June 25, 2019

She Owns It: The Challenges of Raising Prices and Competing With Online Retailers

She Owns It

Portraits of women entrepreneurs.

Jessica Johnson doesn't mind letting some customers go.Sara Krulwich/The New York Times Jessica Johnson doesn’t mind letting some customers go.

At the last She Owns It Business Group meeting, the owners talked about several issues related to pricing. This post focuses on the prices charged by the two family businesses in the group, and the particular challenges of selling a product that is sold online for less.

Deirdre Lord, who owns the Megawatt Hour, had a question for Jessica Johnson and Susan Parker. Both took over businesses handed down from their parents, and Ms. Lord wondered whether they inherited pricing schemes as well.

Ms. Johnson, who owns Johnson Security Bureau, said she inherited the terms on certain contracts that were not yet up for renewal. When she eventually approached at least one of those clients to discuss rate increases, the client protested that other companies offered to handle the job for less. As she has said previously, Ms. Johnson doesn’t mind letting that kind of customer go.

She said her more savvy clients understood that external factors affected pricing and they would incorporate rising costs into their contracts. “That’s the kind of business we prefer to go after now, as opposed to, ‘No, you signed the paper, you’re stuck with it forever,’” she said.

In light of the Affordable Care Act, which will require businesses with more than 50 employees to provide health insurance for those employees, these considerations will become even more important, said Ms. Johnson, whose company had more than 100 employees and had not previously offered health insurance. “I’ve been running the numbers for several of our contracts looking at what’s going to happen when health care kicks in next year,” she said, adding that she had been proactive about talking to clients about how her prices could be affected. “We can kind of set the table and let them know that a price increase may be coming and see if that means that they’ll stay with us or they’ll go to someone else.”

Ms. Parker owns Bari Jay, which manufactures bridesmaid and prom dresses. She’s the only owner in the group with a company that sells a product, not a service. When she and her sister took over Bari Jay, the prices of the dresses already on the market remained the same, she said. But soon after, their factories raised their prices, and they, in turn, raised theirs as well.

“I had no one to teach me how to price a dress, so I came up with my own formula,” she said.

“Is it working?” asked Beth Shaw, who owns YogaFit.

“Really well,” Ms. Parker said.

“Do you take your fixed costs and then do you divide that up by the number of units you sell a year?” Ms. Shaw asked.

“Yes, and then I add a margin on top of it,” Ms. Parker said. While stores have complained that her prices have gotten high, she said higher prices are a bridal-industry phenomenon. “Making a dress in China has gotten really expensive,” she said.

Like other bridal companies, Bari Jay sells a sample dress to its stores, which then place orders based on the sample. About 10 years ago, Ms. Parker said, many of Bari Jay’s competitors started giving away free samples. “My father tried it, and it almost put him out of business,” she said. So, instead, Bari Jay offers volume discounts.

“That’s a great idea,” said Alexandra Mayzler, owner of Thinking Caps Group.

“There’s an incentive to buy more dresses, and if you buy less than the minimum, then you’re going to pay full price,” Ms. Parker said.

“With pricing, you definitely have to do what Susan was saying: think about cost, all of the math, but then you have to say to yourself, ‘Who am I going to sell it to?’” Ms. Mayzler said. You have to determine what they expect and whether you’re willing to “deal with the relationships that come because you’re in a particular price bracket,” she continued.

Ms. Parker agreed and explained that she doesn’t rely exclusively on her formula. For example, if her formula demands that a certain dress be priced $10 more than another, but the lower-priced dress looks more expensive, she will “tweak” the prices accordingly. She also explained how price perception affects her business. Bari Jay sells to stores, which then sell to customers. “All of our stores pretty much adhere to M.S.R.P.,” she said, referring to the manufacturer’s suggested retail price.

But on the stores’ Web sites, it’s a different story. Customers buying online can get the same dresses for less, said Ms. Parker. But they don’t receive the services, like a fitting they would get at the physical store. When you buy online, Ms. Parker said, “They’ll send it to you in a ball and if it has a stain or damage, it’s on you.” This annoys the stores that carry Bari Jay but don’t sell online. And it bothers Ms. Parker and her sister. “It cheapens our name,” she said, adding that customers who are willing to pay more don’t want to wear a dress that someone else was able to buy for half the price.

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/28/the-challenges-of-raising-prices-and-competing-with-online-retailers/?partner=rss&emc=rss

Bucks Blog: A $2,400 Fine for an Airbnb Host

Nigel Warren faced steep fines for violations from renting his apartment on Airbnb.Todd Heisler/The New York Times Nigel Warren faced steep fines for violations from renting his apartment on Airbnb.

Back in December, I wrote a column about Nigel Warren, who was facing the prospect of thousands of dollars in fines from New York City for renting his room in a two-bedroom apartment out on Airbnb. A city inspector believed he was breaking the law, but the city ended up dismissing the charges right before the column appeared.

From there, however, the tale took an odd turn. The city revived the charges and set a hearing date for late January. Mr. Warren, appearing on behalf of his landlord, showed up only to find, to his great surprise, that an Airbnb team was there too, including outside counsel it had retained. The company intended to intervene on his behalf, but it hadn’t let him know that it would appear at the hearing.

Because of some confusion at that hearing, the city scheduled a new one, which finally took place on May 9. There, both Mr. Warren and Airbnb argued that certain language in New York’s administrative code allowed lawful boarders, roomers and lodgers to stay in an apartment like Mr. Warren’s for less than 30 days.

