Mel's Presentation at Diamond's Tenth Annual Retailer Sales Conference. A comprehensive look at the pros and cons of store automation.
We'd like to thank Diamond Comic Distribution for asking us to develop and present this talk to you for the Diamond Tenth Annual Retailer Sales Conference. Diamond Comic Distributors have a long history of encouraging their retail accounts to automate their stores, and have gone out of their way to provide computer-based tools to assist comics retailers in automating.
1. What we'll cover in this presentation...
Why you should automate your store
What automation is and isn't
Homebrew vs. commercial software
Do you need to move to POS right away?
Identifying your critical program features
Styles of implementing automation at your store
POS hardware
Special topics for Comics Retailers
Choosing a commercial system
2. Why You Should Automate Your Store
Increased Profits * Increased Profits * Increased Profits
Improved customer service on Subscriptions/Special Orders
Improves ability to own/operate multiple stores
Order quickly and accurately from multiple distributors
3. What's Automation All About?
Putting your routine, everyday business tasks on a computer so that staff with little specialist knowledge can perform them properly, force a consistent pattern of action on staff, and speed up performance of repetitive jobs
Automation DOES NOT substitute for specialist knowledge, nor does it substitute for poor business practices
4. Special Problems Facing Comics Retailers
A large number of new products being solicited every month
A merchandise category (New Comics) which changes department (to Back Issues) and price when it reaches the end of its sales period
A very large number of SKU's (stock keeping units) in proportion to total sales volume (WalMart has about 5,000 skus and does $50mm+ sales per store ... the typical comics store has about 25,000 skus and does $100k-$1mm)
Periods of intense sales activity on new comics day alternating with slower days
Transactions often consist of many relatively low-priced items
Existence of subscription services with many varying formats as to ordering policies, discounts, etc.
B. HomeBrew vs. Commercial Software
1. Advantages
Initial cost can be low: your own time or a customer who works for merchandise, pay as you go...
Customize software to meet your exact requirements
Have complete control over automation process
2. Disadvantages
Total cost is often five to twenty times higher in the long run than commercial programs
Systems are often difficult or impossible to use for anyone except yourself and programmer
Your time becomes increasingly valuable and is best spent running store, not being a part-time programmer
You are forced to make revisions to deal with changing market conditions or distributor system changes
You miss out on collective wisdom of a commercial system's User Group
You are dependent on good-will of a customer who is acting as your programmer
C. Do I Really Want to Move to Point-of-Sale (POS) Right Now?
1. What are the main reasons for moving to POS?
Gain ability to minimize inventory - by knowing at the end of each day what inventory status is you can REORDER product
Make transfers between multiple locations more feasible
Make merchandise valuation by location more accurate
Order from multiple distributors easily and accurately
2. Merchandise Mix and POS
The small to mid-size single store
If 70-90% of your merchandise mix consists of New Comics and Back Issues, we believe that POS doesn't really gain you many advantages and that you should just automate your core comics retail functions (Cycling, Subscriptions, Ordering)
The large single store
If 50% or less of your merchandise mix consists of New Comics and Back Issues, we believe you should consider installing POS once DC and Marvel have finished barcoding their Direct Market books. (Most mainstream books are now barcoded - 2004)
The multi-store company
No matter what your merchandise mix consists of, you would be well-advised to install POS in your stores AFTER automating one store on a trial basis
3. Capital Costs for POS
About $850 per cashier station for POS hardware ($700 in 2004 prices)
About $1,000 per cashier station for a dedicated POS computer ($600 in 2004 prices)
Add the cost of your ordering/inventory control software
Networking: Under $100 per pair of workstations
4. POS Myths
"I'll never have to count my books again"
"My ordering will magically become more efficient"
"All my internal organizational problems will go away"
"My POS system will install my data..."
"I won't have to install more register positions"
D. What Features Do I Really Need in a System?
1. New Comics
Automatic creation of cycle sheets when ordered
Track all relevant information: order qty, reorders, subscriber qty, transfers, etc.
Easy updating of cycle sheets for new arrivals
Provision for manual data entry if not using POS
Ability to annotate cycle sheets for special circumstances
2. Subscribers
Ability to track special interests
Ability to generate mailing labels, etc.
Ability to identify members with special privileges, etc.
Ability to support Slot # vs. Last Name operations
Flexible pick/pull list reporting
Support "standing order" vs. "one shot" subscriber policies
Allow single-issue or mini-series orders
Support down payments/layaway payments for specialty orders
3. Specialty Products
Support standard "perpetual inventory" features, eg:
quantity in inventory
quantity on-order
reorder level
last sale date
last order date
4. Back Issues
Distinguish between High-Value and Common Back Issues
Re-Pricing Utilities
Transfer utility from New Comics
5. Ordering
Import distributor order pack
Import other distributor data files when available
Generate automatic orders for distributors who don’t offer electronic catalogs
Generate order in distributor-compatible format
Combine data from Subscriber, Ordering & Back Issue files to support ordering decisions
Budgeting support
Create specialized order packs
6. Business Management
Cost Accounting
Multi-Store Operation
Management Reports
7. POS Modules
Flexible installation of cash drawers, scanners and receipt printers
Single or multiple cash drawer usage
Ability to handle scanned and manual sales during transition period
On-line lookup for merchandise
Ability to balance cash drawers
E. Implementing Automation at Your Store
1. "Avalanche" vs. One-Step automation
Do you want to shut your store(s) down entirely, inventory your merchandise, get it into your PC, put barcodes on all your back issues, and get your Subscriber and cycle sheet data into the PC all in a single week?
If you intend to automate in planned increments, will your software support this strategy?
2. Staff Training
What facilities are available for staff training?
