When you usually go shopping, you must have noticed the hardware store on the street.
The store is small and simply decorated. The shelves are filled with inconspicuous objects such as screws, water pipes, wires, tools, and valves. There are only a few individual customers entering the store after a whole day. It looks deserted. It is even less popular than the convenience store and small supermarket next door.
Many people have doubts in their hearts: With few customers coming in and making no money at all, why have these hardware stores been open for more than ten years and never closed down or been transferred?
On the contrary, they are quietly and steadily making profits. Many ordinary community hardware stores can achieve net profits of 20,000 to 30,000 yuan a year. It is also common for stores with good locations and abundant resources to earn 40,000 to 50,000 yuan a year. They are much more reliable than many small restaurants and milk tea shops that line up every day.
A layman can watch the excitement, and an expert can watch the door.
The deserted doorway we see with our naked eyes is just a superficial illusion.
The money-making logic of hardware stores is completely different from that of ordinary retail stores. They do not rely on the flow of people at the door to drive business. The money-making channels are all hidden in places where ordinary people cannot see.
Today, I will use down-to-earth vernacular to tell you the true inside story of how a hardware store can make a profit without losing money and survive for a long time. Only after you understand it will you realize that this is a low-key, reliable and stable small business.
1. First, correct the misunderstanding: If you don’t rely on individual retail sales, your main business is not taking orders at the door.
Most people have mistaken the core logic. They always think that opening a store depends on passers-by entering the store to buy things. If there are few people, you can’t make money.
But for hardware stores, door-to-door retail sales are just a way to earn some pocket money, not core income at all.
Scattered customers who come into the store every day to buy a light bulb, a few screws, and a roll of tape can only cover the store’s water and electricity bills and small miscellaneous expenses.
It has never been these sporadic businesses that really support the annual revenue and widen the profit gap.
More than 90% of the hardware store’s stable income comes from offline fixed cooperation channels, door-to-door supporting services, and bulk fixed-point supply. These businesses are quietly connected in the store, and outsiders cannot see it at all.
Many hardware store owners sit in the store all day long, looking like they are doing nothing. In fact, their mobile phones and WeChat have been receiving orders, checking delivery addresses, and finalizing supply prices.
There is no need to crowd around to grab customers, no need to shout to attract customers, the customer source is stable, the orders are fixed, and there is no need to worry about attracting traffic and promotion, and you can do business safely. This is the main reason why deserted stores never close down.
2. The core money-making trump card: connecting engineering, decoration, and property management, with a steady stream of long-term big orders
This is the core trump card for hardware stores to make a fortune silently, and it is also a high-quality channel that ordinary laymen cannot access at all.
As long as the hardware store has been operating around the community for a few years, the boss will gradually accumulate local stable cooperation resources. Once such cooperation is finalized, there will be no worries about orders all year round, and the income will be particularly stable.
First, connect with local home improvement construction teams and whole house decoration companies.
Home decoration and whole-house renovation require large quantities of wires, water pipes, buckles, fixed accessories, and a full set of small hardware consumables. The consumption is large and the repurchase rate is high.
The decoration team will not go to the market to compare prices every time, but will find a reliable hardware store nearby to get the goods at a fixed point on a long-term basis. The unit price of bulk purchases is reasonable, door-to-door delivery, and after-sales are worry-free. The profit from one order is very considerable, and the cumulative revenue for the whole year is very considerable.
Second, cooperate with community property and maintenance teams of old communities.
The daily maintenance of every community is inseparable from hardware consumables. Corridor lamp replacement, sewer pipe unblocking accessories, access control hardware accessories, and public facility maintenance consumables are all urgently needed consumables.
The property management company will sign long-term fixed-point supply agreements with surrounding hardware stores, with monthly reconciliation and monthly settlement. There is no need to remind accounts every day, zero customer loss, stable and fixed payment collections throughout the year, and guarantees that the revenue will not be affected by market conditions during droughts and floods.
Third, connect small construction sites and shops along the street to renovate stores.
Basic hardware materials, protective tools, and fixed accessories will be purchased in large quantities for surrounding small civil construction sites, street shop renovations, and simple factory repairs.
This type of bulk supply order has a high single transaction volume and stable overall gross profit margin. It does not require additional marketing costs and can be stably won simply by relying on long-term reputation and connections.
These large batch orders can be completed quietly without relying on store customer flow.
Even if not a single passer-by enters the store all day long, as long as there are two or three long-term cooperative property and decoration teams, the store can survive stably and continue to make a lot of money.
3. Hidden High Profits: Huge profits from small items + door-to-door service, the additional income channels are considerable
The real profits from the inconspicuous small items in the hardware store are far beyond everyone’s imagination. The invisible income cannot be hidden, and door-to-door convenient services are added to increase the extra income.
First of all, the profit margins of small hardware are full.
Small parts such as screws, gaskets, small joints, sealants, and special buckles are purchased by kilograms and in large batches at low prices. When sold, they are priced by piece or piece. The overall gross profit margin can reach more than 40%, and the profit of niche special repair parts can even be doubled directly.
The cost of a few yuan can easily be sold for more than ten or twenty yuan. Customers who are in urgent need do not know the price and buy it casually. The little money adds up to the big profit, and the profits accumulate over time and are very considerable.
