For the last few issues we have explored our
experiences with The RYO Store. As you might remember, this store was
opened as an experiment to give we at the magazine a better idea of all of the
ramifications endured by those who attempt to make a living selling tobacco products in
the traditional brick and mortar retail environment. We learned far more than expected and
as the major part of this issue's editorial, we would like to share those experiences with
you. Whether you are a consumer or a retailer matters not as this information should be
useful to everyone who buys or sells tobacco products. It is important to start by telling
you that we have now closed the store. It took a long time to do this as
we had become a popular fixture in Ashland and part of the delay in this issue's
completion had to do with that bittersweet parting. We had intended to be open for only a
few months but found the adventure so interesting and fiscally satisfying that we extended
our experiment for over a year and a half. In fact, as far as a business venture goes, the
store was quite a success. It not only more than paid for itself but left a reasonable
profit at the end of each month such that there can be no doubt in our own mind, (even
given some of the factors we will discuss in a moment), that even under the most perverse
of circumstances, a store like this, dedicated to the RYO/MYO customer, has proven viable.
Tobacco Outlet Business (the widely read, widely respected trade
magazine) was kind enough to mention us as the first such enterprise in
the US. Though they expressed doubts as to how well a shop with such a specific (and
perhaps limited) marketing strategy might do, we are extremely confident that the
possibilities for success exist without question.
Our Game Plan - The Beginnings
Let us first revisit the principles and strategies we adhered to as well as the physical (geographic location) nature of the environment we sought for this experiment. We did not go into this project in a traditional manner in that we purposely picked a location that had many disadvantages. Our reasoning was, to be quite honest, that if we made as many factors as possible atypical to a normal success-oriented retail enterprise, that we could more easily access the actual draw of the products themselves as well as the draw due to the very uniqueness of the environment.
First lets rehash a little of the geography. The old adage "Location, Location, LOCATION", that is the bylaw of successful retail operation, we violated with intent as severely as possible. We located the store in Ashland, which is a small college town in southern-most Oregon whose biggest claim to fame is its annual Shakespeare Festival. The town generates a pretty large amount of tourist traffic during the spring and summer months of the Festival but we chose a location, while downtown, was as far as possible off the beaten path, too far for easy access by visitors of these events. Now we are not masochistic by nature but we wanted to see what kind of local, loyal, regular customer base we could assimilate and we found the prices of store space very low compared to a more well traveled location. We were looking for believers (potential) in the RYO/MYO experience and knew we would, for the most part, have to create a customer base from scratch. We located the shop in the basement of a building at the far end of downtown that had been trying to put something together for a number of years (the idea by the landlord was a small, intimate, and unusual underground mall of sorts. The unusual part was an understatement. There is almost no parking in the area that is reliably available (much of Ashland suffers from this malady) and we were too far from the very popular and beautiful Lithia Park and Festival areas to get much in the way of foot traffic. In other words our customers, if we were to have any at all, would have to put considerable effort into first finding and then getting to us. To make things even more of a challenge, we spent only a grand total of $100 during the entire year and a half for advertising. We put our name (and phone number of course) in the phone book, but no display ad. Consequently we relied solely on word of mouth, which is what we wanted in order to attract the kinds of clientele that we would more likely be able to spend the necessary time with to show them in detail the advantages of creating one's own smokes (and what a tobacco shop, in our opinion, should and used to be).
Now with all that we started with as disadvantages, it IS important to note that the Pacific Northwest is a large RYO (roll your own - not make your own) market and given this existing market, we did have a pretty easy time developing a customer base of those who were already familiar with pretty good tobaccos, who had been hand rolling such products for some time, AND that lived close enough to downtown to walk to the store. We offered very competitive prices and purchased everything we sold in the store from licensed distributors (which means we received everything from the distributor with the state tobacco tax prepaid). Hence our profit margin on tobacco products that are all taxed at the rate of 65% by the state of Oregon, was around 30%. In most cases that made our products the best deal in town. Our non-tobacco accessories (rollers, papers, injectors, tubes, pipes, lighters, cases, and the like), allowed us a much higher profit margin usually approaching the magic "keystone" - or 100% profit. Even with that, our prices remained very competitive as many shops (and not just those in our vicinity) find it hard to resist the temptation to get a little greedy on certain items, especially those the customer may not be familiar with but may be interested in nonetheless. We avoided overcharging on all items to a fault and carried a relatively small stock at any given time. We never ran out of the items that sold well but our orders were of such small size that, at times, I am sure we were a source of frustration to certain distributors, although in all fairness, we did clue them in from the beginning what we were up to and they were familiar with this magazine, which did help.
