I just got a call from Accounting, we just got hit with another "fuel surcharge" from another supplier. I'm not surprised, since all costs- from raw materials to getting the raw materials delivered to us to make our
bean bag chairs - have gone up dramatically for years now.
FedEx shipping costs have steadily increased about every 6 months since we started making our bean bags in 1998. Shipping a giant bean bag to California used to cost us $44 in 1998, it now costs us almost $100. We expect this increase to continue, but have NOT increased our shipping cost to customers EVER. It remains $22 per bean bag chair! We're going to subsidize our customers' shipping costs no matter what. High shipping costs have most likely been a major cause in the demise of other bean bag chair companies, making the market for bean bag shoppers much smaller.
Material prices have increased by 20-60% depending on the supplier. Zippers, fabric, and even thread prices continue to rise. With gas prices the way they are, just transporting the raw materials to us via UPS, FedEx, and freight truck has hurt. But since AHH! Products' sales have been very strong, we are able to absorb the enormous increase in costs across the board and not pass them on to our customers. Except for a short period of time following 9/11, we have sold more bean bag chairs from year to year with 2009 being our record year so far. How can this be? Bean bag chairs are "luxury", non-essential items afterall.
So the question is: how do high costs in a terrible economy affect
shopping for bean bag chairs? What makes one company thrive and others crumble? Simple. Low-quality bean bags don't cut it anymore, even if they are dirt cheap. Our sales have increased despite the current economic crisis because we offer very high quality bean bag chairs that will last. Smart bean bag shoppers are looking for extras like our water-repel liners, child-resistant zippers, and washable covers. Customers seek fair pricing, but know how to balance dollars with value. So even though we are priced higher than Walmart or lower-quality suppliers, our bean bag chairs are much more durable. These are not throw-away toys, they are real furniture. Plus, since we offer so many fabric styles in so many colors, our bean bags match any decor and can be taken from room to room. No one wants to spend money on a bean bag chair they have to hide in the basement. Our bean bag chairs are found in every type of home imaginable.
Our advice to bean bag shoppers? For the most part, you get what you pay for with bean bag chairs. Look for a warranty that is at least 5 years (ours is 10), covers that can be removed and washed to prolong the life of the cover, liners that resist liquids in case of spills, child-resistant zippers so your kids don't spill the costly filling, and most importantly: buy from a reputable company that has been in business for at least 3 years that offers contact phone numbers (not just email) and a street address (not just a PO box). If you don't get your questions answered within 24 hours, or keep getting an answering service, move on!
As for absorbing so much cost increase, it's not the best situation for a bean bag retailer, but we are happy to still be in business and contributing to the turnaround of this great country's economy. We project 2010 to be another record year!
Yours truly, Jade