An administrative law judge, Clive Morrick, disagreed with their interpretation in a decision he issued on Monday, noting that the Airbnb renters did not have access to all parts of the apartment, specifically the room of Mr. Warren’s roommate, who was still living there while Mr. Warren was away and renting out his room. Mr. Morrick also questioned whether complete strangers staying for a few nights could ever fall under the code language in question.

Airbnb cannot file an appeal, since it was only a “discretionary intervenor” in the case, somewhat akin to a party filing an amicus brief. Mr. Warren, who has told his landlord that he will cover the $2,400 in fines, says that he’s willing to consider appealing if it doesn’t cost him any more money in legal fees and if Airbnb is willing to help him refine and advance his arguments.

But the bigger question here is the same one I asked in my column in December and Airbnb would not answer at the time: Given that Airbnb is well aware that many of its listings in large cities are probably violating local laws, shouldn’t it warn its hosts, with some sort of aggressive pop-up or similar disclosure, when they first post a new listing that they are potentially putting themselves in legal jeopardy?

On Tuesday, Airbnb sent me a statement saying that it plans to start doing just that. Here’s what the warning will say:

“Congratulations! You’re almost done listing your new space and it’s looking pretty sharp! As you’re deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city’s zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement. These rules can be confusing. Often, even city administrators find it tough to explain their local laws.

We are working with governments around the world to clarify these rules so that everyone has a clear understanding of what the laws are. In the meantime, please review your local laws before listing your space on Airbnb. By accepting our Terms of Service and activating a listing, you certify that you will follow your local laws and regulations.

Many of us at Airbnb are hosts ourselves and we’re passionate about making it as easy as possible to host around the world.

Onwards and Upwards!”

I also asked the company about the possibility of blocking listings from addresses of buildings where residents or the management company have told Airbnb that listings are not legal or welcome. The company had not yet answered this question by the time we published this post.

The company’s approach will probably influence many people in cities like San Francisco and New York, where it has a large number of listings and its hosts have clear legal exposure. The travel news site Skift estimated in January that half of Airbnb’s listings in New York City are illegal. The company did not comment on this estimate.

If you’re already a host in New York, keep in mind that the city still seems only to be conducting inspections at apartments where neighbors have complained about the comings and goings of all the random strangers. But landlords are on to this too, as Fast Company’s Chris Dannen noted last year after his landlord served him with a cease-and-desist order. Most leases prevent the sort of subletting that goes on via Airbnb every day.

Airbnb and other companies hope to clarify or change some of the laws that restrict these sorts of short-term rentals. Here’s what Airbnb said in a statement about that effort and a 2010 law in question:

“This decision makes it even more critical that New York law be clarified to make sure regular New Yorkers can occasionally rent out their own homes. There is universal agreement that occasional hosts like Nigel Warren were not the target of the 2010 law, but that agreement provides little comfort to the handful of people, like Nigel, who find themselves aimed at by overzealous enforcement officials. It is time to fix this law and protect hosts who occasionally rent out their own homes. 87 percent of Airbnb hosts in New York list just a home they live in — they are average New Yorkers trying to make ends meet, not illegal hotels that should be subject to the 2010 law.”

If you’re an Airbnb host who is probably violating local laws, do you intend to keep on renting your room or home out anyway until the legal dust settles, just as Airbnb’s employees seem to be doing?

Article source: http://bucks.blogs.nytimes.com/2013/05/21/a-2400-fine-for-an-airbnb-host/?partner=rss&emc=rss

Foxconn Audit Reveals Workweek Still Too Long

The auditors, supervised by the Fair Labor Association, said Foxconn was still working toward lowering the average workweek to the 49-hour cap. And labor unions at the plants that are supposed to represent the workers’ interests are still dominated by management, the group said.

Still, the average workweek has come down sharply from the typical 60 hours or more that has been common practice at the Chinese suppliers of Apple and other technology companies.

Although the auditors declined to be specific about the length of the Foxconn workweek, Apple has said that it has been working to reduce the long hours put in by workers at its suppliers, which are mostly in China.

In a statement on its supplier responsibility Web site, the company said for more than a million workers in its global supply network that it tracked in 2012, “the average hours worked per week was under 50.”

An Apple spokesman, Steve Dowling, declined to discuss the specifics of the Fair Labor Association audit, which he said was done independently of Apple. In a statement, Foxconn said the F.L.A. report confirmed the company’s recent improvements in its operations. “We will continue to build on that success as we work toward compliance with the F.L.A. Code,” the company said.

But Mr. Dowling said Apple has been working closely with its suppliers and conducting its own monitoring to improve conditions at the factories that make its products, and the company has posted public progress reports.

Foxconn, part of the Taiwan-based company Hon Hai Precision Industry, employs about 178,000 workers at the three factories inspected. It has about 1.2 million workers at plants making products for Apple, Hewlett-Packard, Dell, Microsoft and other technology companies.

Foxconn has been under intense scrutiny for several years because of working conditions inside its factories. Investigations by The New York Times, outside groups and Apple’s own supplier responsibility officials have found illegal amounts of overtime, crowded working conditions, under-age workers and improper disposal of hazardous waste. Industrial accidents have injured and killed Foxconn workers, and the company also experienced a wave of worker suicides.

Labor and consumer activists have pressured Apple, one of the most profitable companies in the world, to do more to improve conditions for the people who make its products. The monthly earnings of Foxconn workers making Apple products are currently about $500.

Apple joined the Fair Labor Association, or F.L.A., in January 2012, and asked the group to audit its suppliers, beginning with Foxconn. The labor group has periodically inspected Foxconn factories in Guanlan, Longhua and Chengdu since February 2012 and interviewed thousands of workers. Apple pays for the audits.

