Stocking UP....and the SCHIP tax...

[Arnie]

Originally Posted by FN in MT

Arnie.....Cars of and by themselves are fine. Add alcohol, or youthful inexperienced , an inattentive driver, etc and then you have a problem. Alcohol is THE big one. Unless your post was one for nuclear safety??

Guns are a lot like chain saws, four wheelers, motorcycles, ocean sailing, private aviation and a few other endeavors. VERY unforgiving to any inattention or carelessness.

My .02 anyway.

Your use of the word "potential" is the key. Nuclear missiles have much more POTENTIAL for harm. On a daily basis, however, cars do greater harm. So the flaw in that premise is potential vs actual. You are correct to say that screw-top wines have greater potential for harm because they are produced in far greater quantities than corked wines.

[yurizilla]

Originally Posted by Arnie

Your use of the word "potential" is the key. Nuclear missiles have much more POTENTIAL for harm. On a daily basis, however, cars do greater harm. So the flaw in that premise is potential vs actual. You are correct to say that screw-top wines have greater potential for harm because they are produced in far greater quantities than corked wines.

What are the laws against growing tobacco for personal Use?

[TDIvey]

Not affecting me - at .40 a stick, doubt I will see a difference. You know if you figure the times you buy from a B&M and how one down the street from another can be off by at least .50- $1 per stick from one another - it's really nothing to be concerned with. With so many auction sites, I doubt you'll see much of a noticeable difference online unless your buying boxes of Padron Anni's, etc. To put an additoinal positive spin on the matter - look at all the gas money you're saving over this same time last year - hard to complain about 40 cents a stick difference when gas is down over $2 a gallon from this same time last year.

[FN in MT]

Originally Posted by TDIvey

Not affecting me - at .40 a stick, doubt I will see a difference. You know if you figure the times you buy from a B&M and how one down the street from another can be off by at least .50- $1 per stick from one another - it's really nothing to be concerned with. With so many auction sites, I doubt you'll see much of a noticeable difference online unless your buying boxes of Padron Anni's, etc. To put an additoinal positive spin on the matter - look at all the gas money you're saving over this same time last year - hard to complain about 40 cents a stick difference when gas is down over $2 a gallon from this same time last year.

I'm sorry but I can't put a "positive spin' on yet another tax on a product thats already TAXED. I'm tired of taxes.

FN in MT

[6clicks]

The potential for abuse and dangers of smoking and drinking alcohol have nothing to do with the heavy tax. They do it because it sounds like they really care while taking full advantage of our personal addictions. I remember hearing that scumbag governor of NJ saying that the extra 27 cent tax per pack of cigarettes will stop teens from smoking. Are his constituents really that stupid?? The kids are driving Beamers to school and they're going to go cold turkey over 27 cents!! They tax it because they can. Note also that there's no big push to make anybody quit, and no extra funding for medical. It's sort of exactly like the old fraud called "the education lottery". Have you heard that one?

[doblemaduro]

Stocking up BIG TIME! Shopping for any deal I can find. Just opened up a new coolidor. Just got a great deal on Nub Connies and a box of Oliva Series G's. Awesome smokes at great prices.

[dinoa2]

I think we could be in for a shock (hope not) but cigarettes have gone up about $1 a pack where I am in about the last 10 days. some clerks tell me that the manufactures have raised their prices. if this raise is in addition to the tax, cigarettes will be sky high. I understood the tax will not go into effect until April 1

another industry and activity taxed to death in the name of insurance and the good of all. my .02

[OracleSmoke]

we're not seeing any sales because all the retailers are taking advantage of everyone's fear of the tax while they outspend themselves. Why would anyone in the cigar business consider dropping their prices when they see a huge uptick in "fear" sales?

They're in business for one reason, to make money, and they're doing it.... no need to attract buyers with sales because the tax "fear" is pushing them up very nicely. JMHO

[havanitascigars-cl]

Originally Posted by OracleSmoke

we're not seeing any sales because all the retailers are taking advantage of everyone's fear of the tax while they outspend themselves. Why would anyone in the cigar business consider dropping their prices when they see a huge uptick in "fear" sales?

They're in business for one reason, to make money, and they're doing it.... no need to attract buyers with sales because the tax "fear" is pushing them up very nicely. JMHO

I agree with you. One of the local B&Ms almost doubled prices in anticipation of the tax. Now he is planning on raising prices by the amount of the tax on April 1st. La Aroma de Cubas I was buying for $4.50 are not $9.00! LGCs are $14.00 from $7.50. CAOs... do not even go there! All these cigars are going up another 70 cents per stick at the end of the month. And all the new, popular stuff by Pepin Garcia are $15.00 on up! Meanwhile, he won't carry the LX2, the Camacho Corojo, etc because Fuente offered him a bunch of cash to hold onto shelf space.

