Steve Houser Adresses Your State of The Season Questions!
Dear Valued Customer:
As many of you know this will be an interesting season for sure. In advance of getting this one kicked off I’d like to give you an update of what is happening on a number of issues and hopefully answer some questions you may have. We have compiled these based on the questions we have been receiving from customers calling in and from meetings we have had with customers. This list covers the most commonly asked questions that we have been fielding to this point.
I am going to break the questions down into 3 categories:
- Product Availability
- Purchasing Terms
- Placing and Receiving/Picking up orders
Q1: How is production in China progressing? Since the factories reopened in Mid-March production has been moving along very rapidly. Over the last month we have had an enormous amount of product manufactured by our partner factories. That said there will be shortages but for the most part things are better than I had projected they would be initially. The weather has cooperated overseas and thankfully all the production has proceeded safely. I estimate that overall order completion will be in the 80-85% range. I do believe Red Rhino will be very well positioned to provide inventory supplies across most all product categories. You may not get every single item you want and subs will be a part of the process you should expect. But in the end you will have adequate selection to choose from and you may find some new favorites!
Q2: When is the product going to arrive at the warehouses? The bulk of the production that began after the factories reopened from the COVID-19 closures will start landing in our warehouses here around Mid-May and will be arriving steadily probably even through July 4th. What this will mean for all of us is having to operate a bit outside of our respective comfort zones. For us we will be unloading many more containers much later than we normally would and you will be receiving inventory later than you normally would. With the production and shipping delays caused by the pandemic this is an unavoidable situation. Together we will have to organize this mass unloading and dispersion so we can get through the season. Although it is not an ideal situation it is one we must both figure out and conquer. 10 containers are being received into our warehouses this week and another 15 hit the water at the end of the month. The log jam is breaking loose as I write this. Now the flood will commence out of Shanghai bound for the U.S.
Q3: Will you be receiving your New 2020 items? The answer is YES! Of our 39 new items for 2020 production has already been completed on 27 of them as of April 17 and we anticipate the rest will be completed by April 25th according to factory production reports. 15 of them are either already here, on the water or loaded on containers headed to Shanghai. The one caveat is the 5 new novelties, while the factories are working on all of them I don’t believe they will be able to finish all of the quantities I ordered. For those 5 new items I expect we will receive some quantities of all of them, just not as many as I had ordered. So, yes Virginia there will be New 2020 items at Red Rhino this season! I made sure of that because we all needed a positive thing to talk about this season.
Q4: When will the New 2020 items videos be on the website? They are being filmed now and the videos should be on the website around Mid-May assuming all renderings and video work can be completed by the videographer in a timely manner. Also, we will be releasing our “video demo” on April 24th via our website www.redrhinofireworks.com and through links on our Facebook page so be sure to check them out. That will be the first opportunity to see the NEW 2020 items!
Q1: If credit is going to be available this season when may that start? Probably the most asked question is will we be offering credit terms this season. I am happy to say we are opening up our shipping on credit terms this week (April 22nd, 2020) for accounts in good standing with no history of collection or default issues. Before shipping or having any pickups scheduled on a credit basis we will be making sure that we have current, updated credit paperwork on any account requesting credit. There is one distinction that I want to clarify this year, cash or paid for orders will take precedence in terms of inventory allocation for this season. Meaning, if an order is placed on a credit basis and a cash paying customer is ready to take delivery the credit order may be at risk of losing access to some of that inventory to the cash customer. Unfortunately, with inventory levels being depleted and a shortage nationally of consumer fireworks for this season, the old rule of cash is king is in place. Hopefully this will not prove too troublesome for order fulfillment. Although I do not like being in this position it is a reality that I must deal with in making sure my business cash flows properly so I can run the business dutifully and be sure to provide for all our employees while making sure we are here for decades to come, for my family, my employees and my customers. It would be irresponsible for me to do otherwise and I appreciate your understanding of this. I have personally spoken at length with many credit accounts about this and they have all understood, so my thanks and appreciation to all of them for that.
Q2: If I am unable to qualify for credit status what can I do? While it is my hope to help as many as I personally can I continue to urge the importance of good planning for your business. Due to the COVID-19 crisis and the programs passed by the U.S. government there are programs available to all of us through the SBA that have generally been harder for our industry to qualify for. You need to go to the SBA’s site at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options Here you will find options for financing your inventory purchases through working capital lines of credit under the 7(a) loan program, contact your bank today and ask them. I have been recommending this to customers heavily over the past month through my website and social media platforms and I have spoken with customers that have already applied and some that have already been approved. So I urge you to research this and apply today.
