Welcome to Curious Business

Every Friday, I post a small insight into running Curio City. My most recent posts are directly below. You can also start with the first post, or use the subject labels to the right to home in on particular topics. Feel free to comment on anything that interests you.
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Friday, April 18, 2014

End of the Line for XP





Security warnings grew increasingly shrill as Windows XP rode into the sunset. Wasting $100 to upgrade my five-year-old Dell Vostro to Windows 7 would have been dumb. I knew that this was coming and a new computer was in the plan for 2014 all along -- just not yet. Then Microsoft upped the stakes by disabling Security Essentials – they’re still updating virus definitions, but they rendered the program unreliable by turning the detection permanently red. I reinstalled Avast to get around that (and quickly remembered why I had uninstalled it in the first place; what a whiny program!).  

Last week’s Heartbleed scare pushed me from anxiety to action. With two major vulnerabilities I had to replace my Vostro, and quickly.

“Quickly” took most of a week as I shopped the Dell Outlet, Newegg, Best Buy, Staples, Tigerdirect, Lenovo, and a smattering of smaller vendors for sweet deals on Dell, Lenovo, or HP laptops. It quickly became apparent that I was not going to get very much new computer within my budget, so I focused on refurbished and scratch-and-dent machines. The options narrowed drastically when I limited results to Win7 machines with at least 6 gig of RAM for under $800.  

The finalists were a new Inspiron from Staples for $550, a refurbished Latitude for $429, and a refurb Precision for $599 (both from Newegg). The Latitude was the best deal and the Precision was the best machine. After a couple days of hand-wringing I reluctantly decided not to take a chance on a refurb with a 90-day warranty from a third-party seller – I lack the technical chops to solve potential problems myself...the potential for problems was too high...and my confidence in the limited warranty was too limited. 

The full-year warranty from Dell persuaded me, without enthusiasm, to buy the boring Inspiron. It has twice as much RAM as my Vostro, so I can at least expect slightly faster performance. The display and keyboard are nicer, too. Redeeming my Staples rewards covered the sales tax and brought the delivered cost to $552. American Express will rebate 5% of that, and I’ll earn another 5% in further Staples rewards.  

Of course, I still can’t afford it. Without an unexpected sales surge I’m going to have to pay some credit card interest for a few months. 

Windows XP still powers hundreds of millions of computers worldwide. It's still a fine operating system that works simply and reliably. Win7 is a good OS, too, but frankly I always liked XP's interface better. If tens of millions of those XP users go through the same hassle that I just did, the PC industry should register a noticeable bump in sales this spring. 

That Precision was a really nice computer, btw. Maybe in a few years I’ll be able to replace this Inspiron with something that I actually want. 

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As long as I was making hard decisions, I discontinued Bottled Up Jewelry. Despite being beautiful and eco-friendly it didn’t fit in with Curio City’s overall emphasis on practical, clever things. The jeweler dropshipped quickly and accurately, but sales never amounted to more than a nuisance. I was able to delete 110 product pages, four categories, and more than 400 images. I hated to flush away all that work, but having it cleaned out feels good now that it’s done.

Will I ever bring in another jewelry line? Maybe, if I happen upon something unique and clever, not too expensive, and drop-shippable.  

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As I should have foreseen, business completely hit the wall the minute I put the computer on my Amex card. As of Friday afternoon this is shaping up as the worst week ever, with just four sales totaling $78. I don't know why. The coincidence with switching to PayPal is suspicious, but that should be invisible to customers. I don't see any technical flaws of any kind. AdWords could use a refresh and Google is screwing with Product Listing Ads again, but that doesn't explain the sudden dramatic collapse. A formidable new competitor wouldn't kill everything across the board. Maybe it's got something to do with Easter. Sometimes dry spells just happen. Eventually they end as mysteriously as they began (although this one has already lasted much longer than expected and shows no sign of fading). Whatever the cause, this week is going to drag April into the dumpster. 

Friday, April 11, 2014

And the Winner Is...




Subjectively, I like PayPal’s high-rate, no-fee, no-contract approach better than WorldPay’s low-rate, high-fee, sign-away-your-soul model. The number of online complaints about WorldPay still bothers me. PayPal gets friendlier reviews – high rates are the chief complaint, and I’m getting pricing below their published rates. So PayPal has a subjective edge.

