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, January 30, 2009

From Bad to Worse

Moving to the new credit card processor isn’t going very smoothly. My test transactions go through fine, but Sunshop reads them as declined and won’t complete the sale. Credit card acceptance was broken for a day before I realized that all was not well. “Fortunately”, there were no sales that day.

Sales are running way behind LY now. On Inauguration Day business fell from 4-5 sales per day to 0-2. The little Valentines Day bump that I expected did not happen. January will finish very slightly up, thanks to one record-breaking sale from two weeks ago, and that itself is remarkable. If you take away that one big boost, though, the month flopped.

January’s numbers might be the last black ink I will see for some time:

Total income: +6.7%
Total COGS: -5.1%
Payroll: +11.8% (yay me!)
Net Income (Profit): +3.8%

DCI, the company that double-shipped two Christmas orders and then dragged its feet about sending return labels, is stonewalling on my $1200 Mastercard credit, six weeks since their original error. Only four of the five UPS return labels show delivery; the fifth one was apparently never scanned. I’m hoping that DCI is just too incompetent to realize that, and not deliberately stalling me until it’s too late for me to dispute the original charges. I DID return all five boxes, of course. I don’t have a clue what might have happened to the missing one, if it is really missing at all. DCI was supposed to have shipped me a backorder last week, too, and I don’t see a charge for that. I’ve dealt with many incompetent vendors, but never on this scale. It’s too bad their merchandise is so good.

Worst of all, my wife joined the ever-growing legions of the unemployed last week. Her lousy job goes unlamented, but it subsidized me while Curio City grew. Without that support and with Curio City’s growth stopped, I’m going to need a part-time job. Kraken Enterprises will remain my number one priority, but it can’t keep me busy full-time until the customers come back.

If there is a silver lining to this post, it’s February. Historically accounting for only 3.5% of annual sales, February’s targets look laughably low.

So why am I not laughing?

Friday, January 23, 2009

Avoid of Fraudsters!

My largest single sale ever (for 58 lighted caps) saved this week from disaster and made up for all the refunds I had to give this month. January is going to be OK now. Not great, but OK. If history holds up I should see a very small Valentines Day bump next week.

Yet another reason to hate UPS: The aforementioned customer paid big bucks for 2nd Day Air. I quickly tested all those caps, weeded out a couple of defects, replaced a few dead batteries, and packed them up neatly. Hoping to impress her, I upgraded to Next-Day Air when I saw that the incremental cost was still within the customer’s shipping charge. The box’s value triggered a requirement that I’d never seen before, to hand the package directly to a driver or “a UPS agent” for a signed receipt. I wedged the big box into my Miata for a trip to the UPS Store…who could not accept it, because they are not “UPS agents”. Hmmm.

OK, back into the Miata we went. UPS never misses a chance to charge my account, so I expect to pay extra for this home pickup that they required. Well, whatever. The big valuable box was finally on its way, I had complied with their insurance requirement, and my customer should be pleasantly surprised when her caps arrive a day early.

Since this is a UPS story, you can guess what comes next: My customer emailed me about receiving delivery delay emails from UPS. She wanted her hefty expedited delivery fee refunded. I had to explain that it was still being delivered within the two-day service that she had actually purchased, and only the upgraded delivery that *I* had paid for was forfeit. My pleasant surprise had backfired. I filed a claim with UPS and offered to refund her shipping charge if UPS would honor their guarantee.

As you might guess if you read this post, UPS’s guarantee is not worth the pixels it darkens. Here is their list of excuses:

• Disruptions in the air or ground transportation networks, such as weather phenomena and natural disasters;
• The unavailability or refusal of a person to accept delivery;
• Delays caused by the consignee;
• Acts of God;
• Public authorities acting with actual or apparent authority on the premises;
• Riots, strikes, and other labor disputes;
• Civil commotion.

And so I added a new section to my shipping policy. OK, I can see blaming God and public authorities. But “weather phenomena”? Come on. UPS has obviously never heard of the post office’s unofficial creed: “Neither snow, nor rain, nor heat, nor gloom of night stays these couriers from the swift completion of their appointed rounds.” One might even argue that all of those fine-print exclusions make their guarantee border on fraud.

In other news:

I noticed a pending charge to my business Mastercard for $7.50 from PayPal. That’s strange; I didn’t think I owed PayPal money for anything, and why would they hit my charge card rather than my PayPal account, or maybe my linked checking account? Maybe they were doing a routine card authorization check...but those usually use $1, not $7.50.

