Moving Right Along

Last week, I invited you to comment on my blog, or register your presence by clicking the ads above this post. (You won’t see them if your browser runs Adblock or restricts javascript). I got one comment, a few ad clicks, and a few emails. We're not exactly burning up the Internet, but it's a start. I thank you for your time and interest.

I will henceforth post at least once every week, probably on Monday or Tuesday. If you’re interested in the inside story of Curio City Online, bookmark this site and come back periodically. I’ll do my best to keep my posts interesting and informative – and short.

For your part…please continue to signal your existence by leaving a comment or clicking on an ad. I don’t need much encouragement, but I do need some.

Oh, btw: My wife thinks my profile photo should be more mayoral looking. I kind of like the slightly warped self-portrait. What do you think?

NEXT: It’s Almost Christmas!

So What Do You Think?

My previous 10 posts gave you a short autobiography, the genesis of Kraken Enterprises and Curio City Online, a brief history of my first year in business, and a look at my current status and immediate challenges.

Now I’ll lay back until I see some indication that people are reading this. If you find it interesting or useful, please leave a comment. I seek readers who can learn from my mistakes and advise me on solving or avoiding problems – especially regarding marketing and technology. I’d like to establish an honest, free-wheeling dialog with interested small business owners, customers, vendors, and suppliers. I hope it will be useful to me and my readers. But first I need to know that you’re reading.

Sound off. This is my last post until I have some reason to continue. Is there anything you’d like to know more about? Did you enjoy what I've written so far?

(Oh, and if you don't comment, please make your presence known by clicking the ads at the top of my page.)

NEXT: ????

The State of the City

Fast forward nine months.

I continue to refine my PPC ad campaign to reduce costs and maximize traffic. At its peak, PPC advertising cost nearly 25% of gross sales. I calculate that advertising can consume a maximum of 8.25%. Year to date, advertising is running me 17.11% of gross sales. I am slowly bleeding startup cash to subsidize the difference.

My top priority, obviously, is increasing sales without increasing advertising costs. To achieve that 8.25% goal, I need to go beyond PPC ads. I know of two ways to do this: Get (free) links from vendors, bloggers, and other sources; and optimize my site further for organic search results. Affiliate marketing is a third possibility, although I’m leery of what seems like a high sleaze factor and the substantial complication of installing an affiliate module. My PHP technology (inability to build HTML pages) and my part-time developer support limit how far I can take these strategies.

My second priority is inventory improvement. I currently invest 50.2% of my gross sales in merchandise. Being a wee bit more than my average cost, that should produce a slowly-expanding inventory base. Unfortunately, I brought in a lot of merchandise before I knew what I really wanted to carry, or what people would really buy, and now I have thousands of dollars tied up in inventory that isn’t selling. I need to recycle that money into new products. I’ve had limited luck selling it off at cost.

My third priority is continued website development. I've still got numerous ideas for site improvements, and a little bit of startup cast left for achieving some of them. There is a major new revision of the underlying Sunshop cart coming out next month.

I’m heading into the Christmas season with an open-to-buy today of (-$42), and at least $2,000 worth of new merchandise and reorders wishlisted, with the Boston Gift Show coming up in a couple of weeks. I cannot sell what I do not have, so I’ll need to infuse more startup cash into new products in the next few months. I’ll pinch some from my development budget (since that’s going so slowly) and some from my marketing budget (since that’s just subsidizing PPC ads). But those are not big budgets.

So that’s where Curio City is today. January through April was discouraging. I nearly broke even in both May and June, thanks to Mothers Day and Fathers Day. July was poor, and August is even worse so far – today is my fifth consecutive day without a single sale; dry spells like that are murder. I expect a minor recovery in September, and then a robust fourth quarter. If it plays out like that, I'll finish the year close to break-even.

If anyone is actually reading this, you could help by freakin’ buying something. :) You could also link to my site, or refer your friends and relatives, or even just click on those Google ads at the top of this page.

Next: So...What Do You Think?

Lights...Camera...(Cue Chirping Crickets)

November 2005 got pretty crazy. Merchandise started flooding in; I spent many hours photographing it, writing descriptions, and moving it into our cellar. My target opening date, Nov. 7, came and went. Eric (the web developer) was silent; I wasn’t even sure he was working on Curio City at all. When the next Monday, which was my drop-dead date, also slid by, I began to panic in my low-key way.

