I'm Back

Our Berkshires break was wonderful. The weather cooperated for a concert on the lawn at Tanglewood and our garden tour of Naumkeag, the former summer home of the Choate family (no direct relation to the late actor Tim Choate, better known as Zathras). We went to an exhibition opening for the Williams College Museum of Art, saw the O’Keefe show at The Clark, visited MassMoCA, and even saw a play at the Berkshire Theater Festival (good lord, theater is expensive! Not as bad as going into Boston for a play, though). We walked our customary three miles on at least half the days that we were there, had a day or two of down time at our rented mountain cabin, and still managed to visit most of our favorite restaurants. Behaving like employed people was refreshing while it lasted. Now I’ve got a year to recharge the vacation budget before we can go back out west.



On our first night in Williamstown two customers who received the wrong orders called me. Yes, I carelessly switched two mailing labels again – the third time I’ve done that, I think. Being 150 miles from home made solving it nearly impossible. But I got lucky: Both customers cheerfully agreed to send their misdirected packages to each other. I reimbursed them for their expense and refunded their original shipping charges, leaving everyone satisfied. Or at least not angry, which is the best I could hope for in that situation.

I’m seeing tentative signs that the economy has bottomed out. After going nowhere for six months, my wife’s job search produced several leads last week. Curio City’s traffic is up slightly and I’m averaging 2-3 (small) transactions per day again. Maybe I’ll see reliable (small) paychecks again next month.

Apples & Oranges

Calendar drift moved LY’s first week of August into this year’s end of July. Since we also changed our summer vacation from August to July, comparisons between the two months are whacked. I should probably change my spreadsheet from full weeks to straight calendar-month accounting. My Excel file would need a drastic overhaul, but I’d only need to do it once, rather than shuffling weeks between months every couple of years. It’s a silly statistical niggle of interest to nobody but me. Anyway, this July has one more week than LY (34 days in all), but also includes 10 vacation days during which Curio City did a whopping $95. Those two factors ought to roughly cancel out.

Total income: -15.7%
Total COGS: -20.4%
Payroll: -45.5% (ouch!)
Net Income (Profit): +363%

The YTD numbers:

Total income: +6.4%
Total COGS: +7.0%
Payroll: +16.9%
Net Income (Profit): -91.6%

Higher payroll is harming profits. My personal bank account likes that trend on a week-to-week basis, but I’m going to miss my year-end bonus. At least the YTD bottom line is slightly in the black.

I don’t know what to expect from August. The month has one less week than Aug. 2008 did, but no time out for vacation. I hope those factors cancel out.

Who Are You?

Who Are You?

A shibboleth about online retailing says to target a narrow market. I’ve been in business for four years now. What do sales imply about who my customers are?

Outstanding Products

DayClocks were my first real bestseller. I sold more than 200 of them before underpricing competitors killed them off. Retirees (old people) and vacation-home owners (rich people) were the primary customers for those. I still sell a few.

I got my first media break in November 2006, when American Way magazine mentioned the USB Fan. I ultimately sold 350 of them (plus a couple of hundred other USB gadgets) before that one petered out. Travelers and gadget geeks (the young and the rich) were the main customers.

I sold 270 Recycled Motherboard Christmas Trees after my other big media score with last year’s New York Times gift guide. I’m sure that I’ll unload the remaining 42 this year, and probably a few dozen more. It’s a cute, clever, inexpensive gift that appeals to anyone – but especially to those who like computers and electronics. It does have that recycled thing going on, so let’s mention the “green” crowd, too.

Business card holders in general were my wife’s idea. I haven’t found a good, steady line, but the Mini-Briefcase Business Card Holder was a breakout hit. I’ve moved 257 to date. People buy them for graduates and coworkers.

The Neverlate Alarm Clock could have become a major product had its lousy markup not made it impractical to sell. I only mention it because it served the same graduation demographic as the mini-briefcase.

Lighted caps, of course, blow everything else away. These things appeal to everyone. I wish I could find something else with such universal interest. Outdoorsmen – campers, hunters, fishermen, hikers, bicyclists – are all noteworthy customers for these.

Successful Lines

Successful product lines are at least as valuable as hit products. Even if no individual item is a breakout hit, the overall collection can rack up serious sales. Golf balls are easily the best of that lot; their audience is golfers (duh), but I’ve also made a few big sales to corporate/institutional customers. Switchables rise and fall in popularity – right now they’re down, and I'm worried that they are becoming too mainstream -- but they have done well historically. Their base is mostly female, and I suspect older (although I don’t have any objective reason to say that). Pursehooks were a flash in the pan; I think those appealed to younger, trendy (rich) women. Bird kites deserve honorable mention. Although I’ve carried them since Curio City opened, they just developed into a strong line this spring. Those sell mostly to people who need scarecrows, and the Dove of Peace sells to churches, of all things. Maybe I should add Christians to my list.

