A similar jolt came over this reporter while absorbing a recent tidbit in Scott
Benfield’s e-newsletter (www.benfieldconsulting.com). Benfield, a well-known distribution consultant, told of performing an
activity costing study finding that most counter sales lose substantial amounts
of money. This is (sorry) counter-intuitive considering that pickups avoid a
lot of sales and shipping overhead and frequently are cash transactions.
Benfield said that even with gross margins upwards of 40%, counter sales
consistently lose money.
“Why? The simple reason is their small transaction size,” he
explained. “A counter sale of $50, at a 40% margin, only leaves $20
for the other processing that goes on inclusive of purchasing, receiving, put
away, storage, picking, invoicing and the counter seller.”