Monday September 28, 2009 | 10 comments
Consumer spending is down, millions are out of work, and businesses around the country are struggling to survive. I can predict with confidence that – absent a surprisingly strong holiday buying season – hundreds of physical and online tea retailers across the U.S. will close their doors early next year. There has never been a better time to buy the very best teas!
Before you accuse me of being a cold Capitalist seeking to take advantage of the independent tea retailer, let me clarify my position. The next few months present both tea consumers AND tea retailers with an incredible opportunity to break free from the classical (boring) mold and truly inspire the palate.
Tip #1: Resist the urge to conserve
Retailers: If you’re buying teas wholesale, you may be tempted to go down-market to save money and appeal to the frugal customer. DON’T DO IT. If a customer’s primary concern is saving money, they can stop drinking tea altogether or switch to less expensive mass-market options. The overly frugal customer should never be the target of a specialty retailer. Remember, 90% of Americans are STILL employed.
Consumers: Instead of responding to the current economy by switching to low-grade mass-market teas from the grocery store, use the same dollars you spend today to buy BETTER teas from independent 
retailers. Whereas the prices charged by grocers have remained steady (and you’ll still usually be getting bad tea in fancy packaging), many independent retailers have the incentive AND ability to be flexible in their pricing. Assuming you know of a local (or online) tea merchant you can trust, you may never get a better chance to buy extremely high-quality, rare teas at deeply discounted prices.
Tip #2: Ask for bargains on quality teas
Retailers: Many retailers are making mistake #1 and going down-market. As a result, many wholesalers are overstocked on high-quality teas. Now is the time to get the best teas at deeply discounted prices on the wholesale market. Call your supplier and ask: “What are the best teas you have that no one is buying and what kind of deal can you give me?” Without giving away any industry secrets, I’ll just say that an efficient tea importer has much higher margins than you probably think. More importantly, tea is perishable and they would rather get something for their best teas than have them go stale. Instead of spending less, focus on getting more and you’ll most likely find your wholesaler more than happy to help.
Consumers: ASK for bargains and seek out rare finds. Here’s a perfect question: “What is your best tea that no one is buying?” Every creative tea retailer will take a chance from time to time on a rare or unusual tea. Most retailers have a few pet projects on their shelves that just didn’t sell as well as expected because of a lack of customer familiarity, poor marketing, or inappropriate pricing. Instead of asking for a discount on the shop’s best-selling teas, ask first what their best teas are that are NOT selling, and THEN ask for a deep discount. Once you’re equipped with the answer to the first question, you’re in the driver’s seat. If you buy an overstocked, rare tea at a deep discount, both you and the retailer win. If your retailer has a remotely efficient supply chain, they can definitely afford a healthy discount – especially on a tea that they fear they will be unable to move.
Tip #3: Give the gift of tea
Retailers and Consumers: Use the opportunity to BUY great tea to GIVE great tea. I’ve never met anyone who doesn’t like tea – just a lot of people who have never had GOOD tea. Keep the industry we love (and your local retailer) alive by introducing your friends and family to the wonders of good tea. It takes a pretty expensive bag of loose tea to deliver a higher price per cup than a cheap, mass-market tea bag. Celestial Seasonings’ basic green tea at $2.99 per box of 20 tea bags is the same price per cup as a 4-oz bag of loose tea at your local tea retailer that sells for $17. Give the gift of good tea this year and do everyone a favor!
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Well…we have never given out coupons, never 2 for 1′s, had ‘close out sales’ on teas, etc. Nor have I asked wholesalers to do that for me. And we are steadily growing with almost 0 complaints from customers, who trust that we have already done the work for them in cupping out bad or average teas. I even have my trusted wholesalers email me their ‘deals’ and, if it’s a tea that I don’t believe fits my customer profile I don’t buy it just to ‘get a deal’. We have found that if customers trust you are doing your job in selecting outrageously delicious teas, they don’t mind paying ‘full price’….as opposed to ‘deals’ that are average or less. Nothing wrong with saving money, but day after day I see national chains around us doing battle on price..which is the very worse place to do battle. Nobody wins there but the guy with the deepest pockets..can you say a giant big box as an example?
