Why is it that the unassuming hardware shop down the street hardly does any business, yet it never closes down?

Many unassuming hardware shops on the street look like they are deserted and have little business, yet they have been open for more than ten years and are still standing. The owner will not do a loss-making business. Hardware and building materials are a low-input, high-return profitable industry, a year to earn 300,000-400,000 are conservative estimates. The money-making doorway behind a hardware shop is something that the majority of people don't even think about.

My cousin's uncle has been a foreman in a decoration company for more than ten years. Later, when he got older, he couldn't afford to do the renovation, so he thought about doing something else. He took a storefront outside the community, opened a hardware shop, and cousin and aunt together with the business. He thought he would just earn a little money to feed himself. He didn't expect to make more money than he did as a foreman! After a few years, he was able to buy his cousin a house for his wedding!

The hardware shop run by my cousin was only about 20 square meters, and because it sold hardware, it did not need special decoration. It was a bit dimly lit when you went inside and the lights had to be on during the day. There is a wide range of hardware, plastic products, and electronic tools. Usually, the shop is just a cousin and aunt, not even a shop assistant is employed and only a handful of people come to the shop every day to buy things. How did they manage to do this?

A. Few customers, but a clear purpose for buying

Traditionally, people take the level of customer traffic as an important criterion for judging the business of a shop. If the shop is full of people, people coming and going, business is booming; if the shop is empty, cold, and clear, the income must be dismal. This is true for most shops, where business is good if there are many customers, such as convenience stores, kiosks, fruit and vegetable shops, and so on. However, hardware shops are a special case. Just because the traffic is low does not mean that there is no business.

Hardware shops are full of metal, plastic, or electrical household building materials and tools that are durable and rarely break down after being installed, so you can buy them and use them for years. Therefore, the frequency of replacement is low and the number of purchases is naturally low. Supermarkets and convenience stores, for example, deal with food and goods for everyday use, so people naturally visit them every day. Think about you sometimes have nothing to do, will casually stroll supermarkets, and fruit shops, but will not necessarily buy, sometimes just to pass the time.

However, every customer who goes to a hardware shop is aiming for what they want. Generally, once they enter the shop, they directly talk to the owner about their buying needs, and the customers don't look small but hardly come out empty-handed, with a high turnover rate.

The profit margin of retail products in hardware shops is incredibly high. An inconspicuous expansion screw, in the wholesale, weighed by the pound, the average a few cents less than. However, when sold to customers are sold by individuals, the larger to two or three dollars a piece, and a sale is five or six or more, profit margins can reach 100% or even higher. For larger tools, such as commonly used P V pipes, floor drains, and faucets, the purchase price is only a few dollars, but the retail price is in the tens or dozens of yuan, and the profit margin of the product can ensure that more than 40%.

Second, to provide value-added services for the surrounding community residents

In the fiercely competitive market environment, for hardware shops, sitting and waiting for customers to come to the door is far from enough to maintain shop survival, multi-channel sales, and multi-content services, have become the key to operating down.

We ordinary people usually live have encountered this kind of situation, the faucet at home is broken or valve failure, from the hardware shop to buy new goods is easy, but want to install it is very difficult, especially if only the elderly and children at home, it is more trouble. You call to find a special maintenance master to install, the door fee will be 100 yuan, but also can not come immediately, you have to wait for the arrangement to your home can.

My cousin's uncle and aunt saw the opportunity to provide value-added services. They offer delivery and installation services whenever customers need them. There is no charge for home delivery; if you want to install it, you will only be charged RMB 10-30 for the home service. They will arrive in ten minutes under normal circumstances and are responsible for future maintenance services after installation. The cousin of the cousin is the origin of the renovation, the repair and installation of small work is simply not a problem, whether it is kitchen and bathroom drilling holes, installation of electrical hooks or water circuit repair and renovation are not a problem, to deal with it with ease. In other words, if you buy something from them, you don't have to pick it up yourself, they are responsible for delivery, if you don't know how to install it, they provide installation services, and if something goes wrong at the back, they are ready to come to your home for maintenance. The key is that the price is reasonable and the service is considerate. The cousin's uncle's hardware shop is located in the front room outside the district where he lives, and the services are all for the residents of this district and the surrounding districts. Uncle Cousin and Aunt Cousin pay special attention to customer service, they know that the residents of the community are an important source of customers. They do not care what the customer buys, even if it is just a screw, they will provide the right service, which is very popular among the residents of the neighborhood.

Uncle Cousin provides home delivery and installation and later maintenance services, so he needs to get in touch with the owners, so it is only natural for him to add them to We Chat. The owners are also very willing to add Uncle Cousin's We Chat for easy contact. The owners do not feel uncomfortable being the kind of salesman who forces you to add WeChat and buy by force. With more and more customers coming to the door, Auntie Cousin has purposely set up a hardware customer service group, which is full of customers that Auntie Cousin has served. These served customers also often pull their neighbors' We Chat into the group, or let their neighbors add Uncle Cousin's We Chat directly to tell their buying needs, which has increased a lot of business for the shop.

