Page 33 - TOB Magazine March/April 2013

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TOBACCO OUTLET BUSINESS
MARCH/APRIL 2013
accessories—and sells directly to
retailers through its distribution
centers in Indiana and Arizona as well
as through wholesaler and distribution
partners. In growing the company,
Green has carefully crafted a business
model that leverages the profit
potential that novelty items can offer
while also offsetting the risk inherent
to the business—namely getting stuck
with massive quantities of an item that
simply didn’t take or one that initially
sold well and then suddenly lost
momentum.
In addition to serving retail and
wholesale customers, Novelty Inc.
encompasses a catalog sales division
and Novelty Liquidators, a division
devoted to funneling items past their
prime into new markets. “We are set up
in such a way that we have backdoors
for inventory that isn’t selling,”explains
Green, who notes that early on he
came to understand that the typical
shelf-life of a novelty item is between
two and six weeks. “Some of it we
move through our catalogue business,
which focuses on party goods, through
relationships with a lot of the dollar
stores and other outlets. For example, a
lot of the merchandise you see in those
claw machines at Wal-Mart, where
you try to win a prize by dropping the
claw in the right place, is ours.”
Targeting Trends
While having multiple channels
of distribution factors heavily in
the company’s success, the ability
to move quickly to get in front of
trends when developing products
is equally critical. Early on in the
business, Green did all the product
development himself, delegating much
of the business operations side of the
business to his father. Today he has
a product development team—20
people charged with knowing what
colors and ideas are working in the
market at any given time. But Green
is also realistic—he, more than anyone,
knows that targeting trends is a tricky
business.
At the same time, leveraging trends
is the secret to maximizing the profit
potential of novelty products. It’s no
secret that trends drive impulse sales;
a customer may not think she needs
a lighter—until she spots that flashy
new design on a counter display.