I say to battle in quality and you will get and retain the customers you WANT. Those are customers who appreciate quality and will be loyal to you if you do right by them in that department. There are hundreds and hundreds of average teas out there, not so many stupendously good; you know, the kind that people just get ‘that look’ when they taste them.
Our website is almost done; we haven’t promoted online sales until it was, and I’m believing it will just take time to build that business as well. It has taken a solid year to really build word of mouth in a meaningful way.
Our wholesale business was to the mass retailers mostly and I decided never to be in the price wars again.
People would be surprised if they knew how many ‘good tea wholesalers’ we decided against bringing in because we weren’t blown away by their teas. And, if you look at the tea review boards, you will see ratings consistently of well known wholesalers’ teas at 6.5 or 7.0 for all the world to see. We try to make sure all teas in our store are 9′s or 10′s. And we know because we cup every single one before we sell it to anyone. Crazy picky? Sure.
I agree that in the world of specialty tea, battles should be fought over quality. I’m also interested in this article’s advice about asking a company which of their teas bombed and wanting a discount. The reason is it would allow me to probably try some different Pu-erhs since they’re going to be likely the kinds of teas that people may have decided not to buy enough of. Whether they were overstocked, though, remains to be seen. Pu-erh might also be the kind of tea that the retailer predicted wouldn’t sell as well and therefore didn’t over-order. –Teaternity
I’ve never been able to afford the most expensive teas, but I do like mine to be of the best quality I can afford. I would absolutely not switch to lower quality tea to save money. Life is short, save where you can but don’t settle for low quality. Maybe have something less often if it’s really expensive or go lower in quality on something that doesn’t matter.
While much that you say here is reasonable, I must respectfully DIS-AGREE with the advice suggesting that customers ask for a discount on tea purchases. This is the type of well-meaning but bone-headed advice that is just WRONG.
While this may sound good on paper, for those of us who actually work in our shops and speak with customers on a one-on-one basis every day, this kind of advice makes me wince. I, like many tea retailers, am proud of doing a good job selecting premium teas, selling them at fair prices to all, and educating customers about the joys of drinking good tea and the labor-intensive process of tea cultivation and tea manufacture along the way.
Nothing makes everyone feel squishy faster than wondering whether the guy in front of you in the store was given a different price. Isn’t this why most find shopping for cars and airline tickets so frustrating ?
And, suggesting that shops discount tea to those who ask is is doing a real disservice to the faithful customers who happily pay full price and would never ask for a discount. Let’s not even go there with this conversation – I hate to see premium tea retailing become a bargaining chip in a faltering economy.
Tea vendors that have tea that they are interested in reducing in price (for whatever reason) would be better served to simply put it on special for ALL SHOPPERS to take advantage of. In our shop we put several teas on special each month for those who wish to try something new and or simply save a little money. Those who are interested purchase it; those who are not don’t. Everyone gets a fair shake this way, and I can sleep at night knowing that I am not shilling tea.
After seeing the post by Mary Lou Heiss, I’ve decided to not ask for any deep discounts. I agree with her that’s it a setup for bad blood between myself and others in the tea community. I need to be connected so I can’t have any of that. –Teaternity
There is an entire field of study around pricing theory. Strategies for getting luxury prices out of those who will pay them, full retail price out of the average customer, and offering moderate discounts to those who prefer feeling “frugal”. Good retailers (and wholesalers) set their pricing with all of this in mind. If, as a retailer, you do not negotiate pricing with your wholesaler then you are a dream come true but are also definitely leaving money on the table (unless you are very small). Would you buy a car at a dealership and gladly pay full price? Amazing how many people do, and upon these kind souls are built the vacations of the salespeople.
I am NOT suggesting compromising quality. On the contrary. I’m suggesting the exact opposite!
As for asking your retailer for discounts… I stood behind the counter of a tea shop from the day it opened until we turned a profit and I spent 5 years managing tea shops. I would not offer a discount to someone who simply asked… but I would work with a regular customer who was willing to work with me. That’s why I worded the question the way I did… “what are the best teas that no-one is buying?”
At TeaGschwendner we offered set volume discounts. A 100g bag was “full price”. 50g was 10% more, 250g 5% less, 500g 10% less. Would I work with a customer interested in trying a range of our more unusual or expensive teas? Most certainly. Would I be offended by the question? Most certainly not…. assuming it wasn’t asked on a busy Saturday with 10 customers waiting in line.