After the first inspection, Apple and Foxconn agreed to an action plan of 360 items to be completed by July 1, 2013. As of January, 98.3 percent of them had been achieved, the group’s report said.

Most of the items were “housekeeping issues,” said Auret van Heerden, chief executive of the F.L.A., in an interview Thursday. “Those things they plowed through.”

But Foxconn has also addressed more substantive problems, Mr. van Heerden said. For example, in fire safety, the company added more escape routes and cleared choke points after the auditors asked it to test the evacuation of buildings during shift change, when plants are most crowded. “We were, in a way, looking for trouble,” he said.

He noted that Foxconn has also overhauled many processes, including using robots instead of people to polish the aluminum backs of iPad cases and water to capture and dispose of the resulting dust. An aluminum dust explosion in May 2011 at Foxconn’s Chengdu factory killed three workers and injured more than a dozen others.

Critics of the F.L.A. and Foxconn said the most recent audit played down problems found by other investigators, such as unpaid overtime and Foxconn’s use of unpaid interns.

“Over all, the F.L.A.’s reporting on Foxconn continues to be unjustifiably rosy,” Scott Nova, executive director of the Workers Rights Consortium, a university-backed group that monitors apparel factories worldwide, said in an e-mail.

Steven Greenhouse contributed reporting.

Article source: http://www.nytimes.com/2013/05/17/business/foxconn-audit-reveals-workweek-still-too-long.html?partner=rss&emc=rss

Media Decoder: Snooping and the News Media: It’s a 2-Way Street

“There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters,” Gary Pruitt, president and chief executive of The Associated Press, wrote in a letter of protest to Eric H. Holder Jr., the United States attorney general.

Given that the government has brought six cases against people suspected of leaking classified information, under an administration that has set a record for the use of the Espionage Act, the Associated Press story adds to a growing atmosphere in which working reporters always need to worry that someone is looking over their shoulder while they type. As Scott Shane wrote in The New York Times in 2012, the investigative aggression creates “a distinct chill over press coverage of national security issues as agencies decline routine interview requests and refuse to provide background briefings.”

In the instance of The Associated Press, its leaders, who were notified of the investigation last Friday, worried that the information obtained would “provide a road map to A.P.’s newsgathering operations and disclose information about A.P.’s activities and operations.”

Something about that has a familiar ring.

“On Wall Street, anonymity is critically important,” a former senior trader at Bear Stearns told The New York Times. “Secrecy and the ability to cover one’s tracks is paramount. If Bloomberg reporters crossed that line, that’s an issue.”

The clients who use Bloomberg terminals found out on Friday — the same day that the government sent The Associated Press notice that it had seized the phone records — that reporters at Bloomberg News had used terminals to find out when clients were signing in to the service. Besides Goldman Sachs, JPMorgan Chase and other big banks, who were among the concerned subscribers? The United States Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation.

The hunted and the hunter, the hacked and the hacker, all of it seemed up for grabs.

So at the same time The Associated Press, a nonprofit news organization owned by various media agencies, was responding to government intrusion into its affairs, another news service, Bloomberg, was responding to complaints from clients that it was peering into private matters.

So many lines are being crossed in so many directions, it is tough to keep track of who are the victims and who are the perpetrators. There has always been a cat-and-mouse game between government and the media, between the coverers and the covered, but increased reliance on technology has weaponized something that used to take spycraft and shoe leather.

At Bloomberg, reporters could sit at their desks and use a keyboard function to see the last time an official of the Federal Reserve logged on. And the Justice Department obtained the records of The Associated Press from phone companies with no advance notice, giving it no chance to challenge the action. The absence of friction has led to a culture of transgression. Clearly, if it can be known, it will be known.

In the past year, in addition to the recent revelations about Bloomberg and the Department of Justice, there have been overreaches by Google into homes and computers and a host of breaches into private data, by both foreign states and private hacks. And as a general fact of modern living, Facebook knows who we like, Foursquare knows where we are and Twitter knows what we think. How long before data gathering moves from the front of our face — Google Glass — to inside our head?

Some people are newly worried that Big Brother is coming and others say he is already here, having taken up residence in the cloud, where he snacks on Big Data as he pleases.

It’s worth remembering that in scary movies (see “Minority Report”) about the coming informational Armageddon, it is not just government that is doing the lurking. Part of the reason the Obama administration, which promised to be the most transparent in history, has become such a spectral presence is that it is facing cybersecurity threats like none other in history. Journalists, aided by computers, can find and surround any source they like. Leaked information, which used to have to be photocopied or whispered, can be dumped by the terabyte into drop boxes by organizations like WikiLeaks and sent everywhere in an instant.

Bloomberg is a hybrid informational agency — a wired gatherer and distributor of information — that had $7.9 billion in revenue last year, mostly from its 315,000 subscriptions around the world. Its media division may play a small role in profits — it is viewed as a marketing tool for the terminals — but it has been hailed as a newsroom of the future with its open office plan and lack of architectural hierarchy.

There is an instructive paradox in that arrangement. To be seen is also to be under surveillance. Every keystroke, every entrance and exit to the building, every note on every story, is there for the seeing when you work at Bloomberg. Putting a phone call into Bloomberg H.Q., as I did this morning, is akin to calling the C.I.A. “Don’t e-mail me, don’t call me here, please,” said an editor there I know.

So, we have discovered anew that government will do what it needs to in a vain, but chilling, attempt to plug leaks. But best to keep in mind that the most ubiquitous threats to our privacy do not originate in some secret government bunker. In the media, in the general public, in business realms, we are keeping an eye on ourselves.