Finally, Eric broke silence to reveal a nearly-completed website. (It had taken him 99 hours to reach that point, btw). I recruited all of my friends and relatives to stress-test the site on Monday, Nov. 21. I got 13 orders that night totaling over $800, as well as lots of valuable feedback. The prevailing opinion said I didn’t have enough merchandise, so I redoubled my ordering despite having spent my whole pre-opening budget.

That’s when the crickets started chirping.

I’d thought that search engine results would bring at least a little traffic my way, but day after day went by without any sales. I didn’t appreciate, yet, how hard it would be to make my site come up in keyword searches – a challenge that I still haven’t solved.

I sent an e-mail blast to everyone that I knew, and got one more order out of it. I found a site (Addynamix) that let me create a cheesy banner ad and run it for $99. Some software glitch prevented my banner from running for nearly a week. As of Dec. 4, I still had no business at all. I started reading up on pay-per-click (PPC) advertising, but I was paralyzed into inaction by the complexity and anticipated cost.

At about this time, my sister approached us, in need of some money. She’s at least as web-savvy as I am, so I drafted her to get a handle on PPC advertising for me. That worked out. It was an expensive learning experience, and the clicks were costing me dearly, but I did finally start getting some sales. I had only the most rudimentary traffic information from Navigator’s Webalyzer program. When I complained to Rip, he set me up for AwStats. At last, I was seeing some solid information about my visitors. Alas, AwStats contained a security weakness that allowed someone to attack Navigator’s server; Rip withdrew the tool after only three days. I was back to working in the dark.

Then, on Christmas Eve, the server went down entirely. I had been disappointed with its uptime so far, and this holiday crash was the last straw. With Eric’s help, I moved to MochaHost by Dec. 31. I'm still there. Rip graciously still gives the Kraken Enterprises homepage free hosting at Navigator.

My first Christmas brought in about $1,800 in sales. This December, I will more than double that amount.

Next: Fast Forward to Today

If You Build It, Will They Come?

I’ve never had to do much marketing for the various businesses I’ve run, which is good. I don’t particularly like it and I’m not very good at it. I knew, of course, that Curio City would not have an employee whom I could christen “marketing manager”. I hoped that I could spend a few thousand bucks on an ad blitz to get the ball rolling, and then search engines and repeat sales (plus some routine advertising) would be my lifeblood. I was budgeting 2.5% of my gross sales for advertising.

It turned out that professional marketing, like web development, is a lot more expensive than I had dreamed. A serious effort would cost more than my entire startup budget. I needed to cut some corners.

One of Anne's former coworkers had just started her own PR firm. She might, we thought, be hungry for business. I took her out to Legal Seafood in Framingham for lunch, and pitched Curio City to her (I didn’t yet have a website to show). She took some notes, asked some questions, and said she’d bring us a proposal. We emphasized that we were willing to do some grunt work ourselves to keep the cost down.

With Anne and I doing virtually all of the production work, and an assistant handling our project on their end, her bargain-basement fee would be $6,500. Plus expenses. Hah! My budget was $2,500, so we really didn’t have anything further to talk about.

I trolled Craigslist a few times, hoping for a freelance marketing type…a student, maybe. I just wanted to pay someone $500 to deploy the other $2,000 to maximum effect. I found no takers. So, as opening day approached, I had nothing in place.

The second leg of my plan was search engine results. Getting one’s site or merchandise to come up organically in real Google or Yahoo searches turns out to be quite an art. There are companies called SEOs – search engine optimization firms – that promise to do this for you, usually by shady and secret methods. Their typical fee is in the $6,000+ range and theirs is a buyer-beware industry. Reading up on it myself is difficult, because everything assumes that you have an HTML site and know how to maintain it; once again, the PHP engine gets in my way.

Just a few days ago, a caller showed me how to run my URL through W3C Validator, which appears to be an online HTML error checker. It found 49 errors that, according to this salesman, prevent the engines from indexing my pages. I have no idea whether that is serious, or just a sales pitch. I need someone’s help. Eric is unavailable for the time being.

