We are somewhat fortunate in that we are pretty diverse, and dont only sell pellets, stoves, accessories.....also sell building materials, not that that is a huge profit-center these days either. Id have to guess that roughly 90% of the stoves we sell are pellet stoves, 5% coal, 5% wood. We just got in 125 stoves for the late summer/fall. Folks are still buying pellet stoves....sold 2 on saturday, one on sunday. NG isnt at all available in our area....gas customers have to have it bought in, and its hugely expensive. Ive been thinking about our customers, and why they burn what they burn. Some guys have woodstoves that are quite old, like the old Riteway models...they are still out there, until someone leaves the ash door open and warps out the grates and/or stove. Most of these guys seem to be scroungers like many who abound here, getting their wood very cheaply or free....very hard to argue with the economics of free fuel. But I see many lifelong wood burners who are just plain tired of dealing with it, and they go to pellet or gas, even though the cost is alot higher. At some point POSSIBLY pellets may just be too expensive to burn, but i dont think we are there yet.
As for pellet supply, weve got somewhere around 500 tons on the ground right now, both hardwood and softwood, with between 6 and 10 truckloads (156-260 tons) coming in per week. As for deliveries, we have sold roughly 400 tons we have to deliver, which i have omitted from the above totals. It was hard to make money by selling pellets before, but doubly hard this year, since the pellet companies arent offering any real early-buy incentives. Theres only one pellet mill in New England, and they seem to know it, by looking at their pricing. That mill used to be preferred by my customers, by far, but now that their prices is $20/ton higher than the other hardwoods, people are switching to my other two brands. Im kind of hoping this is a wake-up call for the pellet mill thats more local. The real test will be when we run out of our allotment of hardwoods....will people pay $20/ton more, or buy some softwood pellets? The verdict is out on that one. I also brought in about 150 tons of standard grade pellets, higher ash, about 1.2%, instead of the .5% or so, but they are cheaper, at $210/ton....I expect we'll sell out of those by July.
I prefer to put my money in the bank and get interest...T-bills have been ok....but as for stoves, Ill put my money in pellet stoves still, since the majority of our sales are there. I cant make the leap of faith and put alot of money in woodstoves on the "if I build it, people will come" theory. I know how many I sold in last years' boom year, so, I order a fraction of that for summer/fall. If I had to guess, Id say that its going to be another good year for the pellet stove, but likely not as good as last year. I dont mind at all selling wood stoves, but its usually a one-time sale, and Id prefer to keep having my customers back, year after year (just a retailing thing, i guess), so for that reason as well, pellets are nice.
Id like to see more pellet manufacturers around New England so as to have more competition and lower the price. I really cant see how I can lower my prices anymore and still make money, to where its worth the trouble. I dont sell cordwood, so, after selling a stove, the folks arent gonna be back for anything other than smokepipe in 5 years or so. Maybe just a selfish reason, who knows?
Also, some of the clientele buying pellet stoves require yearly cleaning, parts, etc, so theres more potential sales with those stoves. I know, all this might sound somewhat greedy to all you folks who arent in retail, but return customers are a retailers lifeblood. Service in this industry is on a whole not very good, at least in my area. If you can service the customer well, say what youre gonna do and do what you say, you can do well. Even selling pellets.