Article source: http://www.nytimes.com/2013/05/15/business/media/the-two-way-street-that-is-snooping-and-the-news-media.html?partner=rss&emc=rss

Alan Abelson, Barron’s Columnist and Editor, Dies at 87

The cause was a heart attack, his daughter, Reed Abelson, a business reporter for The New York Times, said.

No subject was sacred to Mr. Abelson, including the celebrated investor Warren Buffett, whom he chided in his column, “Up Down Wall Street,” for being overly optimistic in the 1996 annual report of his company, Berkshire Hathaway. Mr. Abelson suggested that Mr. Buffett should have added the words “just kidding.”

In the 1990s, he was consistently scathing in his criticism of the run-up in technology stocks, a stance that was proved right when the tech bubble burst. In December 1992, he pointed out that the $28 billion I.B.M. investors had lost that year exceeded the $16 billion estimated cost of cleaning up after Hurricane Andrew. “The case for an official designation of I.B.M. as a disaster area seems unanswerably compelling,” he wrote.

His sarcasm about government economic promises was biting. “We’ll get a second-half recovery,” he once wrote, “it just won’t be the second half of this year.”

Mr. Abelson was one of those rare journalists who come to personify their publications. Barron’s, a weekly tabloid that is more technical than most popular financial magazines, comes out on Saturdays. In the days before global markets, readers of Mr. Abelson’s tips and analyses on Barron’s front page could ponder their moves on Sunday, a day before the markets opened. Barron’s, which has a circulation of about 300,000, has been published by Dow Jones Company since 1921. Dow Jones has been owned by the News Corporation since 2007.

Mr. Abelson’s power prompted executives worried about negative articles to threaten to punch him in the nose early in his career and to sue him in later, gentler times. “Go right ahead” was his brisk rejoinder to those threatening to sue. Many did, but none won.

The losers included Business Week magazine, which in 1975 reported that some investors sometimes found out the contents of Mr. Abelson’s column in advance. He responded with a libel suit demanding that McGraw-Hill, Business Week’s owner, admit that it had no reason to believe he had leaked information on purpose or acted unethically. McGraw-Hill made the admission, and Mr. Abelson dropped his suit.

Alan Howard Abelson was born in New York City on Oct. 12, 1925, grew up in Queens and attended Townsend Harris High School. He entered the City College of New York at 15, studied chemistry and English, and graduated in 1946. The next year, he earned a master’s degree in creative writing from the University of Iowa, and went to work as a freelance journalist.

He became a copy boy at The New York Journal-American in 1950 and was promoted to reporter and then, with a $5-a-week raise, to stock market columnist.

Mr. Abelson joined Barron’s as a reporter in 1956 and was named managing editor in 1965. He started his column in January 1966 as a piecing together of odds and ends about the stock market. His last column, three months ago, sardonically defined a Wall Street expert as anyone who can spell Mr. Buffett’s name.

In 1981, Mr. Abelson was appointed Barron’s top editor. Dow Jones asked him to resign in 1992 after circulation fell, but allowed him to continue writing his column. “I’m a terrible manager,” he told Manhattan Inc.

Mr. Abelson’s wife, the former Virginia Eloise Peterson, who owned a bookstore in Croton-on-Hudson, N.Y., died in 1999. In addition to his daughter, he is survived by his son, Justin, editorial page editor of The Recorder of Greenfield, Mass., and five grandchildren.

In 1998, the G. R. Loeb Foundation gave Mr. Abelson its lifetime achievement award. “Few journalists have been as influential as Alan Abelson,” the foundation said. “For 41 years he has given us his insights, wisdom and a moral view of a world in which ethics and straight dealings are often rare commodities.”

What many readers and investors most valued in him was his insistent contrarianism in the face of boosters proclaiming the wonders of a particular stock. “He never promises false hope,” The Street.com said in 2001. “Rather no hope. For that, his readers love him.”

Article source: http://www.nytimes.com/2013/05/11/business/media/alan-abelson-barrons-columnist-and-editor-dies-at-87.html?partner=rss&emc=rss

You’re the Boss Blog: A Wholesaler Decides to Abandon His Most Profitable Sales Channel

Gerald Shvartsman has expanded his start-up to more than 50 employees and sales of $7 million.John Van Beekum for The New York Times Gerald Shvartsman has expanded his start-up to more than 50 employees and sales of $7 million.

Case Study

What would you do with this business?

Last week, we published a case study about an entrepreneur, new to the furniture business, who had expanded his business selling patio and deck furniture to $7 million in annual sales. Instead of selling through sales representatives, Gerald Shvartsman, founder and chief executive of Source Outdoor, which is based in Miami, employed a multichannel sales strategy.

He sold to South Florida furniture retailers, fulfilled orders taken by Internet merchants, cut deals with local decorators and designers, and did not overlook an opportunity right under his nose — the beachfront march of condos, all needing outdoor furniture around their pools. But Mr. Shvartsman hit a speed bump when he started enjoying much higher profits through a fifth sales channel: selling his goods at retail prices at local home shows.

One of his best retail customers complained: “I’m buying from you and you’re trying to sell to the same customer I am.” Neither that store owner nor any of Mr. Shvartsman’s other retail outlets were selling at the home shows. Still, he wondered if it might be best to remove his retail hat and stick to wholesaling. After some personal debate, he decided to stop displaying his goods at the home shows. We talked to Mr. Shvartsman about why he decided to walk away from his most profitable sales channel — and also about the advice elicited by this case study.

How did you reach your decision?

