Welcome to Curious Business

Every Friday, I post a small insight into running Curio City and/or Blue Hills Editorial Services. 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, March 14, 2008

Ding, Dong, The Store Is Dead!

What a relief.

I tried to talk myself into it. The financials probably would have eventually worked – as the wife observed, I was probably too fixated on a sales-per-sq-ft number with a weak basis. A year or more of exhausting hardship and chaos might have eventually settled into a stable, profitable base of operations. Of course, surviving until “eventually” was always the corker. Certain aspects of owning a mature store did (and still do) appeal to me. But I could never convince myself to go through hell to risk that nebulous payoff. I’m almost certain that I couldn’t have done it all by myself, and I would’ve destroyed my web business in trying.

The certainty that a store would completely take over my life was the biggest drawback in my mind, along with the staggering amount of work required to make it happen at all. To Anne, it was the thought of borrowing >$60,000 during an economic recession, and with our personal finances already very wobbly. We aren’t doing very well. I make doodly squat, and she hasn’t had a raise or a bonus in three years even though she does nothing but work, work, work. Savings are bleeding away, debt is mounting, and inflation pinches the household budget more and more every time I buy groceries or try to pay property taxes or need car maintenance. Coddling Curio City looks more and more like a luxury that we can’t afford.

Wife Summit II ended with a mutual commitment to endure a couple more years of hardship, at least for as long as growth remains encouraging. Now that I don’t have to open a store, I’ve decided to divert a couple thousand dollars out of “startup money” and into our house, which is literally rotting away. Hopefully we won’t have to tap the home equity line of credit that we have no way of repaying.

Curio City Offline” is not dead. It’s merely resting until such time as “Curio Metropolis” needs to move out of the house. By then, Kraken Enterprises should have enough cashflow to reduce the risk of rapid failure. I might even be able to hire someone to help me do it. In theory, anyway.

With the store slain for now, I can focus on moving the website forward. Although the risks are much less than a store’s would be, they’re out there. I need to push forward aggressively if I hope to keep doubling my sales. There are some time bombs coming up.

The first one, paradoxically, is lighted caps. If you’ve been following along, you know that this single product line accounts for 75% of my total sales. It is the sole reason that March is demolishing LY’s sales. In my fine tradition of finding the dark cloud beneath every silver lining, I know that these caps won’t sell this well forever. Sooner or later, a deep-pocket competitor will out-compete me, or consumers’ whims will just wander on to something else. Even if caps do keep cranking along, I’ll soon be up against LY sales figures from months that included cap sales. The year-to-year comparison will look a lot less rosy when I’m comparing apples to apples.

Earlier I identified three major steps to take Curio City to a higher plane:

  1. Increase my merchandise selection and improve its presentation;
  2. Increase my traffic by improving my search-engine placement; and
  3. Improve my conversion rate.

Step 1 is the most straightforward, and the most fun. So let’s talk about that one this week.

I have two immediate problems: Way too many inventory dollars locked up in old and unsalable products, and an open-to-buy budget that is constantly struggling to reach black ink.

Nothing cures a budget shortfall faster than a big wad of cash. But pouring in more of my own money is counterproductive; after all, Curio City exists to put money into my pocket, not take it out. I would much rather let operations lift the budget back to where it belongs than infuse a new loan for it. (And just because I have money in the bank labeled “startup money” doesn’t mean that I want to spend it on Curio City; I would love to divert some of it into personal needs instead). So rather than transfer all my money into Curio City’s treasury and go on a shopping binge, I’m ordering just those half-dozen or so new products that I’ve had wishlisted since January. Maybe they’ll sell enough to cover the bills before the charges hit, or maybe I’ll need to inject doses of rescue money here and there to keep the charge card out of the red. The objective is to keep my options open without loaning the company a lot of new money.

I started with an expanded line of purse hooks. They would not have been my first choice, but the vendor is offering trade show pricing plus free shipping. I can’t resist a bargain. And maybe they'll get a bump from Mothers Day.

Next up is a line of recycled bicycle chain housewares (Use the Related Products tab to see the whole line). I expect them to sell slowly, but reliably, like the Vinylux products. I’m bringing these in right now to take advantage of the upcoming Aging Hipsters linkage. Which, it occurs to me, I’m supposed to finish today. Drat!

Neither the purse hooks nor any of the other new things on my list have blockbuster potential, but they all enhance my overall product mix and promise to sell steadily. Steady sellers are just as important as bestsellers, if you have enough of them (remember the 80/20 rule?). Meanwhile, I’ll keep some cash ready in case I luck into the Next Big Thing. If my friend Matt had not mentioned lighted caps last summer, I never would’ve found them. If I hadn’t had a few bucks in my open-to-buy at the time, I might never have tried them. There’s a huge right-place, right-time factor in product discovery.

To recycle some of my frozen inventory dollars, I should be ruthless with the markdown pen, and then send out another newsletter announcing a sale. Markdowns hurt the bottom line, but merchandise languishing in the cellar hurts the top line. So those are my objectives for the next week or two: Bring in new product. Turn over the Aging Hipsters list. Take draconian markdowns on my oldest stuff. And announce it all in a newsletter.

The hoped-for Sunshop upgrade didn’t happen, btw.

About Newsletters

My Constant Contact bill rose from $15 per month to $30 when my mailing list topped 500 email addresses (at the beginning of last week, I had 506). My mail open rate averages 21.3%, and Constant Contact says that the average for retailers is 26%. So those were two good reasons to prune my list.

With some effort, I figured out how to identify those addresses that have never opened a newsletter. 335 of my 498 contacts were on the never-opened list, leaving only 163 presumed “good” addresses. Last week I sent those “dead” addresses – which included a surprising number of friends whose ISPs must be blocking my emails -- a confirmation request. A week later, a handful of them had confirmed that they want to stay on the list (although none of my friends confirmed). Now my monthly fee is back down to $15, and I expect a much higher open rate from the 180 good addresses remaining.

None of this is likely to help the bottom line: each newsletter ultimately only delivers 1-3 “extra” sales (those with coupons work best, of course). They barely cover the cost of the newsletter service, much less my time spent creating them. But there is value in keeping my name in front of people, and like most other things about Curio City, newsletter results improve very gradually as I keep building a bigger and stronger customer base. Also like most things about Curio City, it’s not growing big enough fast enough.

Reasons to hate Massachusetts

Sensing that Kraken Enterprises is a great source of untapped wealth, the Commonwealth just raised my unemployment tax contribution rate from 2.53% to 4.78% -- retroactive to the first of the year. Thanks, guys! I guess I can collect a few bucks a week if I lay myself off. Which I might have to do, if this bloody state keeps raising my taxes. Massachusetts has the highest unemployment taxes in the nation, and pays the most generous benefits.

Reasons to hate Blogger

This interface for post creation blows. I can't tell what font or size I'm using. The spacing goes all wonky. Headlines never look like they should; it absolutely refuses to resize the "Massachusetts" headline above. Whenever I open a published post to edit it, the font appears to be 72-point.

I am nearing my 100th Blogger post. Maybe it's time to move the blog.

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