Secondly, door-to-door maintenance and installation value-added services make money easy and worry-free.
Ordinary residents do not know how to handle leaking water pipes, damaged faucets, tripped circuits, installation of lamps, and replacement of door locks at home. When buying accessories online, they have to wait for express delivery and do not know how to install them themselves, which is time-consuming and labor-intensive.
Go directly to the owner of the nearest hardware store and come to your door with accessories for one-stop repair, saving you worry and effort.
When the boss comes to your door, he has to charge not only the cost of accessories and materials, but also a reasonable door-to-door labor time fee. The net profit of a door-to-door visit is tens to hundreds of yuan. If you take two or three orders a day, your daily revenue is guaranteed.
This kind of urgently needed service is irreplaceable and is not affected by e-commerce online shopping.
No matter how cheap the hardware accessories are online, they can’t keep up with the emergency needs of water leakage or sudden power outage in the middle of the night. Everyone will give priority to offline hardware stores to find out. This is also the irreplaceable core advantage of hardware stores.
Four. The operating costs are pushed to the extreme. There is no risk of losing money, so it is naturally not easy to go bankrupt.
The biggest fear of doing business is not the small profit, but the high expenses and high costs. A busy year is spent on rent and labor.
Hardware stores, on the contrary, have kept their operating costs to the lowest in the industry, with almost no risk of bankruptcy at a loss, and their ability to withstand risks far exceeds that of catering, clothing, and fresh food stores.
First, 90% of them are mom-and-pop shops with zero labor expenses.
Legal hardware stores on the street are basically run by a husband and wife duo. The wife stays at the store during the day to receive scattered customers and check the order ledger, while the husband goes out to deliver goods, handle projects, and do door-to-door maintenance and installation.
There is no need to hire additional clerks, pay monthly wages, pay social security, or cover food and accommodation. It directly saves tens of thousands of labor costs in a year, and all the savings are pure profits.
Second, store rents are cost-effective and there is no need for core stores.
Hardware stores do not need to be located in prime locations in the core of pedestrian streets or business districts, and there is no need to compete for high-traffic storefronts. Generally, they can be located on side roads or corners of streets around the community.
The rent for this type of storefront is cheap, more than half that of a busy restaurant shop with the same area. The rent pressure is minimal throughout the year, and even if the off-season revenue is slightly lower, it can still be afforded.
Third, there is no expiration loss of hardware products and zero risk of inventory loss.
Catering ingredients are easy to spoil, fresh food is easy to perish, and clothing is easy to become outdated when the season changes. The risk of losing money is very high.
Only hardware tools, metal fittings, pipes and wires are not afraid of putting away, not afraid of hoarding, and are not outdated. They can be used all year round when stacked at room temperature. If they are not sold out this year, they will be sold next year. There is no expiration, depreciation, or loss of inventory. The risk of financing is extremely low, and the capital turnover is particularly stable.
5. The customer base is extremely sticky. Old customers keep buying again all year round, making it easier to do so.
Newly opened Internet celebrity stores rely entirely on freshness to attract traffic. Once the popularity is over, no one will visit, and they close down very quickly.
Hardware stores are just the opposite. The longer they are in business, the more regular customers they accumulate, the more stable and worry-free the business becomes, and there is almost no need to actively attract customers in the later period.
As long as the surrounding residents, merchants along the street, property management teams, and decoration workers have purchased something in the store once and experienced door-to-door service, they feel that the price is reasonable, the accessories are complete, and the after-sales service is reliable.
Hardware is a high-frequency consumable that is needed every day and is used in every household. Regular customers keep repurchasing all year round, slowly accumulating a stable customer source circle, and it is difficult for peers to steal customers.
Besides, the neighbors have small repairs and small purchases every day, and they habitually look for the old stores in front of their homes, which increases their trust.
There is no need to advertise, carry out promotions, or involve low prices. You can steadily maintain your business by relying on word of mouth, and long-term operations will become easier and easier.
6. Summary: It seems deserted, but in fact it is a low-key and profitable small business.
If you put it together, you can understand the whole picture: the hardware store does not rely on individual customers at the door to make money, but relies on large batch project orders, door-to-door services, and high-margin small items to make money; it does not rely on inward flow of customers, but relies on low-cost operations, zero inventory risk, and high-stickiness regular customers to stabilize its base.
The door looks deserted, but we can’t see the orders, door-to-door service, and batch supply behind it.
It is not affected by online shopping, is not affected by seasons, has no shortage of customers who are in demand, and does not strain inventory funds. It has stable revenue all year round and can earn hundreds of thousands a year in a down-to-earth manner. It is a low-key, stable and good business.
Compared with following the trend of opening Internet celebrity stores, getting together to do catering, and following the trend of online side businesses, hardware stores have no fancy routines and rely entirely on down-to-earth management and honest work. They are stable and long-term, with extremely low risks, and are suitable for ordinary people to work hard for a long time.
Topic Discussion
1. Is there such a deserted hardware store downstairs in your home?
Have you ever had your boss come to your home to repair something?
2. After reading the inside story, do you think hardware stores are reliable small businesses for ordinary people?
3. If you have spare money, would you like to open a community hardware store to make money steadily?
Everyone is welcome to leave a rational discussion in the comment area, talk about the hardware store around you, and talk about the most reliable small business in your eyes.
