Turnover up, money the same. It is usually two departments, and they are nearly always the bulky ones.
A shopkeeper told us last year that his takings had grown by a fifth and there was no more money at the end of the month. That conversation happens often enough that it is worth writing down what we look at.
The first thing is not the buying price. It is the freight per carton, department by department.
On an island order, freight is charged by volume and weight rather than by value, so the cost per carton is roughly the same whether the carton holds mobile phone chargers or empty buckets. That means the freight is a small percentage on dense valuable goods and an enormous percentage on light cheap ones. Bottled water, plastics, tissue and sachet detergent are the usual offenders. We have seen shops where the freight on bottled water was larger than the margin on it, which means every pack sold made the month slightly worse.
The second thing is money sitting still. Count how many lines you carry that you have not reordered in three months. Each one is money on a shelf doing nothing, and on most shops we look at it adds up to several weeks of purchasing. Four brands of detergent in nine sizes is the classic version of this. Cut it to two brands in five sizes and the department usually looks fuller, not emptier, because five lines properly stacked beat nine half faced ones.
The third is the expiry bin. Anything you threw away is not a small loss, it is the whole margin on several units of the same thing. Short dated stock is only cheap if you can actually sell it before the date, and on an island there is nobody to sell it on to.
The fourth is the thing nobody counts: the trips. A shop that sends somebody to Male to fetch part of an order is paying a ferry fare, a day of somebody's time and usually a taxi. Two of those a month is a real number and it is invisible because it never appears on an invoice.
What to do about it is boring. Price two or three departments properly after freight, drop what does not earn, buy bulky goods from whoever is closest rather than from whoever is cheapest per unit, and order less often in bigger loads.
We have lost order value on every shop we have done this with, and gained more back within a year, because a shop that is making money buys more of everything else. If your turnover is up and your money is not, send us a year of your orders and we will go through it with you. It takes an afternoon and we do not charge for it.