And B&Ms wonder why their business is declining while internet sales are rising.

[craigchilds]

I was reading the JR catalog this month, and I was amused because it said something to the effect of:

JR's could make a hell of a lot of money by shutting down in March, then re-opening in April and selling our existing inventory at the new post-tax price. But that would go against our core values, because we actually care about our customers...

This is funny to me because it seems that on April 1, they must be planning to raise all their prices. But, of course, they'll still have a lot of old inventory that hasn't been taxed.. they're just planning to sell that product at a higher margin and "blame" it on the government.

Not that I blame them... that's exactly what I would do if I were in their situation.

[Arnie]

Originally Posted by craigchilds

I was reading the JR catalog this month, and I was amused because it said something to the effect of:

JR's could make a hell of a lot of money by shutting down in March, then re-opening in April and selling our existing inventory at the new post-tax price. But that would go against our core values, because we actually care about our customers...

This is funny to me because it seems that on April 1, they must be planning to raise all their prices. But, of course, they'll still have a lot of old inventory that hasn't been taxed.. they're just planning to sell that product at a higher margin and "blame" it on the government.

Not that I blame them... that's exactly what I would do if I were in their situation.

JR gets a lot of grief from folks here, but I am a fan. They have fair prices and good service. I don't know of another online dealer that has lowered prices at all leading up to this tax increase. JR wants to reduce inventory, not lower prices to help us, but still, see anyone else doing that? Not all the price reductions are huge but if you look for a deal you'll find a few. I buy from a lot of online dealers but I spend more with JR than any other company. But that's just me.

[RexBeck]

Very slowly but surely, just put in a larger-than-normal-for-me order from Taboo, and now I'm scrounging around the Devil Site trying to scrape some boxes up with less of a hit on my wallet!

[craigchilds]

Originally Posted by Arnie

JR gets a lot of grief from folks here, but I am a fan. They have fair prices and good service. I don't know of another online dealer that has lowered prices at all leading up to this tax increase. JR wants to reduce inventory, not lower prices to help us, but still, see anyone else doing that? Not all the price reductions are huge but if you look for a deal you'll find a few. I buy from a lot of online dealers but I spend more with JR than any other company. But that's just me.

I'm also a fan. I buy most of my cigars from CBid and CI -- because they carry some of my favorite boutique brands like Gran Habano, 5 Vegas, etc. But I use JR when I find a deal on a more established brand, like Hoyo de Monterrey or Punch. Also, JR sells Flor de A.Allones, which are great.

[OracleSmoke]

When I started buying off the net JR was the first place I went to. They were OK at the time, but since then the collection has grown and this requires multiple vendors. JR is good for Altadis stuff as I think that's the big cheese that runs that show there. I just got tired of the Altadis stuff pretty fast, and when they have good sales it's usually the Altadis stuff.

It's a point of mine now to go through whomever get's me the product I want at the cheapest price. Some vendors have better pricing on some brands or even some stogies... such as Phoenix and Cubao. They have a fair price on Cubao #6 but everything else is too high. I just find a reputable vendor and find who's got the best overall price including shipping.
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And so the story begins......

As with any retailer of any product, we are only in business for one thing, and that is to make money, nothing else. We are not in business to do you favors, be your buddy or give stuff away. Part of being successful in this business is knowing how to maximize profit with the least amount of cost to us. This means advertising. In the case of web based sales, our advertising is done on the web. The first and most obvious place to begin advertising is on our own site. This means hitting the visitors right off the front page with info that will make them continue into the site and purchase product. At the present time in the cigar business the most effective advertising is the SCHIP tax. Notice how some sites are putting SCHIP information right on the front page making it almost mandatory that you read it. Now, while these vendors are not outright lying about the SCHIP tax and what it means to customers, they are not telling them everything about it because at this point in time they can't. No one knows the overall effect of this tax on sales in the future. What they DO know at this time, and what they love to hammer home, is the exact date the tax will come into effect. Now why would a cigar retailer want you to know about this tax, how much it will be and when it will start? What else... it makes the reader panic. The reader sees that in the very near future, the price for all cigars WILL increase by .40 per cigar. This causes the reader to reconsider the purchase they may or may not have made, because as of the SCHIP date, they'll allegedly have to pay .40 more per cigar. So BANG, that guy who may or may not have purchased something now decides that he better stock up on everything he smokes NOW before he gets screwed by the new tax. So what has putting SCHIP information on the front page of my website done? It's made people panic purchase more product than they would have if they had not known about the tax. So you tell me, was it a smart idea to put SCHIP info on the website or not? As a retailer, am I moving more stock out the door every day before the tax goes into effect or am I not? Has this tax created a buying frenzy that I am now taking advantage of? You bet. As a vendor, my sales have gone through the roof thanks to me advertising the new tax. And guess what? I didn't even have to lower their prices to increase sales output, all I had to do was reserve some ad space on the front page for SCHIP info. For the next couple weeks, vendors don't HAVE to lower prices to move stuff, the SCHIP tax is doing all the work for them and they're making more profit because of it than they would if they had to lure buyers with lower prices. So the SCHIP has been a boon for the cigar business at this point.

