After a Blizzard, What’s a Fair Price for a Shovel?

Categories: Blog

That’s the headline from an article in the HBR Blog Network (a service of the Harvard Business Review).  To find the article Click Here.

The writer, Rafi Mohammed, asks, “Suppose you own a hardware store.  There’s been a heavy snowfall throughout the night and you know the moment your store opens at 8AM, the limited supply of snow shovels will sell out.  Should you raise your price?”

The article was written following the recent storm that hit Boston.  It reminded me about one of the stories that occurred during the famous “Blizzard of ‘77” in Western New York.  The storm hit on a Friday in late January, 1977 and paralyzed the entire area.  All roads were closed by government edict and, anyway, they were impassable. 

On Sunday, Bob McCloud, one of the salesmen for our distributorship, Ward Beals, got a call from his largest account, Bethlehem Steel, who had a large plant south of Buffalo.  They needed shovels, lots of shovels.  They explained to Bob that they had emergency approval to be on the roads, and a large truck that could handle the impassable conditions.  A crew from Bethlehem picked Bob up at his home and went to our Buffalo warehouse.  They took every shovel, pick, hoe, rake, scoop, and broom that we had in stock.

Rather than take the time to count and list each item on a packing list, Bob just wrote “one lot of shovels and brooms”.  Since they took every piece in stock we just used our inventory records to create an invoice.  We got a “fair” price for the shovels based on our contract with Bethlehem.  But do you know what the real benefit was?  I’m sure you can guess….. we got rid of lots of very dead inventory!!

One other quick “blizzard” story.  On Monday a few of us made it to our office – most businesses were still closed.  A good customer purchasing agent called, he was the only one working at his plant, and he gave us a long list of items to price.  So with nothing else to do we priced up the quote and called him back.  When we finished giving him the prices he gave us a purchase order number saying “nobody else answered the phone, so you have the order”.

In thinking about these stories, I can see how the Core Values that NetPlus articulated late last year played a role in my early business career – just a couple that come to mind: “Be Nimble”, “Be the Best”, and “Do the Right Things, Right”.