So here we were, off the beaten path with no advertising, in a underground space that nearly no one knew existed, selling a product that few were familiar with (again MYO not RYO). In fact many eyebrows were raised when we would begin discoursing on the advantages of the tobacco injection process (I honestly think some were actually expecting that hypodermics of some nature or another would emerge). The RYO crowd loved us from the start but the potential Make Your Own customer base (using tubes and injectors) took a little time (weeks) to develop. Most of this group came from the packaged cigarette demographic but a surprising number of hand-rollers, many of whom buy packaged cigarettes occasionally when handrolling is not convenient or when they run out of their favorite rolling tobacco (obviously, it is much easier to find packaged smokes anywhere in the country than good rolling tobacco), found the MYO process fascinating. They recognized that MYO when comprehensively examined, to be a better, less expensive alternative to even handrolling and certainly more satisfying and less expensive than buying packs. Which bring up the other part of our customer demographic that placed the store in a rather unique situation, one that may not apply to all areas these kinds of stores may/should inhabit.
Being a college town and with a distinct artsy-craftsy image, Ashland's downtown was a hangout for many younger folks traveling the coast and many college students and other young people who were often fiscally challenged. These were intelligent (for the most part) folks who simply had little disposable income. The store, because of its friendly, homey nature attracted many in this situation and we provided in-depth service, unusual to say the least, to all, even for those with only a buck or two to spend. These types of customers, even if available in great numbers (and a very nice group of people they were) are not a demographic one should rely on to make a living and we found this group to be yet another disadvantage of our location, one that would have been more easily avoided had we located somewhere where parking enabled those who could afford cars to find a place to park and thus shop. Therefore, geographically speaking, our take on "Location, Location . . " mentioned above would morph to "Parking, Parking, PARKING." And as a added note to this section, it is important to note that we avoided ANY chance that we could be considered a "Head Shop." We were a TOBACCO SHOP and sent large numbers of customers elsewhere for glass pipes, screens, and other items interesting to the counter-culture population a town like ours attracts. This cost us much in the way of enhanced profits but simply compromise in this area would have tainted the experiment this store was engaged in.
Another issue that was arguably counter to fiscal success is that I ran the store myself with no help. I put an office in the back so I could write this publication (which is why it has been tardy for the last year or so) and continue to conduct my share of the work load in the operation of the other businesses I am a partner in. Consequently we were often open only 3 days a week for 6 hours a day. We went to a five-day-a-week schedules on occasions but were never open longer than the 6 hours stated on any given day. Even with all of the disadvantages outlined above we profited nicely and learned a tremendous amount on how one could easily improve significantly both the top and bottom line of an operation like the RYO Store. This we will discuss in the following section.
What We Learned
First off lets outline what we would do different if we opened the RYO Store today AND did so to make a significant amount of money. As it stood, even with all of the disadvantages above mentioned, including being open less than 20 hours a week on average (and unreliably so at that), rotten location, no parking, no advertising, limited inventory (no packaged cigarettes, smokeless tobacco, glass pipes, etc.) and a very small population base who could get to the store or were willing to put up with circling the block several times in hopes of finding parking - even with all of the above we extrapolate that if hours were reliably extended to the normal 6 days a week, 8 hours a day, and a small but steady advertising budget was incorporated, a single proprietor who (and this is the key we will discuss next) really knows this product line and is affable and interested in sharing knowledge with his customers, could have easily pulled out between $60-100,000 profit for the 18 months the store existed. Now while that may not be a lot of money to some, many folks would be happy to own their own business and put $40-60K in their pocket per year while being their own boss, especially if they were truly interested in the product they spent long hours providing to a customer base they enjoyed dealing with. As mentioned above the key ingredient that made our store as successful as it was - was I was their at least during the limited hours we were open. I talked with every customer, most times at length, about the various choices available to them, about the MYO experience specifically, and the issues of tobacco , smoking, health, and taxation in general. And I listened to their opinions and learned a great deal from them. They appreciated the symbiotic relationship that developed and became the MOST loyal of customers. They were constantly upset that we were open so infrequently and unreliably and still they came back, sometimes for product, sometimes for just conversation. Not a single instance of impatience or anger was experienced during the entire run of the store. It was reminiscent of the old barber shops I frequented as a kid or the bars later on where you always had a favorite bartender you could commiserate with. If I had not had so many other things I was supposed to be doing that generate far more capital, including this magazine, I would have really enjoyed the business. In fact, if I ever have a need for extra things to do, (I should live so long), I am confident that I personally could open up an RYO Store (by the way, we applied for the trademark and already own the domain names, ryostore.com & theryostore.com - more on that later), in a reasonably good (as defined above) location, with a sufficient population base and make a couple of hundred grand a year talking about tobacco, a topic that I enjoy immensely. The hardest part would be the hours of reliable commitment necessary.