This kind of thing is exactly why I started this blog. I am hoping that someone who’s already solved this problem will read it, and leave a comment. I am also hoping that it will not provoke a flurry of SEO sales calls.

As for repeat sales…my original, ambitious site design was meant to make Curio City a “sticky” destination that people would visit for fun and for community as well as for shopping. Nothing like that was implemented. I have made 341 sales to date. Exactly ONE was a repeat customer who wasn’t a friend or relative. I really expected more like 1 in 10 would come back. I still hope to see a few of them again when Christmas season starts up; even 1 in 100 would be nice! I’ve been sending out newsletters with discount offers, to hundreds of people every month. Each newsletter brings me 0-1 sales.

I ship quickly, I address complaints promptly. Only about one sale in 20 encounters any problem that I know of. I don’t think there’s anything wrong with my site, my service, or my merchandise. There’s just no particular reason for anyone to come back. I’ve thought about posting a survey or questionnaire…but again, because of the PHP, I need a developer to do that for me. I have so many higher priorities on my list.

The answer to the title question is, unsurprisingly, No. They will not come just because you built it.

Next: Here They Come

Happy Birthday to Me, Part 1

Kraken enterprises began one year ago today. Since half of all new businesses reportedly fail in their first year, this milestone is worth mentioning.

Web Development Begins

By September 2005, I’d built up a good head of steam. I opened a checking account. I trashed out, cleaned, and organized part of our cellar, and started looking for merchandise. I opened a PayPal account. I arranged for web hosting with Navigator Hosting, a small business owned by one of the Octopus Overlords, and the host of that site. I went with Navigator partly to support somebody I know, and partly because I was impressed with Octopus Overlords’ uptime during Hurricane Katrina (Navigator is in Louisiana). And I worked intensively to finish my website spec.

I quickly realized how little I know about two important things: internet technology, and marketing.

Fortunately, the developers that Michelle had recommended (Eric and Polly) explained things as we went along. My computer gaming career gave me considerable experience with software development, but the online environment was all new to me. While Polly (the artist) and I hashed out the look of the site and the logo, Eric (the programmer) explained such arcana as merchant accounts and gateways. He also floated the idea of buying a PHP shopping cart to drastically reduce development costs.

Buying a software package that already included all the basic e-commerce functionality, rather than having it coded from scratch, looked like a very good idea. Eric would customize the basic cart to achieve my spec. He suggested a few possibilities, and I eventually settled on Sunshop, mainly because I liked its interface and support forums.

I have questioned this decision numerous times, and am still ambivalent. Sunshop itself is fine, as far as PHP carts go. But Curio City Online does not exist as a set of static HTML pages. Rather, Sunshop builds pages from templates as they are called up. Without knowledge of PHP programming, I am more dependent on developer support than I would like to be. I’m perpetually unsure what can and cannot be easily implemented. It’s difficult to optimize for search engines – a problem that still plagues me today. All of the help resources I've found are specific to HTML pages.

This might be tolerable if I had my developer’s undivided attention. I do not. Eric puts in time as he can, and progress comes very, very slowly (he does have a day job, after all).

Incidentally, Turnkey is working on a major version upgrade to Sunshop. It will theoretically be ready next month, and the degree to which it solves some shortcomings will greatly affect my opinion of it. That's fodder for a future post.

Once Eric installed Sunshop at Navigator, I pressed him to tackle my many customizations. He convinced me that we really needed to concentrate on just getting the doors open. Reluctantly, I dropped or postponed one planned feature after another. It was hard to watch my vision of a unique, exciting web shopping concept gradually give way to a plain-vanilla online store, just like every other. But October was slipping away already. I wanted to open before Thanksgiving, and we hadn’t even nailed the look yet. The bells and whistles would obviously have to wait. Just getting the basic site up and tested was pretty intense.

Long story short: We did get it done in time for a stress test the weekend before Thanksgiving. It passed. Curio City Online 1.0 was real, and in time for the heart of the Christmas season.