Basically, I decided that having a good reputation and good referrals from my current customers was more important than the income from selling directly at home shows, because it’s a small, cottage industry. They all know each other. People talk.

One reader suggested that you open another company with a different name to work the home shows.

That was my first instinct, to be honest. But that’s not the right thing to do, because people talk. Why am I going to put myself in a bad situation for extra money? At the end of the day, integrity is more valuable.

Both of our experts and several readers suggested ways to partner with your retail customers so as not to leave this market untapped. Did you make any such attempts?

Yes, last year I offered to pay for the show for this retailer, which came to more than $8,000. I would set it up for them, because I have the infrastructure, the trucks, a full-time marketing team. I designed the fliers for them. I gave them an extra 10 percent discount off their price. I sent them one of my salespeople who knows the product and does well at home shows. I paid him out of my pocket, $250 a day, so he wasn’t working on commission. He helped their two salespeople, who were not used to this environment. These shows are a one-call close, whereas in retail it’s not necessarily that way, not as fast pace, not as much pressure, where you have to close while you can or likely you’re not going to close them.

And how did this work out?

They did really well. They did almost $60,000 in business. So they paid me back the $8,000. They were very happy. I offered it to them going forward, but they didn’t feel they got a lot of post-show business and the main salesgirl had a baby and they just didn’t want to do it anymore.

Have you offered this service to any other retailers?

The other retailers in the Miami-Fort Lauderdale area that I would offer this to aren’t set up for it. The retail side of this business is a very family-owned kind of business and multigenerational. You have to be a hustler to do well at home shows, and they don’t have that type of personality.

But if you have determined that none of your retailers are interested in the business, don’t you have every right to do it yourself?

The answer is yes. But at the same time, integrity is everything, and your customers have to be secure that you’re not competing with them. The minute they think you’re competing with them, they’re going to find somebody to replace you — no matter how good you are to them or what kind of terms you extend to them or how you treat them.

What do you think of the reader suggestion to enjoy the higher profit margins at home shows beyond the reach of your Florida retail customers — in Atlanta, for example?

It crossed my mind, but it’s penny-wise and dollar-foolish. Setting up in Atlanta is not really an option. Even Atlanta is too far to ship the goods. It’s only really worthwhile in our backyard.

Have you identified any other sales or revenue channels?

Yes, we’re spreading our wings into export. As we’ve become a brand instead of just another guy importing wicker, within the last year or so we’ve acquired overseas customers, so we’re not only a U.S.-based distributor, we have distributors called Source Outdoor Colombia, Source Outdoor Costa Rica, and we’re working on Source Outdoor Brazil. We ship directly from our factory in China to these people around the world. They could very easily go to China and go to a show and pick up a manufacturer and buy merchandise maybe a little cheaper. But with me, I make their life easier. They have a beautiful catalog that they otherwise couldn’t afford. We send them leads. Every time we do a show and someone comes to us from one of their regions, we send them the lead.

How big is this new international revenue stream?

We’ll probably do about half a million dollars this year from distributor sales, and I think we’ll get that to $5 million in the next five years.

Article source: http://boss.blogs.nytimes.com/2013/05/01/a-wholesaler-decides-to-abandon-his-most-profitable-sales-channel/?partner=rss&emc=rss

Link by Link: Media Critics Turn to Twitter

Much like a friend who can’t let you get to the punch line of a joke without getting there first, the Twitter feed @HuffPoSpoilers takes away the fun of the teasing headlines that The Huffington Post sends out about its articles.

On Thursday, for example, when The Huffington Post posted on Twitter, “City council may consider making rifle ownership mandatory,” the HuffPoSpoilers Twitter feed included that original tease and appended the following: “City = Craig, CO (pop. 9,000).”

Or on April 4, when it posted, “ ‘Mad Men’ star hints at season six surprises,” HuffPoSpoilers wanted it known that the star was not Jon Hamm or Elisabeth Moss but Ben Feldman, who plays the copywriter Mike Ginsberg.

And then there is that deflating feeling produced when a post promising “3 foods that will give you amazingly smooth skin,” is explained simply with “Avocado, honey and sugar.”

Twitter, with its strict 140-character limit, may not be great for capturing the nuances of complicated social changes but it seems ideally suited to a particular form of snarky journalistic criticism that grows brick by brick, post by post. HuffPoSpoilers uses example after example to expose the habit of sending out overpromising headlines.

Similarly, the Twitter feed @NYTOnIt has sent out more than 400 posts, prompted when a trend article from The New York Times seems too obvious or too generic — for example, distilling an article about a study of Internet use among older people as, “GUYS, older folks don’t use the Internet as regularly as younger folks, and The Times is ON IT.” Other targets include articles about the arrival of fall, the use of staplers, and how night stands are becoming more crowded.

(In November, The Times enlisted Twitter to have the account more clearly identified as a parody of The Times, not part of The Times, which led to its briefly being taken down.)

Another style of journalistic criticism is more of a group effort — like the now nearly four-year-old hashtag #slatepitches. This acts as a clearinghouse for over-the-top “story ideas” that would seemingly fit the counterintuitive spin that Slate magazine favors, along the lines of, say, why Kobe Bryant’s injury would be good for the Lakers in the N.B.A. playoffs. (These days, however, Slate and its contributors appear to be using the hashtag to promote themselves, showing that perhaps the worst thing is to be ignored on Twitter.)

A more esoteric example of such Twitter mockery was the flurry of posts with the hashtag #BBCobituaries, which allowed fans of the cult movie “Withnail and I” to object to how one of its stars, Richard Griffiths, was identified by the BBC in an obituary. Mr. Griffiths was identified in the headline only for his work in the Harry Potter movie franchise, rather than for his turn as Uncle Monty in “Withnail.”

