 cents per ticket sold.

    April 8, 2006, 1:45 pm

  2. AZVicki:

    I knew right away it was Game and Fish but I thought you were going to say it was Arizona. I was recently trying to get a fishing license at Roosevelt Lake and the local mini-market and bait shop no longer sold licenses because of all the red-tape/hoop jumping; I had to drive into Globe.

    April 10, 2006, 9:10 am

  3. Matt:

    I sometimes have to wonder why you picked a business that requires such an immense amount of contact with government.

    I mean, all business owners chafe at the difficulty of interacting with those deluded souls who think themselves our masters, such as the tax and labor agencies...but your business is on fairly intimate terms with government at many levels in ways that most businesses aren't, since you operate concessions on government land and sell government permits in the course of your business.

    Obviously someone's going to do it, and equally obviously as a libertarian I'd prefer that it be a private entrepreneur. But it seems odd for one of my fellows to _choose_ that particular line of work, and I'm occasionally puzzled about why you did.

    April 11, 2006, 2:50 am