Eric has slowly been plucking away at my task list ever since, most recently completing some support for Google Analytics. I do have a clear plan. First, I want Eric to handle about 10 more tasks that I consider part of Curio City 1.1. I had hoped that he would finish them before Sunshop 4.0 comes out. Then, I want him to perform the upgrade. After that, I can finally set the poor man free, and go into Christmas 2006 with version 1.1. After the holidays, I'll find a new developer to implement the core customizations that comprise Curio City 2.0. Three developers read my spec; one expressed weak interest in taking it on. It is amazing how hard it is to find someone for this without paying big bucks to a big company.

All of this tech stuff gave me an excuse to put off my other major challenge: marketing. I have never liked or cared about marketing. I don’t know anything about it. I’ve never had to deal with it myself before. But it is critical. Curio City will rise or fall based on marketing. I have known this from the beginning. I have also known that I am inadequate for that challenge. I need help.

Next: If You Build It, Will They Come?

Nailing the Concept

My concept for Curio City was twofold.

First, I would sell "everything else", meaning anything that isn’t owned by Wal-mart, or by some trendy mall boutique chain, or by an Internet category-killer like Amazon.com. I would sell an odd assortment of quality merchandise. As I mentioned last time, my earliest model was a store in Williamstown called Where Did You Get That?! They sell curios, novelties, toys, games – all manner of unusual and fun merchandise. It’s the kind of store where you never know what you’ll find around the next corner, and that is the feeling I want to create at Curio City. But WDYGT was crowded, and full of low-quality, low-priced crap for children. I started thinking about taking their same concept upscale, in the kind of shopping environment that would appeal to me.

Besides “everything else”, my other main concept is “everyone else”. That is, my customers will be people like myself (except with money!) who need to buy gifts but hate to shop. I will offer an assortment of high-quality merchandise at reasonable prices, with no tasteless trash to wade through. I’ll offer original greeting cards. I’ll offer gift-wrapping on the spot. The idea is to be a painless, one-stop destination for people who need to get gifts but aren’t inclined to shop around for them. “Gifts to go” is my catch phrase for this concept.

Armed now with a goal, I started kicking around some names, relying on a thread in my favorite Internet forum, Octopus Overlords. I polled these names: Everything Else, The Worthwhile Shop, WorthWhile, And Another Thing, and The Odd Store. “Curio City” was eventually suggested by user Pyperkub.

Anne and I took a couple of road trips, scoping out different types of gift shops in resort towns and tourist areas. Each one helped me refine my ideas about merchandise and presentation. A local chain with the awful name Funusual does something near the concept that I was settling on. They do it in malls, though, where I don’t want to go. And the last time I looked, they had no Web presence worth speaking of.

In late July 2005 we had dinner with our old friend Michelle Chambers, who owns a web design firm called New Tilt. I picked her brain about business in general and Web business in particular. Based on that conversation, and on a suggestion from Anne, I decided to open Curio City as an e-commerce site ASAP, and postpone a physical store until Fall 2006. I was dismayed to learn how much professional web designers earn. Michelle says the rock-bottom charge is $7,000. I reluctantly raised my budget from $2,000. I began to hope that the Web business might work out well enough to preclude opening a real store. I’m skeptical, but I’m open to the possibility.

Once this decision was made, things happened rapidly. I opened a mailbox at the UPS store to obtain a business address: 300 Grove St., Suite 113. I got a cell phone so that I could have a business phone number: 781-635-8743. I met with my patent attorney friend Dale Malone in an official capacity for the first time, buying him dinner at The Union Street Brewhouse in exchange for his advice on incorporating.

I got my federal EIN, and incorporated as an S Corporation on Dale’s advice. Then I trademarked the name Curio City. Sadly, that URL was taken, so I bought curiocityonline instead, and made a point of referring to my store by its full name in all references.

By late August 2005, I was finishing up a highly detailed website spec and looking for a developer. I had extremely ambitious plans to create Curio City as a place – a destination as much as a store, with a strong community aspect. It would have been like no other store on the Net. The first developer I interviewed turned down the job as unworkable. The second one agreed to do it, and for the very good rate of $35 per hour. Thus began a long struggle that continues to this day.

NEXT: Web development

Kraken Enterprises begins

The older I get, the harder it is to pretend that I work for any reason other than to get a paycheck. Yet, to succeed in a job, you have to act like the paycheck is incidental. You have to pretend that you care so much about the work that you’d rather be in the office than anywhere else. The people who pull off that charade (or, even scarier, the ones who actually buy into it) are the ones who get ahead.

