Red Ink on Black Friday

Week 3 of Christmas will follow the first two weeks into the crapper unless an unexpected rush pulls it out in the next day and a half. “Black Friday” is typically quiet while the Normals are out looking for deep discounts in stores. “Cyber Monday,” which finds the office workers back at their desks, is better, but accounting-wise that’s in December.

If November does come in behind LY, it will be my first losing month since June. After pulling all the stops out of advertising I'm now paying a frightful sum to buy 250-300 visits a day, but my conversion rate has fallen. Many transactions are in the $10-20 range when they should be averaging $50-100. Wednesday brought a respectable 10 sales. It would have been a good day if my historic average of $40 each held up, but instead the day finished at $185. Bleah. People are shopping, but few are buying. Those who are buying are spending less, and they’re buying the wrong stuff. Well, at least I’m liberating a few dollars that have been locked up for years in old, dead merchandise.

How to explain this? I lost half a day’s business to a technical problem late last week before I found and fixed it (thanks to my developer’s rapid response to the Brad Signal). I lost 32 newsletter subscribers when Comcast decided to block all email from Constant Contact. I emailed all of those customers individually and asked them to re-enroll with a different email address, but I don't expect to get any of them back. Setbacks like this crop up routinely, though.

I think macroeconomics are to blame. Last October’s financial crash only hammered people with stocks and big retirement portfolios. Housing values had only begun to plummet and employers had just started destroying jobs, so ordinary people were not yet impoverished. A year ago the rich were hurting, but the middle class could still shrug it off. This year, bailouts have restored prosperity to the rich, but average people are desperate. And my customers are average people.

What can I do? Yesterday I used a newsletter and Facetweet to put out a discount code good for free shipping (actually 60-cent shipping because Sunshop is too stupid to waive the handling fee). That code is BIGBIRD – use it! It’s good on a minimum $25 purchase to any US address, and it expires Monday. I should probably facetweet a reminder on Sunday. It was a particularly entertaining newsletter, if I say so myself. Sadly, only 44 out of 278 recipients have opened it, thanks to yesterday’s accursed holiday. If it were up to me the Normals would be chained to their desks 365 days a year. :)

Both the new Power Caps and the old 2-LED caps have stopped selling almost entirely. I’m buying 50 clicks a day, but only bottom feeders looking for outrageous discounts are responding. I don’t think anyone’s undercutting my retail price online…they just plain aren’t selling.

With my core products dead in the water (even Whisky Stones have fallen to nearly nothing) this week is running about 25% behind LY, which was in turn down from 2007. So with only three more weeks to go I’m up against LY’s free mention in the NY Times gift guide. December is not going to be pretty.

Here are November’s numbers:

Total income: -2.9%
Total COGS: -16.5%
Payroll: +371.5%
Net Income (Profit): -39.7%

The YTD numbers:

Total income: +20.6%
Total COGS: +15.8%
Payroll: +50.3%
Net Income (Profit): -21.4%

What is there to be thankful for? Well, November didn’t drag the YTD numbers down too badly. The bar is set low for next year. Costs fell farther than income, and more money went into my pocket. The year should still end with a small profit, and if it's smaller than LY’s, then I'll owe less tax on my K-1 income.