On Twitter, this emphasis was compared to writing, say, “Marilyn, ex wife of Arthur Miller, dies,” or, “Bicycle shop owners Orville and Wilbur Wright have passed away.” The message got through to the BBC, and the headline now begins, “Potter and Withnail Actor. … ”

The creator of HuffPoSpoilers, Alex Mizrahi, says his Twitter feed came as a spur-of-the-moment reaction to reading the post “Guess who is the highest-paid celebrity” in August. Rather than guess, Mr. Mizrahi, 30, from Prospect Heights, Brooklyn, looked up the answer — Oprah Winfrey, $165 million in 2011 — and added it to the Huffington Post message. He quickly got 10 followers and remembers being excited.

“It kills me that there is a 40- or 50-character tweet where they could easily put in more information but choose not to, such as the person involved or the country,” he said in a telephone interview on Friday. “I understand they want people to read,” he added, but he said it was hard not to feel toyed with when a headline is sent out like this one on Thursday: “1 dead 20 injured as chef mistakes pesticide for sauce.”

You think, he said, “Oh my God, that might be New York,” when, as HuffPoSpoilers revealed, this happened in the Inner Mongolia Autonomous Region of China.

On Wednesday, for a reason he can’t really explain, the Twitter feed suddenly got enough attention to cascade, with more than 11,000 followers as of Sunday — Mr. Mizrahi says he knew it was a big deal when he stumbled on HuffPoSpoilers in the feeds of people he follows. (He does not identify himself as the creator of the Twitter handle, but it was not hard to discover who it was.)

Mr. Mizrahi works freelance trying to link social media to entertainment — and, in that way, his experience creating an online phenomenon could actually fit on his résumé. But he acts, he says, “out of love,” simply to register his dislike of a practice that is not limited to The Huffington Post.

“The Huffington Post wouldn’t have three million followers if people didn’t like the content and like the articles and like what they are producing,” he said, “but people like me get annoyed by their cryptic tweets that don’t tell you anything, or just obvious click bait.”

Thus far, Huffington Post has not changed its tactics on Twitter, but it did give some publicity to those who would mock it. The very brief article about HuffPoSpoilers on Thursday says, “We don’t know who’s behind this account but it made us laugh, so we’re sharing it with you too.”

Of course, Huffington Post also promoted that article on Twitter: “@HuffPoSpoilers ruins every tease-filled tweet from @HuffingtonPost for you.”

That message left Mr. Mizrahi at a bit of a loss. All he could append was, “can’t ruin this one.”

Article source: http://www.nytimes.com/2013/04/29/business/media/media-critics-turn-to-twitter.html?partner=rss&emc=rss

You’re the Boss Blog: Up for Discussion: Can Employees Be Rehabilitated?

She Owns It

Portraits of women entrepreneurs.

Susan Parker: Any benefits are temporary, at best.Earl Wilson/The New York Times Susan Parker: Any benefits are temporary, at best.

At a recent She Owns It business group meeting, the owners talked about the odds of rehabilitating an employee who isn’t working out. Susan Parker, who owns Bari Jay, started the discussion by explaining why she was focused on becoming better at ensuring she has the best possible employees.

In 2008, she and her sister Erica Rosenberg inherited the business — and its employees — from their father after his death. Under those circumstances, Ms. Parker explained, she did not, at least initially, have control over whether she had the right employees in the right roles.

Some of those employees had been with Bari Jay for 15 to 30 years. “You have loyalty to them,” she said. This loyalty extends even to employees who have been with the company for far shorter periods of time — to those who helped Ms. Parker and her sister during the difficult transition period. For this reason, she said, “Erica and I have really tried hard to rehabilitate people.” Ultimately, however, she said she had come to the realization: “You just can’t.”

Ms. Parker said she came to this realization — and many others — while reading “Who,” a book on hiring that her business coach recommended.

Deirdre Lord, who owns the Megawatt Hour, said she had also conducted lengthy rehabilitations throughout her career — and come to a similar conclusion. While nobody wants to be fired, she said, she has found that the person who is not working out is often relieved. “There is this sense of, ‘Oh, thank God, we can stop this charade,’” she said.

Beth Shaw, who owns YogaFit, asked a question: What do you do with an employee who is really good at the job itself but has a bad attitude? When dealing with someone who fits this description, she said, she gets tired of the defensive stance and pushback that she and other YogaFit employees confront when offering feedback or suggestions.

Ms. Lord pointed out that it sounded as if this employee was not actually good at the job.

“There has to be a cultural fit,” said Jessica Johnson, who owns Johnson Security Bureau.

“Exactly,” Ms. Lord said.

Ms. Johnson said the resistance to feedback was especially jarring given that Ms. Shaw runs a yoga company, and it was critical that yoga instructors gave feedback. “Even if that’s not your role, there’s a disconnect,” she said. “You’re going to be schizophrenic in your job.”

Alexandra Mayzler, who owns Thinking Caps Group, said her biggest struggle was over how detailed to be when describing job requirements to a new hire. For example, is it sufficient to say timeliness is essential? “To me, that means you get there five minutes early and you’re ready and you have a few minutes to prepare yourself,” Ms. Mayzler said. “For some people, it might mean that you run in on the minute, and some people think if you’re five minutes late, you’re actually on time.”

She also said that she did not want to judge employees unfairly if the problem was her own failure to be specific when explaining job requirements. She said she wondered whether rehabilitation sometimes became necessary because the employer was not clear from the start.