When the charge settled, the payee's name changed to Rebatesoft. That’s even stranger. Who? When I googled them I found multiple forums dealing with credit card fraud. Maybe Rebatesoft is laundering stolen credit card numbers prior to selling them. It's unclear whether Rebatesoft is the actual thief, or a willing accomplice, or an unwilling tool. There is a real company called Rebatesoft. Their contact page includes this gem: "Avoid of Fraudsters. Please note what Rebatesoft.com not charge anybody credit cards. All payments going via RegNow.com system. Beware of the fraudsters!"

I immediately canceled my card. Now I’m stacking orders until the replacement card arrives. I could use my Amex instead, but I want to earn my cash rebate.

I used this week’s idleness to (finally) poke around in my new merchant services account. I am ready to integrate it into Sunshop and make the big switch…possibly as soon as today, if I can get somebody to hold my hand. I obviously can’t afford to screw up credit card acceptance.

Friday, January 16, 2009

Inaugurations

Apropos of nothing…my wife took this photo on Monday, Dec. 8, just as I was about to load up the Forester with the weekend’s orders. The huge box in the foreground is about 4 feet deep. All three of those boxes are filled to overflowing with orders. She named the file “why isn’t the mayor smiling.jpg”. The mayor is stunned. The mayor thinks his business may have outgrown him. The mayor is rethinking this whole "success" thing.

Anyway, on to today’s post:


It looks like the Obama administration is going to parade into Washington throwing fistfulls of cash to anybody who asks. I’m tempted to grab a piece of whatever action they toss at small businesses, even if it means taking on debt for the first time -- we all know that government debt never has to be repaid.


Here’s what I’d do with a big pile of free government money:


  1. Take Curio City beyond Sunshop with a custom e-commerce engine and a graphical makeover. I just met a developer who’s going to take over from Eric very soon -- solving one of my longstanding challenges -- and who would happily step right into a complete redevelopment.
  2. Contract with a marketing firm to bring Curio City to America’s attention. Last Christmas proved that people love my store…when they stumble upon it. Long-time readers know that marketing has been my Achilles heel since before I launched this company. Three years later, I am no closer to figuring it out myself.
  3. Rent commercial space with warehouse, shipping/receiving, and office capabilities. Nothing lavish…I use maybe 250 square feet of our house now; quadrupling that to 1000 would be luxurious.
  4. Hire a part-time or seasonal employee to handle the shipping/receiving duties, freeing me to focus on the intensified admin requirements that points 1 & 2 would impose. The above photo should explain why I need to do this. Do you know how long it takes me to ship that many boxes?

The new regime has promised most working Americans an extra $10 per week from reduced federal withholding. Ten bucks would be a nice windfall. How am I going to spend mine?


Hah!


My paychecks are too small to trigger the federal withholding tables. Since our combined household income is taxed at 25%, I just withhold as much as I can afford without shrinking my paycheck to invisibility. To date, I’ve arbitrarily taken 10% for federal withholding. Starting with my most recent check, I raised that to 12.5%. So unlike the rest of America, I’m getting a 2.5% “tax hike” that will reduce my average weekly paycheck by about $3.50.


My wife, being a grownup, will reap the Obama windfall. That $10 per week will help offset a fraction of this year’s $100 monthly health insurance increase. Our combined net income is going down again for the fourth year in a row. Hopefully a round of deflation as other Americans join us in the shrinking income department will make it a little easier to survive on less.


To battle this, I gave myself another raise, to 18.25% of gross. If Curio City defies gravity again this year, we might be able to hold our ground.


Oh, and while we’re on taxes…in the past week Kraken Enterprises deposited:

  • $1,236.81 in federal Q4 payroll taxes
  • $259.89 in state payroll taxes
  • $56 federal unemployment
  • $235 state unemployment
  • $69.23 in sales taxes

Put that together with our personal Q4 1040-ES payment and our quarterly property tax bill, and it’s hard to understand why the government is broke. Maybe we are the only people who actually pay our taxes.


Let's end with a parting shot at Blogger: Every time I Preview a post, Blogger changes the font and removes my formatting. It's probably because I paste in text that I composed in MS Word, but you'd think that after all these years they would have fixed that. It is highly annoying to see everything changed to LARGE and all of my line breaks gone. It's why my posts don't look consistent from one week to the next. This paragraph, for instance, simply refuses to convert to Verdana.

Friday, January 09, 2009

Progress

I addressed most of the problems that I laid out in last week’s post. If you missed that, you ought to read it before this one.


I finally – finally! – got the return labels for my double-shipped orders from DCI. It took all of one phone call. Our living room looks downright cavernous without those five enormous cartons dominating it. It still remains to get my $1,200 refund; at the moment I have neither my money nor the merchandise. I’ve been dangling the promise of a large new order in front of both the sales rep and the customer service rep, but neither of them seems very motivated.