Is the system interface (how you select tools, enter data, etc.) one that's comfortable and efficient? Can non-technical people learn to use the system quickly?
3. Your Personal Style and Company Resources
Are you comfortable with a fixed, regular routine? If not, automating your store may not be a good idea.
How much time can you personally put into getting a new system up and running? Can you hire someone to help you during the transition period?
4. Data Conversion
Do you have existing data in spreadsheet or database format that your vendor can convert for you?.
Will your vendor take Order History reports from Diamond and convert them into inventory records for you?
F. POS Hardware
1. Cash Drawers
Driven by PC or from Receipt Printer
Media slot in drawer face for increased security
Mechanical reliability
2. Scanners
Pen scanners... lower-cost, potential limitations on ability to scan multiple barcode schemes, lower quality, prone to damage
Laser/CCD scanners... more expensive, no limitations on barcode schemes, higher quality, auto-scan models can be fixed in place on counter to reduce damage
3. Receipt Printers
Low-volume stores can substitute dot-matrix printers with a receipt paper extension spool
Advantage: low cost; Disadvantage: slower, wear out quickly
4. Micro-computers
Apple PC users are out of luck for comics-specific commercial software
Any DOS-compatible 486' class PC with a 500mb hard disk should provide acceptable service, if you are recycling old units
Otherwise figure on a 133-Mhz Pentium or better with 16-32Mb of RAM and 1 gigabyte of hard disk storage
2004 - The major issue is whether your PC can run Windows efficiently. We recommend an 80Gb 7200rpm hard drive, flat screen 15" monitor, built-in LAN port, built-in modem, two parallel ports, 1GHz CPU, 523Mb of RAM, WinXP/Home.
Apple users - either buy a Windows emulation program or buy a $600 Windows PC and dedicate it to POS
G. Special Topics Especially for Comics Retailers
1. Printing Your Own Barcodes
Much merchandise (back issues, supplies) need to be barcoded
Some barcodes don't match a code you may prefer to use (eg: paperback book barcode doesn't contain ISBN numbers)
2. Laser Printers/Inkjets/Dot Matrix
24-pin dot matrix printers provide good barcode quality, especially if you are using laser/ccd scanners Now obsolete - 2004
Laser printers are expensive on a per-page basis and make it difficult to produce odd numbers of barcode labels (are less expensive - 2004)
Inkjets are less expensive than lasers, but share their speed and cost problems (Printers are inexpensive but ink is a cost factor - 2004)
3. "New Comics Day" crush
Any system must be able to handle the rush of business associated with new comics day.
Tightly integrating time-intensive processes (such as maintaining Subscriber data while on-line from a POS terminal) are often incompatible with one-terminal systems during busy sales periods
As a rule of thumb, in a single store you'll need one additional POS station for every three cash registers which you presently use
4. Multi-terminal systems vs. Independent PCs
Adding multi-user features to a system adds cost:
the cost of the Local Area Network Not relevant in 2004
the additional support cost for multi-user programs Less relevant in 2004
Multi-user systems make you more vulnerable to hardware or software problems - lose the server and nothing works!
Hour by hour sales levels are not relevant for 95%+ of all comics retailers
5. The multi-store company:
Management Reports
Out-of-stock conditions at individual stores
Sell-through indicators
Sales/S.F. ratios and other performance indicators
Hot sellers/Slow sellers
Transfer Merchandise
How do you transfer merchandise? Will you allow managers to initiate transfers which will be entered into your system later, or will all transfers be initiated at your company's office?
Company-wide vs. Store-wide ordering
Will you order centrally for your entire company, or will you create individual orders for each store?
Centralized vs. Drop-shipped ordering
Will your merchandise go to a central warehouse for redistribution to individual stores or will your merchandise be drop-shipped to each store?
6. When to print barcodes:
At the Time of Ordering
Works well when ordering merchandise which is likely to all arrive on the same date (eg: gaming products)
When Product Arrives
Works best when receiving merchandise which was ordered on widely separated dates
On Demand
Useful to reprice product, entering used merchandise (such as back issues) into your system, etc.
H. Choosing a Commercial System
1. Vendor Qualifications
How many users do they have?
How many years experience in comics do they have?
Do they offer user references?
What return policy do they offer?
How big a company are they?
Do they speak fluent "comic book"?
Can I get a demo disk?
2. Vendor Business Policies
Can I buy separate modules instead of the entire package?
What level of support is available? For how long?
Who pays for the phone call?
What are support hours?
How many support staff are there?
How quickly do they fix bugs?
How often do they offer upgrades to the program?
How much do upgrades cost?
How much does additional support cost?
3. Usage Considerations
How fast is the program? Will I have to upgrade my system?
How complete and well-organized is the User Manual?
Do they offer a comprehensive Install program?
Do they offer any utilities to help me enter masses of data initially into the program?
Is the program flexible? Can it deal with changing industry needs or changing needs in my company?
Is the program compatible with my distributor, or with other merchandise sources which I may use from time to time?
Is their program best suited to low, medium or high-volume stores?
Am I comfortable with the program's user interface?
Does the program support me in the way I like running my business:
Customer slot # vs. Last name/First name
Pull books Customer by Title/Title by Customer
Support both "One Shot" and "Standing" subscriber policies
Company-wide Ordering vs. Store Ordering
Warehouse deliveries vs. Drop Ship to Stores
Is the program data available to me for reporting or conversion in a readily accessible format?
Acknowledgements:
Buddy Saunders of Lone Star Comics in Dallas-Ft. Worth, Texas; Jim Wanser of Collector's Comics in Wantagh, NY and Bob Gray of Twilight Book and Game in Syracuse have been very generous with their time and information concerning many of the less obvious automation traps peculiar to comics retailing.
© 1992-2005 Melchior Thompson & Associates - All Rights Reserved