I’ve never cared much about making money for other people, and somewhere along the line I lost the ability to pretend otherwise. This attitude probably makes me unemployable. Being nearly 50, white, and male does not help very much, and my checkered work history and rudimentary education pretty much seal the deal. Who would hire me?

The combination of inheriting a bit of money, feeling unemployable, and being unable to retire, led inevitably to one conclusion: I have to work for myself.

I was slow to accept that idea – it wasn’t easy to give up the pursuit of a regular paycheck, especially since I didn't feel driven to do anything in particular. As I was grappling with that, I decided to spend a few thousand dollars on one last exotic vacation. We arranged to meet up with some Michigan friends in Tortola, BVI. One fine afternoon in the swimming pool at Lambert Beach, I went into my employment lament, which had begun to bore even me after my third layoff. My friends suggested that I might start some kind of gaming website. I couldn’t imagine how that could possibly make money, especially with PC gaming on the wane, and strategy gaming never particularly popular, and me having no real technical skills. I shot the idea down…but it was the first time someone suggested a website.

Gradually, I concluded that I should open a store. But what to sell? The two things that I know best – books and computer games – have died in retail. The Internet and two huge chains own bookselling. PC gaming is steadily losing market share to consoles (I have zero interest in action-oriented console games). Besides, like books, that business is owned by the Internet and by huge chain retailers. It is simply not possible to establish a profitable general-interest bookstore or PC game store.

So…what retail category is not thoroughly dominated by (a) Internet retailers, (b) big-box stores, or (c) a mall boutique chain?

First, I investigated hobby shops. There are still a fair number of mom-and-pop retailers, despite worrisome growth by a chain called Hobby Town. As my continuing research suggested that a hobby shop might be feasible, I had to admit that not actually having a hobby of my own (except, that is, for PC gaming) would be a real handicap. Successful independent hobby shops are labors of love by fanatical hobbyists.

My other inspiration was a store in Williamstown, Mass., called Where Did You Get That? This dimly-lit, claustrophobic store was overstuffed with all kinds of novelties, gag gifts, games, nostalgia items, costumes, toys, and miscellany. You didn’t know what you’d find around the next corner, but it would probably be interesting. This store’s eclectic selection and haphazard presentation was its strength. It was actually fun to shop. Here was a concept that depended on its owner’s quirks. It could not be made formulaic and reproduced. As far as I knew, there were no similar shops locally.

I wanted to avoid a label like “hobby shop” or “bookstore” that would create expectations that constrain my selection. “Gift shop” seemed sufficiently vague to encompass almost anything. I would open a “gift shop” similar to Where Did You Get That. I would eliminate the cheap, tacky, lowbrow humor items and tilt more toward the techie and the sophisticated. I would also have a nice website, and make a significant share of my sales online.

(Ironically, the original Where Did You Get That store has moved to a larger, brightly-lit location. Their selection and presentation are more professional now, and they’ve lost the quirky fun feeling that originally inspired me. Let that be a cautionary tale.)

I researched Boston-area competitors. I took a few classes on how to found a company, choose retail space, etc. The price of rent in any desirable shopping areas was very discouraging. I honestly don’t understand how any independent store can ever cover its rent and payroll, never mind putting money in its owner’s pocket. I started running numbers. They were pretty daunting. It was very clear that my little inheritance was not going to do it. I’d have to take on considerable debt. Debt = danger. I really wanted to bootstrap my business.

About this time my wife suggested that, instead of starting a store with a website as an afterthought, I could start with the website, and use the knowledge and experience gained to open a store. Maybe the web would even prove profitable enough that I wouldn’t need a store at all. Oh, and by the way, she would support me while I got the thing off the ground.

That was the breakthrough. I could bootstrap this thing. I could establish the business, find vendors, test merchandise, and build a brand – all without taking on debt or risking anything beyond my starting capital.

On August 12, 2005, Kraken Enterprises, Inc. was born, and I was committed. ("Kraken", by the way, is a long-time gaming alias assembled from the letters in my name.)

NEXT: Curio City takes shape