I finally – finally! – quit dithering and submitted my application for merchant services from CDG Commerce. Yes, after three years I am bidding Merchant Express and Pipeline Data a not-so-fond adieu. Here’s hoping for better service at lower cost.


Hours after I posted the story of the UPS 2nd Day Air screwup, another customer complained that her Express Mail shipment (supposedly overnight) took a ridiculous 10 days to reach her. I immediately refunded her money, of course. Unlike UPS, the post office honored its service guarantee and refunded my shipping cost -- in cash -- on the spot.


Months ago I foolishly agreed to accept a Canadian check drawn in US funds. Business was dreadfully slow then and the risk was small, so why not? First, the customer took over a month to send payment. Then my bank bounced the check without explanation. I took it to the local branch, where they scratched their heads and suggested that I redeposit it. Yesterday it came back again. This time, though, they gave a reason: The date field wasn’t filled in. :rolleyes: At least there are no bounce fees, since they keep intercepting the check before depositing it. I shall fill in the date and try again. Third time’s a charm, right?


Customer returns are still coming in. Sales would’ve been pretty good last week if I hadn’t had to refund nearly $300. Those blankety-blank Coin Factory Banks (see “The Worst Product Screwup” in last week’s post) are the biggest problem. I suspect that a few other customers changed their minds about what they could afford as their December charge bills arrived. I still managed to edge out LY despite the negatives, but I fell far short of plan and I have at least two more large payouts yet to come. January could wind up looking weak despite decent sales.


Now taxes are the last big nasty steaming thing on my desk. I intend to file my Q4 state returns online today, and see if my federal form 941 has arrived yet. I see that Massachusetts has added new tax withholding requirements for pass-through entities, and that Kraken Enterprises is such an entity. Here’s what their introduction says:

The pass-through entity compliance program allows non-exempt members of pass-through entities to meet their tax obligation by: agreeing to file and to subject themselves to personal jurisdiction in Massachusetts; participating in a composite return by the pass-through entity; or having the pass-through entity withhold and pay tax on their behalf. These three options are explained more fully below. The compliance program generally exempts the following members: Massachusetts resident individuals, estates, and trusts; federally tax-exempt organizations; corporations with income (other than pass-through entity income) subject to tax under M.G.L. c. 63 for which they are filing a return; and pass-through entities that are filing a return. To be treated as exempt by the pass-through entity, these members must file an exemption certificate (Form PTE-EX) with the pass-through entity.

Crap. Being a Massachusetts resident individual, I am probably exempt, but there are going to be paperwork requirements anyway. It looks like I have a little light reading to do before I can slide several thousand dollars to various governments and get back to running my business.

Friday, January 02, 2009

Further Christmas Screwups (or, Good Riddance to Bad Service)

The worst vendor screwup: Remember the company that double-shipped my initial order of 144 Recycled Motherboard Christmas Trees? Well, not only are those three monstrous cartons still sitting in my living room, freezing $700 of inventory dollars…last week the same company screwed up again and double-shipped another order of 72. Now I have got five enormous cartons of 212 unwanted Christmas trees tying up $1,200. This is heading into its third week without resolution. Naturally, anybody who can do anything about this was on vacation this week. Only we self-employed types work a normal week between xmas and New Years.

Since the vendor seems oblivious and the sales rep seems useless, I am sorely tempted to return the cartons freight-collect and dispute the credit card charges. That would get their attention. It would also poison my relationships with two companies with whom I hope to do considerable business in 2009. In fact, this ongoing screwup is the only thing preventing me from placing a sizable new-product order from D├ęcor Craft right now. I shall phone them and lay down the law on Monday.

The worst product screwup: I mentioned the quality shortcomings of the Amazing Coin Factory Bank in my first screwups post. It looks like five of the 35 that sold are coming back. On Monday I’ll find out if that company’s new sales rep can make good on the old sales rep’s exchange promise, or if I’m going to be stuck with these broken things after paying $10 apiece in return freight. Even if they do come through as promised, this will be the least profitable successful seller that I have ever carried. And if they leave me holding the bag, it will be my worst money-loser ever. Unlike the company that stuck me with 212 unordered Christmas trees, this vendor has always been marginal. I will drop them in a heartbeat. My tolerance for inferior products and service is very low right now.

The most irritating service screwup (or, another reason to hate UPS): Late on the afternoon of 12/22, a customer paid $20+ for UPS 2nd Day Air. She mistakenly thought that she would get her order on the 24th, because she didn’t take into account the time that I need to pack the order. I diligently shipped it early the next afternoon (the 23rd). When she complained on the 24th that her order had not arrived, I explained the logistics and timing and assured her that her package would arrive on the 26th.