Now, no doubt, part of the success of the store had to do with my attitude about smoking and moderation. Partly it was due to the fact that I never tried to sell anybody anything, or encouraged my customers to smoke, much like I never approach companies to advertise in this magazine. They find me or I call to talk to them about their products. It is up to them to ask about ads just like it was up to my customers at the store to decide if they wanted to buy something. I only provide information here and initially information at the store, leaving the recipient of the data in full control of every aspect of the decision making process. This tactical approach is, I think, absolutely necessary to growing a loyal customer base, especially with this particular product line. Drench your customers with accurate information, as well as your informed personal views, while listening attentively to theirs. Spend time with everyone who walks in the door (at least those interested enough to hang around) and most importantly show them several alternatives to their choices and the correlating advantages, every time you see them. Taking the time to communicate is becoming a lost art in retail, with counters too often manned by minimum wage workers who could give a #?@% about the products they ring up. A tobacco store, to do really well, simply cannot afford disinterested employees. It is a SERVICE oriented business not a product one. If you have an employee(s), pay them well and comprehensively teach them about your products. It is always a help when hiring to choose from those who have already expressed an interest and knowledge regarding tobacco products and you will be surprised at the number of potential candidates who you will meet first as customers. Just as a good dentist or doctor has assistants in the office who are well trained in medical practices, your potential employee should feel they are entering the tobacco business as a profession and not simply becoming a register jockey.
Our Must-Have Products
While each location and population base is going to vary to some degree, the following is a list of items, some brand specific where warranted, that we found necessary to create our image as a first rate tobacco shop. I will list them quickly here as reviews on all of these products can be found in the various issues of this magazine. (See the Archives page for more guidance). They are as follows:
During the life of the RYO Store and as a consequence of our sharing the experience with our readers, we have had numerous formal inquiries from entities who wish to open their own RYO Store. In other words they expressed a desire to become part of a franchised operation using the name and the game plan. These have come from 24 states and have totaled to date nearly a hundred interested parties. We have long considered the viability of such a chain, partly due to the buying power it would provide the whole and partly because such an operation would allow for those, interested in opening such a store, a source for the finest tobacco products from a centralized distribution channel who is licensed in all 50 states. This means that the prospective store owner would be able to obtain all of the products we have covered here tax pre-paid by the distributor so that the new owner need not jump through all of the hoops that are required to become a distributor themselves and face the unenviable task of finding product sources themselves. Remember in all states to get products containing tobacco into your shop you must either buy from a licensed distributor or become one yourself to ensure the state gets its pound of flesh (state tobacco tax revenue in plain English). While it is not to particularly difficult to get such a license in most states, so that one could import tobacco from any source outside the residing state, the wait can be long and the monthly or quarterly paperwork and subsequent tax payments are a real pain in the butt and can have severe legal consequences if you are late or screw up. It is much simpler to know up front exactly what you are going to pay for your products and adjust your prices accordingly. You have to pay the tax either way and there are fiscal advantages of letting the distributor pay the tax based on THEIR wholesale cost rather than you paying it on yours.
Now if we decide to franchise the concept of the RYO Store (and we are leaning at this time in that direction), we will, in addition to licensed distribution alternatives, also provide training and support as well as sources for all of the enticing and fast selling accessories that are not subject to tax but can be a challenge to find. We are still kicking the idea around but one thing is certain, MYO is NOT being represented as completely as it should be and for this market to grow to its potential, a lot more retail outlets that really emphasize MYO/RYO need to be created by some one. At this time most shops that have these products are either traditional tobacco shops, which are far and few between and who specialize in cigars and pipes and have some knowledge of MYO - OR - discount cigarette outlets who have an MYO section but are often staffed by folks who have little interest in - or knowledge of - these products.