So what happens AFTER the tax goes into effect? Well, for one thing, all those people who panic purchased won't need to buy anything for a little while that's for sure. But thank god tobacco is an addictive product and for the most part sells itself. So the dip in sales following the SCHIP tax likely won't be as severe as you're being told because we all need to keep smoking and not a high percentage of us are just gonna give it up or smoke any less because the price went up. So from a manufacturer or distributor standpoint, I can sit back and watch what happens a month or two after the SCHIP kicks in before I determine whether I'm going to lower my price to the next guy in the food chain to stimulate sales back to where they were. So the lesson is, SCHIP is GOOD. Not for you or me, but it definitely caused a spike in sales with the more omnipresent retailers out here.

Part 2 of this story continues with advertising where Part 1 left off.

Since we've established that the purpose of opening a cigar store is to sell cigars, and the purpose of putting up a website is to sell more cigars, and the purpose of advertising on the internet is to sell yet more cigars, lets look at the cost breakdown of each necessary area of cigar sales and see where in the business model we should spend money to maximize sales, since selling cigars is the goal here.

1. The actual store. Or warehouse. Or guy on the other end of phone who takes phone orders.

This is the most expensive part of the operation since it involves purchasing or leasing or renting enough space and hiring enough people to run the actual physical aspect of the game. Without ever seeing any of the actual phyisical storefronts or warehouses of these big retailers, we know that they at least have to have a space large enough to contain all the product they sell. In the case of cigars, they also must utilize a fair amount of that space to maintain cigar inventory. They also must utilize an space for the administrative and shipping side of the business. This is also the part that no one online sees when they buy something and usually has very little effect on whether or not someone purchases from the vendor. So, would buying a bigger property or hiring more people sell more cigars? Not nearly enough to justify the cost unless I was selling more than I could maintain. No, spending money on physical structure doesn't sell more cigars, so scratch that.

2. The employees (including the guys who take phone orders)

This is the next most expensive outlay in the game. If I hire more employees to answer phones and pack orders, will I sell more cigars? Again, not unless I can't keep up with demand. So, hiring more employees isn't going to increase sales either.

3. Advertising ( including the employees needed to advertise successfully)

This is the least expensive part of the game since once my web presence is established correctly it takes minimal personnel to maintain it. As a matter of fact, when my son isn't answering phones or packing boxes, he can go look at the website and think about what to advertise on the website next.

So, after we look at those aspects of running a cigar business, what do we spend money on to sell more cigars? Buying a new building won't do it, hiring more employees won't do it, will advertising do it? I think advertising is the cheapest way to sell more cigars, and once the initial infostructure is in place on the web, I can use my administrative employees to maintain it and come up with new advertising while I pay them the same pay to be at work either way. So that's it then, ADVERTISING is what we need to do to sell more cigars. And we need EFFECTIVE advertising too. So exactly what kind of advertising works best? Advertise cheaper prices on the website? Maybe. Mention the new SCHIP tax to boost panic sales? Prolly. But what else can we do to get that competitive edge against the next guy? How do we get the word out that we're better than the next guy? I mean, if there aren't enough people visiting my web store to see my advertising, how will I let them know that I'm better than the next guy? Well, I guess I could start with that Email list I have sitting around from when people actually purchased something from my web store. I could send them emails about why I'm better than the next guy, and how I have stuff the other guy doesn't have or sell as cheaply as me ( two birds with one stone there ). But that only covers the people who've bought from me before, what about others? I could utilize a small space to advertise "private sales" to "special people" in advance if they were only willing to give me their email address. I guess I got a few extra emails now from those who are always looking for a bargain.

Here's where it gets interesting....

