Cold Water
Cold Water
Your first sales experience, even selling something as inexpensive as water, can teach you a lot about business.

A group of teen and even preteen vendors works outside the Saratoga Race Track every summer selling water. These young entrepreneurs work hard and make decisions applicable to much larger and supposedly more sophisticated businesses.

  1. Pricing needs to be competitive, but this seldom generates sales. Almost everyone sells water for $1 per 500ml bottle. The one who undercuts everyone else selling for 75 cents isn’t generating extra business because he’s undercutting an already acceptable price with a meaningless difference. They are competing on price vs. the establishment, not each other, yelling: Water only $1; $4.50 in the track.
  2. Brands don’t matter when they’re not presented. Vendors are selling the commodity at a very good price and revealing the brand only when they hand over the bottle. I know I’d try to leverage a well-known brand if I was one of the vendors.
  3. Customer service generates repeat purchases. Those who make the effort to hunt around in the ice water to find a cold bottle win gratitude and repeat purchase the following day. A thank you and smile also help. I’m glad to say that most of these young business people have learned to say: Thank you and good luck.
  4. Purchasing in volume drives profitability. The entrepreneurs buy cases for less than 17 cents/bottle and sell them for $1, about a 6x mark up. It’s hard to find a business with better margins.
  5. Location, location, location. Just like most retail businesses, deciding on the right location is a critical decision. Vendors look for the perfect spot to sell, typically trying for either the first place potential customers pass, or the last one before entering the track. It’s a difficult decision since the last one right at the entrance has the most traffic, although many people already will have made their purchase before reaching this spot.
  6. You better have a good reason if you sell for more than your competitors. The only vendor selling for more than $1 gives 20% to charity. This provides both a reason to purchase from him and more profit per sale.
  7. Cute sells. It’s hard to say no to an eager 8-year old asking if you’d like some cold water. (Note that the parents are in the background when the water vendors are this young.).
  8. It’s best to work as a team. Most vendors work in pairs, which allow them to approach more potential customers. I think another key reason for the teamwork is to keep each other company and have more fun.
  9. You make more when you ask for more. The vendors selling for both the cheapest (75 cents) and most expensive ($1.50) ask if you want your change, which almost everyone contributes. This makes the cheapest bottle actually go for the average price.
  10. Visuals help. They’re selling what they describe – COLD Water – using coolers to signal that they’re selling cold drinks. One vendor uses a large yellow wooden cart that assures that he stands out. Another teen had a colorful home made sign. Everyone else works with a simple price sign that has the identical information.
  11. Aggressiveness is rewarded. You sell more when you ask for the sale. Those who are shy and sit back watch people walk past to buy from vendors who are at the sidewalk making eye contact and selling their water.
  12. Continuity and familiarity sell. Every year there’s a new group of young adults. Most don’t last. The days are long and sometimes hot. People often select a vendor after several purchases based on location and personality and stick with them for the season.

While these young vendors are learning about business, they are making decisions which that most business people also have to make even in much larger situations.

About Richard Sellers

Richard is Chairman Emeritus of the Marketing Executives Networking Group, founder of Demand Marketing consulting firm, and former Sr. VP of Marketing for three multi-billion dollar companies: CEC, WLP, and Service Merchandise. His early career was at GE, P&G, Playtex, and Marketing Corporation of America. He’s also a volunteer counselor for SCORE assisting small businesses in upstate New York. You can follow his communications about marketing, job search and careers here and at mengonlineENTREPRENEURS QUESTIONS, and on Twitter at @Sellers_Richard.



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