It showed up on the 29th. That’s right: 2nd Day Air took six days from door to door. Obviously, I had to refund her shipping charge. Just as obviously, I would recover the cost from UPS. Not at all obviously buried in the fine print of their Terms of Use page is the tidbit that UPS’s service guarantee doesn’t apply to packages picked up from Dec. 12-24. When I explained that my business had to pay the price of their failure, they sent a polite apology with an excuse – but still no refund.

Lesson learned: Never again will I offer expedited UPS services during the holiday week. They are too unreliable.

My own worst judgment screwup: Remember my huge surge in business from that New York Times gift guide? Well, I lacked appropriate boxes to ship all of those orders and delayed ordering them for one crucial day, so I sent out 100+ single-piece orders in padded mailing envelopes. Three of them arrived damaged – two to the same customer…the first via UPS, and its replacement via First Class mail! I did recover the cost for two of those shipments from UPS, but it still inconvenienced my customers and made Curio City look amateurish. I should have waited two days for proper boxes to arrive.

My own most costly screwup: I see that I wrote about credit card processing almost two years ago. Here's a Cliff's Notes refresher: Companies called “merchant service providers” sell service packages to merchants. When a customer uses a credit card, lots of people take a tiny slice out of the sale. The “payment processor” gets the biggest piece.

Have you ever tried to compare mattress prices between two stores? You can't do it. The manufacturers use different model numbers for identical products specifically so that mattress stores never have to meet their lowest-price guarantees. The credit card industry’s cryptic pricing is like that – no two products are identical. I knew that Pipeline Data Systems (who appear in my bank account as CTS Holdings) was on the expensive side. Now that I’m no longer a risky new business, I could do better. But when my contract expired in October I was getting too busy to bother with it, and I’m always loathe to perturb a system that works smoothly.

Then, a week before Christmas, they pulled their “annual fee” trick.

Every December Pipeline tries to charge me the annual fee that my contract specifically forbids. Every December, Merchant Express makes them reverse it. This year’s annual fee was disguised as a mandatory PCI compliance fee of $150. “PCI Compliance” is a government security requirement that doesn’t apply to little guys like me who use third-party processing, but it gave Pipeline another way to bleed their merchants at the busiest time of year. I ran to my Merchant Express rep, who said that they could move me to a cheaper payment processor (Fast Transact) to get me out of the stupid PCI fee.

Did I mention that this was a week before Christmas?

I was busy. Lo and behold, I blew it off for too long, and they finally debited my bank account $150. They will not discuss refunding it, even if I cancel their service before it takes effect. No appeal. End of story.

I am finally motivated now to scrap Pipeline. Their customer service (the two times I tried to use it) was the most arrogant and unhelpful I’ve ever encountered, and their monthly fee reports are indecipherable. I have not decided whether to go with Merchant Express’s payment processor Fast Transact, or switch to the highly recommended CDG Commerce. I think CDG might be a little cheaper overall (they have higher fees but lower discount rates). I might eventually recover more than the $150 that Pipeline Data stole from me. But I'd have to give up Authorize.net as my gateway. I like Authorize.net. And I wouldn’t put it past Merchant Express to pilfer my bank account for cancellation penalties, even though my 3-year commitment ended months ago. I wonder if there’s a way to revoke their withdrawal privilege.

I must force myself to decide on Monday. Each day that I put it off, a little more of my money goes into Pipeline Data Processing’s bank account. Bastards.

My dumbest screwup: I forgot to schedule my Amex payment with Citizens Bank. This is the first time Kraken Enterprises has ever been late with any payment of any kind. I am so embarrassed. I know that credit card companies delight in smiting tardy payers, and that Amex has the reputation for being the least forgiving. I hope they don’t punish me beyond the $38 late fee they already hit me with.

Miscellaneous little screwups: There’s the customer who placed a double order, did not answer my email inquiry, then announced right after I sent out his boxes that he is going to return the duplicate and make me issue a $80 refund...when I knew all along that I should’ve just canceled the second sale. There’s the customer who returned a defective levitating globe (surprise, surprise) to its manufacturer for warranty replacement, got blown off, and has asked me to intercede. If I can’t help her, she’s probably going to want a refund from me...and I can’t do that when she returned the merchandise to somebody else. There’s…um, well, that’s all I can think of.

**************

Visits were below 200 per day all week. If you subtract one unusually large sale from LY, the week came in very slightly ahead, but still not even half of plan. The first fiscal week of 2009 is not encouraging.

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