Destination or Pass-by Business...By Ed Welch...
Destination or Pass-by Business
All selling locations such as shows, group shops, auctions, flea markets, and individually owned shops fall into one of just two categories. A selling location can be either a destination site or a pass-by site. A destination site is any selling site that the buyer travels purposely to visit. By contrast, a pass-by selling site is a selling site that happens to be on the buyer’s route of travel.
One of the most important decisions that a new antique dealer must make is whether to run a destination business or a pass-by business. There are, of course, advantages and disadvantages when choosing either option.
Destination businesses tend to receive more money on each item sold. This type of business attracts a knowledgeable clientele with more available money to purchase the things they collect. Destination businesses tend to specialize in one, or a few types, of antiques.
The major disadvantage of running a destination business is expense. Destination businesses require much advertising in order to become established. Dealers who run destination businesses must spend time and money servicing their clientele. Buyers who frequent destination businesses tend to demand attention.
The advantage of running a pass-by business is that such businesses are cheap to establish and cheap to maintain. The major disadvantage of running a pass-by business is that most all the browsers are casual buyers, who buy on impulse.
A different set of rules govern a pass-by business, compared to the rules that govern a destination business. It is possible to have a profitable money making business using either method. However, success belongs to those dealers who know, and follow the rules that govern the method they choose.
Auctions, buy their nature, are destination-selling events. Antique shows, at first glance, seem to fall into the destination category. Brimfield, for example, is a destination event. However, the majority of displaying dealers at Brimfield operate pass-by businesses. The pass-by dealer simply rents space from one or more Brimfield promoters and hopes that the right buyer will pass by his or her booth.
A few dealers who display at Brimfield run destination businesses. They do not leave the possible selling of their merchandise to chance. They send postcards or letters to established customers detailing the merchandise they will bring to the show. They buy ads in trade publications. They send e-mails and make phone calls. Destination selling booths are easy to spot. As soon as the show opens, such booths are surrounded by buyers trying to get a look at the items offered for sale.
Group shops are a bit more complicated. A few group shops are destination-selling sites. The dealers displaying in such a group shop can be either a destination or pass-by dealer. However, most group shops tend to be pass-by businesses and the displaying dealers tend to be pass-by dealers.
In 1982, I was a displaying dealer at a destination group shop in southern Maine. My advertising budget to attract buyers to my booth at this shop, was greater than the advertising budget of the group shop. On a bad month, my sales were $3,000 to $5,000. Monthly sales off between $6 and $8 thousand were common. My best month ever resulted in sales just under $15,000.
My advertising budget for this shop was $350 per month. The group shop spent $225 per month. The owners tried without successes to convince other dealers to chip into an advertising pool. This shop specialized in original paint country furniture. I quit displaying at this shop in 1989, when I decided that the easy money in painted country furniture was no longer available. I refocused my attention to Modern and Art Deco furniture.
My new line required a different type of destination selling site. I have since abandoned Modern and Art Deco in favor of yet another specialty. Although the type of merchandise that I sell has changed many times in my career, my selling method has always been the same. I prefer to operate a destination business, and I am willing to pay the added cost of operating such a business. I have proven to myself many times that I make much more money operating a destination business despite the added expense.
I now sell just two weeks a year, the first week in April, and the first week in November. If you want to buy from me, you must visit my selling location at that time. I tend to sell 90 percent of the merchandise that I bring to a selling event. The remaining 10 percent is dumped at local auctions. My business strategy calls for all new merchandise at each selling event.
I do business with a dealer in Skowhegan, ME, who is open just two hours one day each week, Fridays at 7 to 9 a.m. If you want to buy from this dealer, you must be at his place of business when he is open.
I do business with a dealer in Lewiston, ME who is open from 10 a.m. to 2 p.m. every Monday. I do business with a dealer in Swansea, NH, who calls when he has something that I may want to buy. I do business with a dealer in Dorsett, England. If he were to call this evening, I would be on a flight to London within hours. By tomorrow afternoon, I would be at his home.