Now, I'm selling a good amount of cigars, my web store is working OK and my front page ad regarding the new SCHIP tax is working as planned ( see panic buyers ). But during these tough economic times, I want to be the one who comes out on top, 'cause my motto is "there ain't enough room in this town for the two of us". So how do I get to more people than I already am? The only way I can think of is to go after those who are not seeking me out yet. But where do those people hang out? I can't very well stop by their house and ask them how their smoking habit's going now can I? Wait..... I gottit. I found where a bunch of potential customers hang out all in the same place and I don't have to go anywhere to get to them. They hang out in those CIGAR FORUMS!!! Why didn't I think of this before!! Advertising in cigar forums is the answer!! Hey wait, they won't let me advertise in their forums. Sure, they'll put a banner from my site up in the forum, but nobody really notices those do they? Wow. So how can I get to those potential customers in all those forums? Hey, if I create an account with an unassuming handle like 'cigarsmokr" I can start posting all I want. But I gotta be carefull. I can't just start telling everyone about my site 'cause the admin will find out and me again. I gotta be slick about this. I gotta just kinda casually say hey to a few people, "hey dude, whatcha smokin?". But after a few posts, I can slyly start promoting my business, always like I'm just some guy who always gets a great deal at this one place. And I can't forget to nonchalantly biff my competition with a couple well place posts of "hey, those guys suck" and "all the stuff I get from THEM is stale!". Yah! That would help out my sales BIG time. And while I'm at it, I can expound on the old SCHIP tax thing to turn up the burner a bit this month. Yep. Advertising is the ticket. After all, I'd rather pay my kid to tinker with the website ads during the 8 hours I pay him to be there instead of catching him playing online poker all day.

And I couldn't let this go without this zinger... sorry

One last idea I can think of to really boost my sales AND make further use of my deadbeat gambling addict of a son. I'm gonna start up a second website, but TOTALLY UNRELATED to my main website (don't look behind the curtain). This new idea I got is a real gem, and best of all, I didn't have to think of it first!! My new vision: CIGAR EBAY!!!!! Yup, works for them, it'll work for me! So how can I set this up? Gottit. I'll start with all the merchandise that was returned unopened ( shipping profit ), and then if that's successful we'll move on to the stuff that was dropped at the loading dock that still looks ok, but would likely be returned. And here's another epiphany, when my son isn't busy answering phones or changing the ads on m website, I'll tell him to start breaking down boxes of Rocky Patel Decades that I get for 60.00 each into 5 packs. Then, we'll auction off the empty box to boot!!! Wow, I'm really maximizing profit now baby!! But wait, if I auction off everything on the site, how can I guarantee I'll make a profit on every sale? Hmmm.... well, it is MY website. I can make it work any way I want to right? Problem solved. Deadbeat son to the rescue!! "Hey kid, until I pay the programmer to make the software do it for us automatically, I'm gonna need you to sign up to our own website with about 20 different handles. Then I'm gonna need you to keep an eye out for anyone lowballing us on our stuff. Here's the list of rock bottom out the door prices... if it looks like anyone's gonna screw us and really get a deal it's YOUR job to bid up to the listed price here and save our ass from going outta business, capiche?". Ok, now I have two different websites selling the same product from the same company using two of the most effective techniques available at this point in time... fear and the overwhelming urge to outbid someone else and actually WIN something, even if they're actually paying to win something.

Yup, advertising sure pays off big. And to think I could have been paying my son to gamble and look at pron all day instead of change the ad on the website and outbid all the other gamblers out there! I'm a GENIUS baby!

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DISCLAIMER
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The above story is ficticious. Any resemblance to any individual either living or dead is purely coincidental. The auther makes no claim to have inside knowledge of the cigar business in general nor any personal knowledge of how any cigar vendor runs their business.

Once again, this is a story, and is not intended to influence any person, either living or dead, into purchasing or not purchasing product from any online retailer who may or may not bear a resemblance to the purely fictional business portrayed by the obviously intoxicated and ill mannered author. Hiccup.
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Now you'll have to excuse me, I only have 6 more minutes until I win my next 5 panic bids and I need to make sure I don't lose to some noob in manhattan that's not sure why he wants to buy cigars in the first place.

p.s. Hey admin, I wouldn't be surprised or disgruntled if you moved or REmoved this one
thanks for the place to post it in the first place.

[craigchilds]

Great post, Oraclesmoke.

As you mention, I've always thought the auction sites probably use a schill bidder. I don't know if that's fair or ethical, but I'm not sure I care, either. I just won a crate of Omar Ortez Originals for $130 on cbid. That's $130 less than I would have paid at my local B&M, and $7 less than I could have bought them at a another no-name internet vendor I've never used before.

So what if the CBid software bid me up from my original bid of $28? I still came out ahead.

Ah, capitalism is a bitch, ain't it?