Often, some customers @ Uncle Cousin in the group say their purchase needs. Homeowners just need to ask, from a small screw to a beauty mirror or a flush toilet that costs several hundred dollars. Whether there is stock or not, Auntie Cousin will be the first to tell the owner that there is stock, or transfer the goods or go to the wholesale market to buy them, in short, she will do everything to satisfy the owner. In the long run, the community residents all think that cousin uncle cousin aunt is reliable and honest, subconsciously will also think that cousin uncle hardware shop things are very complete, as long as want to buy hardware, will take the initiative to find them. As time goes by, Uncle Cousin knows which things are needed by everyone, and with the data to back him up, he will stock up in a targeted manner and buy less of what is normally used.

This one-stop human service is very popular, and Uncle Cousin runs seven or eight districts a day, with five or six orders a day in each district. Look at the charges are not high, but for ordinary delivery plus installation, the average single is more than 100 yuan, and a month to receive 50 to 60 single is 5000 yuan, than in the shop to guard the customer door to door to earn a lot more.

Third, the use of human resources, maintaining large customers

If the home delivery and installation service is not a fixed source of customers to develop into potential consumption objects, then the cousin's uncle with many years in the decoration industry and customer resources is the most stable sales channel for hardware shops.

Cousin has been a foreman for more than ten years and has been working for so many years, he knows many decoration companies and decoration masters and has a good relationship with them. These decoration masters will have work all year round and as long as they have work, they will come to the shop to buy light bulbs, plugs, safety switches as well as glass glue, foam glue, seam sealant, etc. Some decorators can take on dozens of decorating cases a year when business is good, which is no small amount if they all take their goods from the shop. Some decorators take on casual work, but the amount of Styrofoam, glass glue, and seam sealant used are not small. For a typical renovation, more than 10 tubes of seam sealer are used for the kitchen, bathroom, and balcony, and even more if the whole house is tiled. The people from the renovation company do not go to the hardware shop to buy the goods themselves. They usually send a list of goods directly to the cousin, prepare the goods and deliver them directly to the decoration site, and then pay after the goods are counted.

It was often early in the morning when it was still dawn, and my cousin started to work, sorting out all kinds of hardware and equipment according to the list of needs of the renovation team. The number of decoration orders is large and varied, and a decoration order is at least several thousand dollars of purchases if it is all-inclusive, including wires, wire pipes, steel nails, pliers, cement, putty powder, glue, cables, PVC pipes, and so on. After finishing, the cousin's wife drove her van to deliver the goods, trying to get the goods delivered before the hardware shop opened its doors. With just this flow of water, the cousin's wife estimates that she earns 60,000-80,000 yuan each month. Of course, because of the long-term cooperation, the price will not be too high, and the profit is only about 30%, but the monthly income brought in is more than 20,000 yuan.

Uncle Cousin has calculated that a decoration company can receive about 50 decoration orders a year, the basic cost of decoration is about 50,000 yuan, and then the auxiliary materials that need to be used can reach almost half, plus 30% of the profit from the hardware shop. So how much profit can Uncle Cousin get from a decoration company? 50,000 * 50 orders * 50% * 30* = 375,000. Isn't that a very substantial income?

In addition, Uncle Cousin's hardware shop is surrounded by old neighborhoods, where old house renovations are all too common. Sometimes there is a temporary shortage of decoration materials, the owner or the foreman will come to Uncle Cousin's hardware shop to buy directly, convenient and time-saving.

In the end

The reason why an ordinary hardware shop can operate for a long time is that, in addition to stable sales, the operating costs are extremely low. The profit of a hardware shop is the operating income minus the operating costs. Most hardware shops are husband-and-wife shops, so there is no need to hire staff and no labor costs. The location is not a busy commercial area, generally open on some street corners or next to the community, shop area is not large, so the rent is only three to five thousand a month. In addition, unlike restaurants and supermarkets that must be decorated to operate, hardware shops do not need to decorate their shops. Hardware shops do not need to have high franchise fees like some fast food shops and milk tea shops.

The low operating cost of the shop is not only reflected in the initial investment, but also the daily management and stocking of goods. Whether it is hardware or plastic, their shelf life is as little as three to five years and as long as decades. You can boldly make bulk purchases of best-selling products and stock up for several years without any problem. Especially if the price fluctuation is obvious, you can hoard some when the price is low. When the wholesale volume goes up, the price can be lowered, which leaves a higher profit margin for yourself.

Hardware building materials is an industry without a ceiling, there are visionary hardware shop owners, even in a variety of channels to pay attention to business opportunities, to see if there are no new business growth points that appear. Hardware shops in the end make money, it depends on how the boss business. You see no one buying anything, but the boss's pockets are full of money, and after a few years of work, he has bought a house and a car. He is much better than us workers.