This dealer buys complete estates. My records indicate that my cash-flow ratio on purchases is 6 to 1. Shipping, travel expenses, and custom fees reduce my profit to 4 to 1. Still, anytime I can make $4 for every dollar I spend, I am very inclined to do so. All of these dealers run destination businesses.
Cheap air fairs have reduced the cost of shopping in Europe. I can spend a week in London, for the same money it costs to spend a week in Brimfield. The cost of the merchandise I buy is much less in Europe, and the availability is greater, resulting in larger profits.
I have a good friend who is a pass-by dealer. He thinks it is stupid to pay money advertising an antiques business. He does not hesitate to tell me this every time we have a discussion on antique selling methods. He does Brimfield, and all the other major antique shows from New England to Florida. He buys the cheapest booth and does not spend one cent advertising. He is my age, 63, and still sleeps in the back of his truck while doing shows. This person is wealthy. He has made a small fortune operating a pass-by antique business. He can afford the cost of a hotel room. But, his business plan calls for the least possible expense.
Generally, items best sold in pass-by businesses include mass-produced collectibles, small decorative items, small size antiques, and items that cost less than $500. Items best sold in destination businesses, include expensive antiques, fine furniture, high-end collectibles, and items that cost more then $1,000.
Dealers in the trade for social contact, as a hobby, or to build a collection tend to operate pass-by businesses, although, some collector/dealers run destination businesses. Dealers in the trade to make money, tend to run destination businesses.
Group shops in areas frequented by tourist tend to be pass-by businesses. This is because the majority of browsers to the shop are on vacation. People on vacation tend to buy small inexpensive collectibles. The family car, loaded with vacation necessities has no room for large items. A dealer selling large pieces of furniture would probably not do well in such a shop. On the other hand, a dealer selling collectible cups and saucers could sell well in such a shop.
The cheapest method of building a destination business is with thank you cards and invitations. If you sell at shows, make out a full receipt for each sale, including the customer’s name and address. If you sell at a group shop, have the sales clerks record this information on each sales slip. Send a thank you card to everyone who buys from you. Keep a customer list that can be sorted by date of sale, item purchased, and state.
If you do shows, as well as sell in a group shop, send invitations to all of your customers within easy driving distance to each show. One of my best customers made his first purchase from me at a group shop in Northwood, NH. This person lives in Georgia. I sent a thank you card and a few months later an invitation to visit my booth at a show in North Carolina. I have done business with this collector for nearly 20 years.
Setting up a pass-by business is less expensive than starting a destination business. However, careful consideration must be given to the types of antiques and collectibles offered for sale. The majority of sales in a pass-by shop are impulse sales. Display and price will greatly affect sales. Item size will affect sales. Season and upcoming holidays will affect sales. When a buyer stops at a pass-by shop, he or she has a different mindset especially with regard to price. Items that are cheap, or seem to be a bargain, will sell more quickly than items that are, or seem to be overpriced.
When a buyer travels many miles to visit a destination shop, he or she knows exactly what to expect from the visit. The buyer has a mindset regarding the merchandise that will be viewed, and the cost. A buyer who has invested hours of time and miles of travel to visit a particular selling site is preprogrammed to buy.
As a professional dealer, I buy every day that I am on the road. I must constantly remind myself to look at price and possible profit, whether I am at a pass-by shop, or at a destination site. I must not pass up items at a flea market, simply because they are priced higher than I think they should be priced for a flea market. I must not pay too much for an item simply because I spent hours, or a day, traveling to a destination shop.
The most common mistake made by new dealers is the failure to analyze selling sites and selling methods. At first glance, the antique trade appears to be simple. Go to an auction, a group shop, or show and buy something that you can sell for more money.
In reality, the antique trade is complex and competitive. Most items available to most dealers have passed through several sets of hands. If just one set of hands belonged to a professional dealer, that item is already priced at the highest price it will bring under most circumstances.
To milk that item for a little more profit requires knowledge, marketing skills, and selling experience gained only through years of market research.
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