Business is about relationships. My suggestion, at its core, is that the recession has created inefficiencies in supply and demand related to the expectations upon which wholesalers and retailers placed THEIR orders. Build a relationship with whoever you buy your tea from and there are always opportunities for negotiation.
Or you can be the one that always pays full price. The market needs you too. ;)
Wow, Charles, it never occurred to me that the few times I made wholesale purchases of flavored tea from your former company Tea Gschwendner to sell in my shop that I might be being laughed at for not hammering down a good deal and ‘ leaving money on the table. ” At least I am conforted in knowing that my purchases were not large enough to send anyone anywhere but the corner deli.
Thanks for the great lesson in corporate thinking. We primarily purchase our tea wholesale from small importers and direct from tea farmers and small tea factories when we can, and I never pressure them for lower prices. It would never occur to me. Thanks for re-inforcing why ‘being a dream come true’ works for us.
Dear Ms. Heiss,
I certainly did not intend to imply that TeaGschwendner laughs at their customers. That is not the case. I also did not intend to be flip or condescending in any way and I apologize if have offended.
That said, there are realities of business that result in the vast majority of retailers and wholesalers offering price levels based on volume and product. I do believe that it would be in your best interest as a business person to be aware of where the price breaks come and negotiate with every supplier. TeaGschwendner would not have given you a discount simply for asking, but they certainly would have given you some idea of the volume required for discounts, and/or which products they may be in a position to offer more aggressive pricing on. I believe you will find the same true with small importers and source country farmers and factories. In most countries, and in most businesses, negotiating is not insulting, it’s business.
Regards,
Charles
Our company before tea was a wholesaler of general merchandise to discounters and mass merchandisers, including Wal-Mart, K-Mart, and national grocery chains. I’m very aware of volume discounts and have nothing against that kind of thinking. My tea suppliers have these as well, and again think that’s smart. However, I’d never buy something just because it’s ‘on sale’ from a tea wholesaler without first cupping a sample. And never do we give ‘discounts’ or ‘half offs’ or ‘close outs’…to me specialty tea is not a mass business, although it is to those who sell to ‘whole countries’ at a time or to mass merchandisers. In fact, the K-cup coffee line just went into Wal-Mart, I believe, with roasters like Diedrich. I don’t think my tea suppliers think I’m naive at all because I don’t ask for discounts other than taking advantage of any volume discounts they may have. If they do, so be it, as long as I can get my margin at retail. :)
This is a very timely posting and I would like to thank Charles for initiating this discussion.
We own and operate both at the wholesale and retail levels. On the retail level, we have routinely participated in 2 for 1 drink coupons. We do not believe this reduces the perceived value of our products, rather we feel quality is communicated through the environment, packaging, and service of the retail store. Because the markup on beverages is so high, we do not hesitate to participate in limited time programs which have the potential of bringing in new, loyal customers. On that matter, I would add that our main goal in the retail space is to do everything we can to ensure the customer will return. After all, it’s a consumable product we’re marketing.
This summer for about 6 weeks, we featured a preselected iced tea for $2. This program was extremely well received and we will bring it back next summer. What we discovered it that the reduced beverage brought people in the store with a certain level of enthusiasm. They wanted to see what was new – they wanted to taste something they might not have ordered in the past. And of course, this directly led to more sales of bulk teas for us.
As for the wholesale side of the equation, we are embarking on some new algorithms and performance dashboards that will help both us and our clients better understand sales trends and price sensitivities. I spoke about this at the recent CoffeeFest in Seattle this month. This is a tricky topic that requires extensive use of Point of Sale (POS) data and careful product setup planning.
As for the consumer tip to ask for a higher discount on what’s not selling, I’m not sure that’s a concept I’d endorse. First of all, as a retailer, I don’t necessarily want to admit what teas aren’t selling well. Furthermore, at least in our store, we want to move away from sounding as if we’re bargaining with our customers – again, it ruins the peaceful environment. And if I’m willing to discount teas on the fly, I suppose they don’t really belong on the menu at that point anyway.
- Ron, Kopius Teas