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The Poem

June 12, 2008

It has been several months since I made the decision to accept American Express at my store. To refresh your memory, in our 56 years of business, we have never accepted American Express because they take a much larger percentage of the transaction than Visa or Master Card. Right now our average Visa/M-C discount is around 2.05% whereas AmEx was going to be 2.6%. That is amounts to almost 27% more. So, if my monthly discounts with Visa were $1,000 they could be as much as $1,278 with AmEx. No matter how you slice it, a substantial hit.

My AmEx representative presented me with two reasons I should go with AmEx:

1.    In his experience, only about 20% of Visa/M-C sales converted to American Express, and
2.    Once they found out we accepted AmEx, AmEx cardholders would spend more mostly on add-on accessories

He was wrong. Over 60% of Visa/M-C customers converted to American Express and we didn’t have one customer say, “Oh goodie, you accept American Express. Let’s add a rug, light, umbrella, and chaise lounge to the order.” In fact, our overall business stayed the same. I will say that the average ticket with AmEx was higher. As I researched that phenomenon, I found that customers preferred to make their small purchases with Visa or M/C and the big ones with AmEx to get reward points.

At the beginning of this month, we decided to stop accepting American Express. The only customer to complain about this was one who had purchased something with AmEx a couple of days before we changed our policy. But even she was able to pay for her purchase with one of her many Visa cards.

Many of you told me that I had to accept as many forms of payment as possible to make the shopping experience easy and enjoyable for my customers. That seems like a good rationale, but in these days of rising gas prices, wages, insurance premiums, pressure is on to save money somewhere. This was a good place to start because it had the smallest impact on my customers and our business health as a whole.

Speaking of rising gas prices, one of my reps was telling me our delivery fee was too low. Until Hurricane Katrina, we didn’t charge for delivery. After Katrina, we couldn’t find anyone to deliver for the same wages as before the storm. Deliverymen and warehouse people would only work for 20% - 25% more. It was a hard decision, but we started charging $25 for local delivery.

The rep told me about some of his Texas customers who had raised their delivery charge from $29.95 to $49.95. I don’t know, but I think delivery fees are, to use an economic term, inelastic. $25 to $35 doesn’t seem to faze consumers, but get to $50 and they start to ask you to “waive that for them since they are purchasing so much!” Of course, our delivery fees are based on $50/barrel oil not the $150/barrel it is projected to be in a few weeks. Who knows what we will have to do then!

Finally, I received the following poem via email a few weeks ago. I hope you enjoy it.

Last night as I lay sleeping
I died or so it seemed.
Then I went to Heaven
But only in my dreams.

Up there St Peter met me
Standing at the pearly gates.
He said, "I must check your record
Please stand here and wait."

He turned and said, "Your record
is covered with terrible flaws."
On Earth I see you rallied
for every losing cause"

I see you drank alcohol,
and smoked and partied too.
Fact is you’ve done everything
A good person should never do.

We can’t have people like you up here
Your life was full of sin.”
Then he paused as he read the last of my record,
Took my hand and said, "Come on in"

He lead me up to the Big Boss and said,
"Take him in and treat him well.
He used to work in Casual Furniture
He’s done his time in hell.”

I don’t know who the poet was, but they must have worked in casual!

Yours in confused retailing, Bruce