Another nice thing about themed product lines is the ease of adding new items with a built-in audience. I can simply clone an existing product, change the pictures, rewrite the description, and voila: a new product is born.

3D wooden puzzles are my latest test line. Even though these things are ubiquitous in museum shops and toy stores, I don’t see much online competition for the more complicated adult styles that will be my focus. And the markup is quite good, although freight is expensive. I’ve had them for several weeks now without any results…but I’m not advertising them, either. Hmm.

Best & Worst Categories

Apparel is my best overall category with a whopping 25% of total sales to date. That’s mostly caps, of course. Second-best is gadgets at 13.2%, then clocks at 12.3%. Each of those categories is driven by just one or two products (caps in apparel, clip-on cap lights – 942 sold! – and USB fans in gadgets, DayCocks in clocks.)

Biggest flops: Fine art tie-ins, wine accessories, expensive shopping bags and totes – I need to be more critical of my wife’s product advice. She’s the only avid consumer that I know, but she’s not quite the Curio City demographic. The “nice things” that appeal to her have usually not done very well for me. I don’t think that my customers are Yuppies.

I expected games to do better than they have. Any game that’s genuinely fun becomes popular and ubiquitous. Price competition in popular games is fierce – the deepest discounters always win. Only two exceptions stand out. I dropped a techie game called Deflexion after it was repackaged and rebranded, because the markup was poor and shipping was expensive. Fluxx is the only game I know of that’s truly fun, doesn’t have saturated distribution, and isn’t discounted to death…and I’ve only sold a few dozen copies over all these years. I keep the category alive mostly because I’m a gamer myself, and one of my earliest concepts for Curio City was a game/hobby store.

Other Trends

Out of more than 3,300 transactions, only 158 people have paid me to giftwrap their purchases. The $318 collected is only slightly more than I’ve spent on wrapping paper. Giftwrapping adds an extra click to the buying process (“choose your options”) and only sells when I’m already at my busiest and can least spare the time to do it. Logic says I ought to discontinue it. OTOH, it’s almost pure profit, it doesn’t take long, and it’s a nice value-add service for the few people who do buy it. Anyway, it indicates that my customers are not time-deprived workaholics.

I’ve carried a few marijuana-related products over the years as an outgrowth of Curio City's early concept as an online head shop. None of them ever sold well at full price. Whenever my newsletter introduces a new one a couple of subscribers cancel. This is another product category that I carry mostly out of personal fondness – I’d need to push smoking accessories harder and distance myself from tobacco to develop that market. For whatever reason, I don’t seem to have as many stoner customers as I'd expect.

Finally, I get a fair number of telephone orders from people who either won’t buy online or don’t understand how. Let’s call them technophobes.

So Who Are You?

My customers are:

• Old people/retirees.
• Young people/graduates.
• Rich people.
• “Green” people.
• Office workers.
• Technophiles.
• Technophobes
• Corporations and institutions.
• Golfers.
• Slightly more female than male.

My customers are usually not:

• Children, or parents of small children.
• Known to be of any particular ethnicity or special interest group.
• Yuppies or workaholics.
• Stoners
• Poor.

In other words, my customers are all kinds of people, just as you’d expect from a general-interest store. So much for retail shibboleths. I’ve resisted specialization all my life, and my store reflects that.

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One thing’s for sure: You stopped buying LED caps entirely for several weeks. I’ve sold only a handful since I placed my huge reorder a month ago. A camping store is selling them online for the absurd price of $11.99. Panther says that they paid the same price I do, so they’re only making about $3 per cap. I’d fail quickly if I had to live with a 25% markup on my bestselling item. Currently this evil new competitor is out of stock on all but two colors…maybe that’s a clearance price, and they will go away. I hope so. They will soon own this product if they're going to accept token markup.

Just three multi-cap sales made this week among Curio City’s best so far this year. That's especially bizarre coming after last week’s truly terrible sales. If it weren’t for next week’s vacation shutdown, I’d have some hope for July after all.

Speaking of vacation, the Sunshop upgrade that I was hoping to accomplish next week has been postponed to August. That’s just as well; I completely forgot that I had to remit payroll taxes this month. My cash on hand is at a record low just as sales are about to go into stasis for a week. Not good. I should be able to get $200 for my old Inspiron on eBay. If you're on the market for a gently used, well-maintained laptop at a good price, send me email. I probably won't list it until around Aug. 1.

There will be no blog post next week. Try to amuse yourself without me.

The QuickBooks Crisis Ends. I Hope.

You’d think that setting up my first new computer in four years would be fun, but business machines are so boring that I didn’t even take my new Vorlon out of the box for three days. Then I spent two days installing and customizing programs and utilities, leaving Wednesday open to deal with Quickbooks.

