Seasonal Business – It’s Year-Round Work
At Winco, we’ve been doing fireworks long enough to know that even though our sales are seasonal, our business is global and year round. That’s why our business strategies and planning have to be long range. We’ve learned throughout the years that the further out we can plan and the more strategic we can be, the more success we can have.
When you’re buying product from factories in China that takes nine to 11 months to make its way onto a container, over the ocean, through the port in Los Angeles, on a train then truck and finally to the stores, you learn that decisions must be made years in advance and must be thought through carefully.
Many years ago, we endured one of the worst droughts in the history of the country. Because fireworks are banned during drought, this particular year negatively affected the majority of our customers and we had a lot of fireworks that we couldn’t sell.
Because of that experience, we do things very differently today. We work with professional meteorologists who are part of a weather consulting company and specialize in assisting businesses with long-range planning. We begin looking at the outlook for drought as early as October in key areas where we have stores. The one thing that affects fireworks more than anything else is weather. Of course, as we get closer to the holiday, we begin to look beyond just the drought conditions to see what part of the country might be expecting rain, storms or sunny skies for the Fourth of July.
This has been an amazing partnership and given us incredible insight into weather conditions even 12 months into the future.
We have a very strong relationship with our Black Cat partners and their core production factories. We know we are going to get quality product, and that’s why we truly appreciate these longtime relationships. But with all global business, understanding cultural differences is critical. It has taken years to become familiar the customs of the Chinese government and the common business practices of the country.
- We have learned that the Chinese local government doesn’t allow a mix of containers from different providences and this has affected timing of shipping out of China. We have to allow extra time and try to accommodate this issue.
- Another big issue is the Chinese ports themselves. There are safety concerns due to the antiquated facilities. Shipping containers get stopped or held up by the government simply because of safety issues related to poor facilities. Of course it would be nice if the ports could be upgraded soon, but for now we are able to work together to get our containers out of the port as timely as possible.
- In China, the government halts the production of fireworks during hot months, holidays (for example, Chinese New Year) as well as special government days. These production halts can last for more than a month, interrupting the planned shipping schedule. We must stay ahead of the calendar and plan for these interruptions. Knowing when these days occur and looking at the weather in China, can help us better plan our ETAs for our containers.
As a longtime member of the board of directors for the American Pyrotechnics Association (APA), Winco President Mike Collar has his finger on the pulse of the latest efforts to work with the U.S. government to limit and/or reduce tariffs on fireworks. Recently because of the threat of increased tariffs with China, the APA’s staff advocates petitioned to get fireworks exempted from tariffs and many of the board – including Winco’s executives – wrote letters to congressional leaders.
Ultimately, it is understood that fireworks are much safer and better quality when they’re manufactured in China where they have been successfully manufactured for hundreds of years and shouldn’t be made here in the U.S. However, not knowing how much the tariffs will be and/or exactly when they’ll be imposed, creates challenges with setting pricing for a product that is to be sold as many as 12 months in the future.
We send a new product team to China every January only after we’ve examined product options and given ideas on what we’d like to see for the year. The team of employees, customers and Black Cat partners makes up our New Product Development Team. This team is scouting product a year-and-a-half in advance of Fourth of July. This means that the team that goes in January of 2020 will be buying for July of 2021. Of course even with this important January trip to China, we are doing new product development almost every day because it’s a critical part of our business, and it’s what helps us stand apart from our competitors.
During the trip, the team collaborates on the creation of the new products. We offer input into label design and product names based on the colors, design and effects. Here at Winco, we take pride in matching the name of the product to the fireworks’ effects and want the customers to get a feel for what they’re buying when they see the label and the name. We also have to do some of the boring stuff too, like make sure the name isn’t already registered and work through government approvals on new products.
By going the extra mile to know our factory partners, collaborate on new product, work on behalf of our customers to reduce tariffs and prepare for weather affecting the business, we can implement long-term business strategies that bring cost savings to our wholesalers.