Q3: Will there be any discounts this year? Next year? I have always been very proud to offer my discount programs and they have served both me and my customers very well. Sadly, this year I have had to lift them. It is my plan to reinstate them after this year and this problem has passed. The advantage of paying now versus later lies in the allocation of inventory to non-credit orders as I discussed in Q1 under this section above.
Q4: Many wholesalers are implementing credit card fees. Is there going to be a credit card fee? Yes, for this year there is a 1.95% processing fee that will be assessed on the invoice balance for all credit card transactions.
Q5: We understand why prices increased this year but what will happen next year, will they go back down? I cannot honestly answer this question now. I have not received commitments from the factories for next year pricing but there have already been rumors that China is planning to raise prices next year to continue to make up for lost production revenue this year. We must see what happens in the coming months.
Placing and Receiving/Picking up orders:
Q1: Are we going to receive multiple shipments/pickups or should we wait to do it all at once? This year, more than any other, it is imperative that you plan for multiple shipments or multiple pickups beginning as early as possible. The situation is this; due to the manufacturing delays in China we will be receiving in much more product, much later than any other year. Because of this we will be having to unload everything and ship everything in the same 4-5 week period where we are generally doing virtually no receiving and only preparing orders for pick up or shipment. You can see how that will become a time problem. It will be a very tough task and there will be virtually no down time here. I am already trying to plan for having operations running on a 24/7 basis to accommodate this massive workload. Moving out the most product we can now is the best way for you to be assured that your inventory is in your hands when you need it most. As I said before, we will all be working outside our ideal comfort zones but this is what we have to do this year.
Q2: Will there be any changes to the pickup process due to COVID-19 or will all orders have to be shipped? We will still have customer pick up (CPU) available. However, it may be the case that we have to implement more of a social distancing protocol for everyone’s safety and psychological comfort. We have always had a good procedure for scheduling pick up times for our customers. That is just good practice, you want to spend as little time picking up as possible so you can carry on with your responsibilities and time constraints. We want the process to be as efficient as possible here as well. To that end, if social distancing practices need to be implemented, one of the first things that will probably have to go will be last minute, on site add-ons to orders being picked up. We simply won’t be able to maintain safety protocols in that situation. So, I will stress that it would be good practice for you to have your orders completely placed upfront, prior to scheduling your pickup times so we can expedite your timely and safe visit to our facilities. All that said, I truly hope that we as a country have moved past this awful time in full so that “social distancing” is much less of a concern and we can be operating again like business as usual. However, it is much better to plan ahead for a situation than to try and adapt to it after you are already sunk knee deep into it.
Q3: If we place an order and local authorities ban sales can we cancel the order? The answer here is yes, that is always the case. You can place orders and modify them up or down as time goes on, right up until you have scheduled your pick-up time and we begun the process of pulling it and preparing it for you. What we ask is that you communicate with us actively and in a timely manner. If you need to process any cancellations either of certain items on the order or of the whole order in its entirety, please let us know immediately of those desires so we can get the inventory back into our availability counts to sell to another party. Fair is fair.
Q4: Will you take fireworks back? The answer here is no. Once the fireworks have been shipped or picked up by the customer they belong to the customer. We have fulfilled our obligation. Again, fair is fair.
Q5: Do you have stock level reports we can use to place orders from? We can produce those but with the way things will happen this year they will be of little use on a day to day basis. With so much coming in so late the reports will be changing constantly as things arrive. In a normal year where most imports are taken into our facilities before the season begins the stock level reports are a very useful tool for both us and our customers. However, this year is like no other and because of that the practical use of that report will be skewed. It is not possible to produce and circulate reports on a daily basis to the customer base, nor would it even be practical for the customer to try and reference a report that will change daily, it will add to frustration and confusion. I would stress that contact with your sales rep or our office personnel will be the best solution, as well as the most efficient given what is coming this year. They will have the most up to date information readily available and be able to provide the right answer.
Q6: Will fireworks be arriving after the 4th as well? Yes, that will very likely be the case. Due to the large amount of expected imports beginning in May I am sure they will continue after the 4th. It will be a head start for the Christmas/New Year’s season.
While I know these questions do not cover every question that is sure to be on your mind I hope this helps answer a number of them.
I would also mention the NFA’s website www.saveourfireworks.com, it is great resource for getting valuable information and for keeping up with what is happening in the industry as it pertains to the 4th of July season this year. They are launching a number of initiatives on behalf of the industry and one of them is a #SavetheFourth petition that I want you to sign. This will be important for your business and our industry and it is due to post on Monday April 20th to the website above.
As always, my sales staff and I are here at your disposal. Give us a call and let us get you prepared for our glorious 4th of July Celebration!
Stay Safe and Stay well!
Red Rhino Fireworks