When I read this morning that shares of Crocs have fallen about 10%, I secretly cheered in my seat on the subway. I am not a fan of the rubber shoes on anyone other than a chef or a five year old. [Some six years old make great fashion choices.]
Immediately I thought the Crocs fad was fading, but to the contrary, sales last quarter were great. In fact, sales at the end of 2007 were up nearly 84% due to international sales. [The Italians love Crocs.]
So what gives?! The people at Crocs say that there margins were affected by unexpected demand which caused high shipping costs.
How does this affect you, Mr. or Miss Small Business Owner? Well, it is a reminder to manage your shipping and delivery costs and price your products and/shipping fees accordingly. With postage costs going up and gasoline prices rising, it can be quite costly because it may cost more to ship which can cut into your profit margin.
If you have a product that sells very well overseas, then you may want to consider working with a company that help you. It can be a consignment deal or a warehouser that can get product directly to your customers cheaply.
Also, Crocs may have simply missed the mark because they totally underestimated demand. This is when too much of a good thing can be bad. How can you anticipate demand? Look at the trends. If sales have been steadily going up and at a fast pace, then profit projections need to be re-evaluated.