I prefer objective decisions, though, so I tried to quantify the expected costs under each bank. I won’t drive you away with the wall of numbers that “show my work.” I used these assumptions from Google Analytics and Quickbooks data: 


  • average transaction of $45, which is remarkably stable throughout the year;
  • average of 90 transactions a month from January through October, 165 in November, and 400 in December; 
  • 25% of my customers use PayPal, 30% use low-cost (“qualified”) credit cards, and 40% use high-cost cards (rewards cards). 
  • American Express is off in its own world and makes up 10% of my sales at most, so they aren’t a factor.


When I plugged those assumptions into each company’s discount rates, per-transaction fees, and monthly fees, I got these results:


  • Using WorldPay for credit cards and PayPal for PayPal should cost $1,895.09 combined.
  • Using PayPal for everything should cost $1,895.02 annually.


Seven cents apart? That’s just eerie.

An objective tie dumped me back to my subjective feelings, so I went with PayPal. I signed up on Wednesday. If that was a mistake, I can get out of it with no penalty.

Initial impression: I had assumed that, like every other merchant gateway, PayPal would process credit cards separately and deposit each day’s receipts to my checking account. Instead, every single transaction shows up as a PayPal sale and goes into my PayPal account balance. There is no way to see what payment method an individual customer used for a particular order. While that simplifies accounting and cash management, I’m not sure yet that I like it.

(Incidentally, I paid $2,617 last year for credit cards and PayPal combined. If my estimates were right I will save around $700 per year with either bank.) 

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Another minor milestone: I passed Quickbooks order # 111111 this week. Sunshop blew past that mark months ago…but Quickbooks is closer to really being my 11,111th sale.

Friday, April 04, 2014

Merchant (So-Called) "Services"




One perk of being a one-man business is that nobody ever questions your decisions. The flipside is that nobody helps you make them. That can paralyze a cautious person like me until something forces me to act. 

The CDG Commerce situation that I wrote about last week has reached the action point. I still can’t access their transparent gateway and their tech support stopped answering my emails. Transaction confirmation emails have become sporadic, so I often have to log onto their website to see which card was used before I can enter transactions in Quickbooks. (And their annoying password requirement means I have to copy and paste my gibberish password every time I log on.) Bank deposits don’t match batch results anymore; the money finds its way into checking eventually, but bookkeeping has gotten difficult. Thursday morning I lost a $25 sale to their gateway’s confirmation screen. It’s probably no coincidence that at least 75% of my sales are going through PayPal now.

Credit card processing, or “merchant services” as the industry styles itself, is an arcane business that performs a simple function. The heart of their service is just an automated process. Here’s a life lesson for you: The more complicated a business’s pricing structure, the more negotiable its prices are. 

After negotiating with RBS WorldPay all week I haggled their discount rates down to just 1.59% plus 10 cents per transaction (2.0% for reward cards and 2.89% for Amex), with a $25 monthly fee and $50 annual fee. The cancellation fees are steep: $295 in year one, $195 in year two, and $95 in year three of their contract…but I’m not one to jump from one company to the next unless something goes seriously wrong; three years seems reasonable to me. Unfortunately their contracts auto-renew every year, giving you only 30 days to cancel penalty-free.

Here’s a corollary to the earlier life lesson: The more complex a business’s price structure, the sleazier its practices. I decided to read web reviews before tying the knot with WorldPay. One professional reviewer gave them a respectable four out of five stars, but scores of customer reviews warn people away urgently, accusing them of arbitrarily raising fees during the contract period, having terrible customer support, and being generally dishonest and untrustworthy. Should I ignore all the warnings and assume that the overwhelming majority of their customers are satisfied (reviews are usually written by the disgruntled, after all)? Or consider myself warned and start my search over? 

I confronted their salesperson with all the bad reviews. She gave me her word that I would not be charged any fees beyond what was already disclosed. With that in writing, I decided this morning to commit. 

An hour later -- before I followed through on that decision -- PayPal called to solicit my credit card business. PayPal charges a straight 2.2% + 30 cents for all transactions with no monthly fees, no contract, and no cancellation fees. Now I need to run some comparison numbers and research PayPal’s reputation before I can commit. I think that WorldPay will have an edge at higher volumes (lower cost per transaction will make up for the $25 fixed cost) and PayPal will make out better during the slowest months (no fixed cost, higher per-transaction fees). 

I wish I had somebody to talk this over with. My brain is starting to seize up every time I think about it. But I need to make a call by Monday.

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