“One of the reasons that I rehabilitated in the past was that I thought, ‘This person’s three months into the job, they know something already,’” Ms. Shaw said. She said another reason was that as the owner of a yoga business, she always felt it was important to “try to bring out the best in people and see the good in them.” But, she added, the values of a “spiritual mission” may not be the same ones that work in business.

Ms. Parker said she had found that any benefits from rehabilitations were temporary, at best.

“That’s what most rehabilitations are, even in relationships,” Ms. Shaw said. “They will rehabilitate, and chances are in three months, most people go back to their old behavior.”

“It’s not that they’re rehabilitated, it’s that they’re performing differently,” Ms. Johnson said.

Ms. Mayzler repeated that her biggest struggle was over whether she should expect employees to share her standards, even if she had not specifically defined the ways in which they should perform their duties.

“It’s a big communication issue, and I think it’s balance,” Ms. Johnson said. “For us, timely might be being there 15 minutes before the meeting starts, but you don’t know how somebody else interprets that, and if you don’t have that discussion. …”

“But if you hire the right person, from the beginning, they should know that,” Ms. Parker said.

“Right, that’s the question,” Ms. Mayzler said.

“Yes, they should know,” Ms. Shaw agreed.

“You shouldn’t have to explain to somebody what timeliness means,” Ms. Parker said.

“I’m not just talking about timeliness, but everything,” Ms. Mayzler said.

Ms. Parker said the book “Who” had been an eye-opener for her. She said it made her realize, “If I hired the right person, I wouldn’t have to micromanage, and I wouldn’t have to explain everything.”

This discussion will continue in our next post. In the meantime, what has been your experience with attempts to rehabilitate employees?

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/04/24/up-for-discussion-can-employees-be-rehabilitated/?partner=rss&emc=rss

You’re the Boss Blog: Should a Wholesaler Abandon His Most Profitable Sales Channel?

Gerald Shvartsman has grown his start-up to more than 50 employees and sales of $7 million.John Van Beekum for The New York Times Gerald Shvartsman has grown his start-up to more than 50 employees and sales of $7 million.

Case Study

What would you do with this business?

We just published a case study about a Florida importer and wholesaler of outdoor furniture facing a sales dilemma born of entrepreneurial chutzpah.

Knowing nothing more of the furniture industry than the sticker shock he suffered when shopping for patio furniture for his family’s Miami condo, Gerald Shvartsman started Source Outdoor in Miami in 2008, assuming he could build a successful business on lower prices and good customer service. And he has. Now overseeing 50 employees, Mr. Shvartsman has pushed annual sales to $7 million by selling through multiple sales channels, targeting South Florida furniture stores, Internet retailers, local decorators and designers, and condos for their pools and common areas. But Source Outdoor, though conceived as a wholesaler, did not stop with business-to-business sales.

Roughly every other month Mr. Shvartsman began selling to consumers at big Florida home shows where he enjoyed much higher margins — even on hard-to-move items. He saw none of the retailers he normally sold to at these home shows and for some time, there seemed to be no problem with his operating as both wholesaler and retailer. That is, until one of his biggest retailers objected and accused him of a conflict of interest. “Gerald,” said the Ft. Lauderdale furniture-store owner. “I understand you’re doing home shows. I know that’s important to you, but we’re your customer. It’s not fair to us. You might be taking our sales.”

Is there a conflict of interest, even in the absence of actual side-by-side selling? Should Source Outdoor abandon a market that has grown to 20 percent of its sales?

Below, you will see recommendations provided by two small-business consultants. Please use the comment section to offer your own advice. Next week, we will reveal in a follow-up post what Mr. Shvartsman has decided to do.

Sean Rosser, a partner at Bridge Management Consulting: “Mr. Shvartsman is faced with the classic ‘channel-conflict’ issue. Many companies have faced this issue with regard to Internet sales, and most have found no simple answer. In theory, since none of Mr. Shvartsman’s current customers exhibit at the Home Shows, there is no current channel conflict. However, looking forward, Mr. Shvartsman is wise to address this issue before it hurts his core specialty retail channel.

“My advice would be to create a second corporate entity that specifically targets home shows. This ‘NewCo’ should have a different name and would purchase product from Mr. Shvartsman’s current business on an as-is, no-return basis. Mr. Shvartsman should then take this program to his other retailers, letting them have the opportunity to buy these obsolete products and expend the resources necessary to exhibit at these home shows. He could even give his existing retailer customers a right-of-first refusal on local home shows. If the local retailer was not interested in program, Mr. Shvartsman could exhibit at the home show without creating a conflict for his existing retailers.”

Caroline Hipple, chief executive of HB2 Resources: “Multiple channel management can be a brand-building strength. By having a presence in heavily trafficked home shows, on the Internet, in high profile commercial installations, and in better retail stores, demand for his brand can actually be a marketing asset. This will in turn drive traffic to his retailers. Finding ways to show his retail clients that this presence actually benefits them will be a key to maintaining good will and space on their floor.

“What are some ways to do this? Developing exclusive product by channel is one way. Another is including the local retailer in the sales made at the home shows, providing them with valuable sales leads and names for other product needed. Rewarding them for providing service or further support for an ongoing relationship with customers. Using their sales staff at the home shows and rewarding them. Passing out coupons for discounts on purchases made in partner retail stores, thereby driving traffic. The key is to find ways to benefit his retail customers who help him build his brand by using the non-retail channels to drive future business to their stores. In the end, he wins, they win and the end consumer wins by having access to well designed products at an affordable price, accessible to them by their preferred channel.”

What do you think?