We would not allow the RYO Store name to be used for Internet Sales as we believe that the future growth of this industry still depends on the success of mom and pop style, brick and mortar enterprises and that it is vital that more begin popping up everywhere there is a customer base. These potential customers need direct, hands-on exposure to these products and methodologies and though the online tobacco sales industry does and will continue to provide great advantages to those who already know what they like, it is difficult for them to match the personal touch necessary to inform and thus sway a packaged smoker to the MYO method. We feel there is room for both strategies and would not allow our franchisees to compete with any online retailer or even the well run existing physical shops that contribute immensely to the MYO/RYO market. Analysis of each location would be necessary to see what the MYO/RYO consumer has already available to them in any area under consideration. A website using the domains we own that we referred to earlier (either theryostore.com or simply ryostore.com) would serve only the function of listing locations and of providing real time support for member operations. It seems a sensible plan and we will update more after the upcoming RTDA (Retail Tobacco Dealers Association) Convention in Vegas at the end of July. However, there is an obvious and potentially serious downside to this plan - that our direct participation in such a venture might taint the credibility of this magazine, and that must be avoided at all cost. We fully intend to take this publication to print and push as hard a we know how to get it into the mainstream, not just the tobacco shop. Therefore all factors that could even insinuate a conflict of interest must be addressed very carefully and with the full participatory input of the industry as a whole. That we will address in Vegas to whatever degree possible. We will, of course, keep you updated.
As a closing definitive, we show below, the statement that we posted conspicuously on the walls and door of the RYO Store. It was created to bridge the gap between the rabid smoker who blows smoke in the face of all who are near, the anti-smoking zealots who have sold their souls to the demons of greed and just plain bad science, and the more sensible, vast majority of smokers and non-smokers alike, who respect each others right to exist and who recognize the absolute right to enjoy personal experiences which neither harm, or suffer the intrusion of, others.
. It also embodies our philosophy at the magazine as it relates to our conception of how tobacco as a retail product can once again gain the respectability it enjoyed for so many years. If you are interested in commenting on the RYO Store concept or wish to get more info on our franchise plans, email us at the link below. We will be glad to address all inquiries as well as update our plans for those who have already inquired as soon as we return from the RTDA at the end of July.
Until next time, enjoy - life is tenuous and should be enjoyed aggressively without regret - without fear - be just selfish enough to do simply that. - the ed.
Next time we will feature a fascinating piece regarding the evolving rules, tax changes, and who is likely to be in control of many aspects of your freedom to enjoy tobacco. We have been working on gathering, simplifying, and verifying the specifics of what has turned out to be a vast amount of new information. For instance, we will examine the role of the BATF (Bureau of Alcohol, Tobacco, and Firearms) in determining federal tobacco issues and reporting requirements, local and state government attempts to increase tobacco taxation levels, insurance companies, employers, and landlords practicing "life-style" discrimination, and most importantly, the non-profit organizations who are behind many of the proposed and current legislative changes and litigations we have seen and will see more of in the future. These 501c(3) organizations seem to be immune to regulation as it applies to their adherence to the rules that non-profits are by law required to observe. So far at least! Things just may begin to take unsuspected and positive turns in favor of tobacco enthusiasts as well as all seekers of freedom, truth, and parity. As usual, repeated below are some interesting links so that you can keep abreast of vital issues that affect 50 million voting age citizens in the US.
- The National Smokers Alliance
Email us with any comments on this and/or any other issues that relate to your free choice.
|EDITOR'S NOTE: These reviews are solely for the convenience of people of legal age who already smoke, are trying to cut down on smoking, wish to spend less money on their smoking, want to roll their own cigarettes from high quality tobacco, and, in general, wish to have a far more satisfying, and economical smoking experience when compared with smoking pre-manufactured cigarettes. We, in no way, encourage people to smoke. Further, we prescribe to a sane, more logical approach to smoking that involves common sense as to quantity coupled with a strong desire to manage the habit until it becomes an occasional, freely chosen, diversion, that can be fully enjoyed with minimal health risks. Finally, we strongly encourage those who do smoke to take it outdoors, or to appropriate environments where tobacco can be enjoyed away from those who do not smoke, most especially children. We do not sell tobacco or related products from this site; We distribute information about our perceptions of the quality of what is available and where it can be obtained. If you are under 18, it is illegal to buy tobacco and you should immediately exit this site. If you do not smoke, it would seem illogical to start.|
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