I started at 11:30 am. Basic installation was routine. Thanks to the warnings that I’d read, I knew enough to patch the program before converting my company file. By 12:05 pm I was ready to register – aw, CRAP! – by telephone. Even though I knew it was coming, enduring a sales pitch from India to obtain a six-digit code pissed me off -- can't computers do that nowadays? By 12:25 I was finally up and running. My 65 MB company file runs great on this shiny new computer. With the QB hurdle finally cleared and only a few minor details remaining, I moved my old Inspiron aside and put the Vorlon in its place of honor. I held a little ceremony. It was emotional.

Thursday morning the QB shortcut was missing from my desktop and from the Programs list. In fact, the QB executable was gone without a trace! The program folder was there. My company file was where QB wanted me to put it. But the program itself is nowhere to be found, not even in the recycle bin. WTF? How is it even possible? I reinstalled, and thankfully didn’t have to reactivate the program. The .exe survived the night and is running normally. Today QB asked me to reapply the big R7 patch, so if that’s what ate the .exe last time I might not be out of the woods yet.

I tried to set up the online banking feature that everyone was complaining about. It seemed to work once, but crapped out on me this morning. Maybe I just don't understand how it's supposed to work. It doesn't matter.

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I’ve been using Kosh long enough to pronounce a verdict on the Dell Vostro 1520. The glossy plastic lid is a fingerprint magnet, although it looks sleek when it’s clean. The onboard speakers are weak and tinny compared to my Inspiron’s robust sound. The screen is very bright and has great contrast, but (like most LCDs these days) it leaks backlight around the edges, and both of the bottom corners are shadowy. Worst of all, it doesn’t have any rear USB ports, and the side ports are near the front of the machine – convenient for changing out USB devices, but anything plugged in permanently (such as the cord for my wireless mouse receiver) is inevitably in the way. My machine is supposed to have 3 GB of RAM. Windows system info shows 2.99 GB of memory. Yet a little freeware system monitor that I installed is only reporting 2 gig. I choose to fault the utility. Functionally, the Vorlon is a great little machine so far. The real test will be how well it runs Fall from Heaven 2.

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I finally made good on my repeated threats to shut down Yahoo Search Marketing. Since July is doomed anyway, why watch the remaining $78 in my account slowly dribble away? I can always reactivate my campaigns when consumers start consuming again…maybe in the fall.

Readers who don’t care about numbers should skip down to the next section break.

I’ve spent $682.35 on YSM year-to-date. That bought 4716 clicks (14.5 cents/click) and 42 conversions ($16.25 per conversion). I’d need a programmer to implement Yahoo’s sales tracking code to know what those conversions were worth; I arbitrarily set their value at $20 – the price of one lighted cap -- which would be $840 in revenue. Am I really paying $16.25 for $20 worth of business? No, the numbers are more slippery than that. A “conversion” means one advertised item sold (thus a conversion can bring along piggyback dollars). Even conversion tracking itself is inexact – for example, Yahoo reports something called “assists”, which seem to be an ill-defined way of inflating their conversion count. Buyers who have cookies turned off don’t register at all. Even if each Yahoo conversion is really worth my average sale (currently $42, but falling rapidly), that’s still just $1,764 in gross sales. With advertising budgeted at 9% of gross, the $682.35 that I spent would need to return somewhere around $7,000 (I don’t know how to calculate that, how embarrassing) to be cost-effective.

It looks to me like I spent 39% of my Yahoo sales revenue on Yahoo advertising, which is to say that each Yahoo ad dollar brought in $1.61 in sales (is that right?). So the roughly $100 per month that I save on YSM should only reduce sales by $161/month.

I might improve this by completely revamping my ad campaigns, or possibly by cutting out all keywords except a dozen or so proven winners. Perhaps I’ll set myself a goal: By September, I want to reopen YSM with a stripped down, cost-effective campaign.

For comparison’s sake, here are my equivalent Google numbers: $1,718.68 bought 152 conversions, for $11.31 per conversion. If those 152 conversions were worth $42 each (the number I awarded to Yahoo), then I spent 27% of gross to drive $6,384 in sales. The same warnings about imprecision apply – if my overall advertising percentage was really that high I’d have gone under years ago.

No matter how you slice and dice it, Google ads are a better investment. I’m going to nudge my Google budget up by the $100 that I’m saving on Yahoo. Theoretically, spending that $100 on Google should drive $173 in sales, or $12 more than if I’d spent it at Yahoo. Whee!

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Traffic and sales are both plummeting now. By the end of June I was down to barely 100 visits per day – 50% below where I should be. This first week of July was even worse. Remember how I said that last week was the worst of 2009? Well, this week is going to be the worst since 2007. My next paycheck will be the smallest I’ve seen in two years. It’s breathtaking how rapidly things fell apart.

My next big project will be figuring out how to use Twitter and Facebook for marketing. Yes, I’m getting desperate. The gods know I have enough time on my hands these days.