Article source: http://boss.blogs.nytimes.com/2013/04/24/should-a-wholesaler-abandon-his-most-profitable-sales-channel/?partner=rss&emc=rss

Economix Blog: In New York City, Cheaper (and Later) Pedicures

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

I have written a column for The New York Times Magazine about the cost of living in New York, which is actually relatively cheap if you’re wealthy and have standard wealthy-person tastes. It was based largely on research by Jessie Handbury, an economics professor at the Wharton School at the University of Pennsylvania, which looked at the groceries that rich versus poor people buy, and how much those different bundles of groceries cost in rich versus poor cities.

In a high-income city like New York, grocery costs are 20 percent lower for high-income people than they are in a low-income city like New Orleans (whereas costs are about 20 percent higher for low-income people in the rich city than the poor city). That’s because there’s a very high concentration of highly skilled people here, so there are a lot of vendors competing for the business of those high-income people, effectively lowering costs and increasing the variety of products that appeal to this consumer group.

Professor Handbury looked specifically at food, but she said that for most things you buy, there are probably positive externalities that come from living around a lot of people who have tastes similar to yours.

“The results are generalizable to other products that have increasing returns to scale and where we think there’s differentiated demand across income types,” she said. “That pretty much holds up, I think, up to housing. You don’t have increasing returns to scale with housing, because you have such an inelastic supply there.” (“Inelastic supply” means that supply can’t adjust easily in response to changes in price; I’ll have more about New York housing costs in a subsequent blog post.)

I was interested to see whether prices of other, relatively supply-elastic services that cater to high-income people are cheaper here than they are elsewhere. Getting local pricing data along these lines is difficult, though, since the usual cost-of-living measures are based on the basket of goods that the typical consumer purchases, not the high-income consumer.

Fortunately I came across Centzy, a company that is compiling pricing and hours data for local businesses as part of a search engine service.

Centzy’s co-founder and chief executive, Jay Shek, said that the company defined a taxonomy of businesses that they want to cover and the information they want to know about each. Then they purchased phone-book listings (just as companies like Yelp and Google do) for these businesses. At any given time Centzy employs 40 to 100 people, mostly in low-cost places like India and the Philippines, to cold-call companies and ask about pricing and availability for a standard menu of services. The listings data are imperfect; Mr. Shek says about 15 percent of listings the team dials each month are out of date, miscategorized or otherwise unreachable, and that a Centzy representative will generally call up to four times during standard business hours before giving up on a company’s existence. Because of errors in the listings data, it’s hard to know exactly what share of local businesses Centzy has data for. Mr. Shek notes, though, that they use the same methodology for every city, so it seems unlikely that their numbers would show any bias toward any particular city.

Centzy currently has information on the prices and hours at 400,000 local businesses in the top 10 United States metropolitan areas, with better coverage for beauty services and spottier coverage for less-commodifiable services, like yoga classes (whose prices are hard to standardize, because sometimes yoga studios and gyms charge by the class, the monthly membership, or some other package deal). I asked Centzy to compile data for me on the prices and hours for some beauty services that probably disproportionately cater to high-end clients.

Here are the prices for manicures (just standard, regular manicures, not including acrylic or shellac) and pedicures in New York versus other cities:

For these services, at least, the average price was cheaper in New York than in the other cities (although there was of course a range of prices within cities).

Another service I asked Centzy about, massages, showed New York prices to be about in line with those in other cities, and even a few cents more expensive. Based on a thoroughly nonscientific survey of my more spa-going friends, though, I am told that there is probably more heterogeneity in both quality and variety among massages than in manicures and pedicures. So it may be harder to compare the average price for this service across cities if the composition of the massages offered is different (which it probably is, given different tastes and income levels in each place).

One way in which New York definitely seems to offer rich people a better deal on these services, though, is in hourly availability.

You know that whole “city that never sleeps” reputation? Well, it shows up at salons and spas. Here are the total average weekly hours for businesses in each of the top 10 cities that sell these services (and note that there is substantial overlap between businesses selling manicures and those selling pedicures, so the hours are pretty similar):

As you can see, salons and spas have much longer hours here. In New York, about one in 10 (10.5 percent) of salons will sell you a pedicure at 9 p.m., according to Centzy’s data; in the other cities, fewer than one in 100 salons will be open at that time (unweighted average of 0.5 percent).

Greater availability at more hours effectively lowers prices for the people who consume these services. That’s because economists don’t think about prices just as the sticker price of goods or services, but rather how consumers prefer an entire bundle of goods over another, based on what we observe about their purchasing choices. (Economists like to measure the cost of different things people consume in terms of price per util, an economic measure of happiness.)

Restaurants might be a bit more expensive here, but they offer more variety, are open much later, and nearly all of them deliver. And more highly skilled people consume those varied, late-night deliveries, which they could not get at any price in a lower-skill city like Detroit. Similarly, people in New York have the choice to get a pedicure at noon, but often enough they choose the 9 p.m. one — hence we assume they prefer it (maybe because they want to work late, get drinks with friends, or some other reason). Let’s say we moved a customer who usually gets her pedicures at 9 p.m. from New York to Houston, where just 0.2 percent of salons are open at 9 p.m. In her new locale, she wouldn’t be able to get her desired service at the time she wants it, even if she were willing to pay a lot more for it, since there aren’t currently enough customers like her in Houston to support staying open that late.

Those kinds of trade-offs in quality and availability represent costs to consumers that may not be obvious in just the sticker price of a good or service.

Article source: http://economix.blogs.nytimes.com/2013/04/23/in-new-york-city-cheaper-and-later-pedicures/?partner=rss&emc=rss