24 year old Entrepreneurial Superstar
Last week I introduced you to a budding young entrepreneur friend of mine, Colby Brister… Colby was trying to figure out why bedding has such high mark-ups… A little business knowledge here for those of you not hip to the terms: A Mark-up is the amount the price is raised before it reaches the end user.
In other words, a store buys something from a Wholesaler at one Price, then marks it up before they sell it to you… Normally things get marked up about 30-50%… Meaning, the store owners pays 70 cents and sells something for a dollar… But bedding is unique; the mark-ups are huge!!!
In all of retail bedding has one of the highest acceptable mark-ups of all products. Often times it can be as high as 200-300%! Even more! That means when you pay $100 for some sheets, the store owner may have paid less than $20…
Our hero in this story knew the mark-ups were crazy high, and wanted to figure out a way to cut out the middle man.. . But first he needed to figure out why they were so high. A little research explained it all to him, you see, in the business world there is a Measurement Called “PPS”. It stands for Profit Per Square Foot, retail stores use this measurement to determine how much they need to charge for something to make best use of their showroom. You can fit a lot of bats in a pretty small area, so the profit per square foot is pretty good on them, plus sporting goods stores don’t need to be fancy, so the overhead is low.
Now bedding, bedding is a different story altogether. You need big fancy showrooms, comfortable, beautiful, and big, very big. To properly sell comforters you need whole beds set-up… That means, the profit per square foot measurement is horrible unless the retail store does one thing, HUGE MARK-UPS.
A sporting goods store can buy a bat for $8 and sell it for $10… But if you tried to do that with bedding you wouldn’t be able to pay your rent. The retail stores have to pay huge premiums on those big fancy showrooms…
Colby had a vision. He wasn’t going to get one set of those $500 sheets, he was going to get 1,000’s of them… No big fancy showroom, no huge displays… He was going to cut all the non-sense out of buying bedding and in the words of every great entrepreneur “Pass the savings on to the customer.”
Inspiration!!! Cutting Out the Middle Man
“Look, let’s say you want to buy a comforter from Cleo (a famous comforter designer), the retail store and our online store buy the exact same one from the Cleo for the exact same price. But we don’t have that huge showroom, so we’re able to sell for much less. Plus, we can get better discounts because we are selling to a bigger audience… In the end, our customers get the exact same thing, but end up paying about half the price, there’s no way you can do that with baseball bats…”
As I interview him I find myself occasionally being reminded that he’s just 24 years old. He’s so enthusiastic, so excited about his new bedding store. It’s an absolute treat to be around. He tells me, “See, when someone wants a baseball glove they usually want it right away. But good bedding lasts for years and years, so people aren’t in such a big hurry. We ship the same day, so waiting a couple of days to save a bundle is well worth it to people. In sporting goods, the retail stores already sell stuff as cheap as, bedding’s not like that…”
He’s so excited, he’s getting me excited about new sheets. This 24 year old big muscular football player from Georgia is so excited about high end bedding; I decide to let the interview get sidetracked…
This story was supposed to be persistence, diligence, and hardwork. But now I find myself becoming another shopper in Colby’s Luxurious Bedding Store (that’s the name of the store)… I came here looking for and inspirational story, now I’m look for a good deal on a new comforter, maybe some 500 count Egyptian cotton too.. I remember my interviewer training, I’m not going to get sidetracked…
“What sacrifices have you made in this effort?” I ask him..
“Sleep,” he tells me, “The site itself is much bigger and more elegant than the sporting goods one. Setting it all up is taking tons of time and I already have a full time day job. So I end up working really late over and over… I’d say I sacrificed my social life but I really didn’t. My business partner is one of my best friends and we’re really having a lot of fun making this whole thing happen. We work a lot, but it doesn’t really feel like work. Plus all my friends are super excited and supportive. They really want us to succeed, or they really want discounts on bedding, I’m not too sure…”
From your friends here at Monalle, we wish you all the luck in the world on this project!
Thanks Colby, your hard work and persistence is an inspiration to us all!