Dirty Words

Here’s a funny: For the first time ever I used the “Notes” box on the USPS click-n-ship site to explain that I changed a customer’s chosen carrier because UPS won’t ship to his PO box. Click-n-ship returned an error. That usually means that the address is invalid or I forgot to tick the stupid return address checkbox that ought to be ticked by default. Nope, this time the reason was “Profanity detected”.

O RLY? I scoured my short sentence for any combination of letters that could be construed as a cuss word. Nothing. On a hunch I changed “UPS” to “your chosen carrier.” Success! Turns out that “UPS” is a dirty word at the post office.

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The Mini-Briefcase Business Card Holder – one of my flagship products with SKU 16 -- came perilously close to selling out when my wholesaler unexpectedly went out of stock. This is the product that I sold to Lord Yabinghoo in last week’s post. Demand really picked up after I exchanged links with The Corporate Gifts Company UK, now my #1 referring site (ahead of Facebook). You’d think the “UK” part would be a deal-breaker, but apparently not. Anyway, they send me a lot of traffic so show them some love.

Speaking of link exchanges, I’m always happy to swap with anyone who has a legitimate site (not a link farm) that doesn’t compete with mine. Such swaps are more about raising your search engine ranking than getting referrals, but any traffic they generate is always a welcome surprise. Email me if you’d like to promote your site here, and tell me where you’ll list Curio City in return. Google loves links.

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My wireless HP Officejet printer suffered a terminal paper jam last Saturday. After removing the accursed paper – in pieces – the printer would not come back. Hours of troubleshooting and more than a few dirty words eventually squared things away except for one detail: It won’t print in black. I think the print head was damaged in the jam.

The printer was exactly four days past one year old, and technically off warranty. I tried anyway. Hunting down HP’s online/email customer service contact was a trial in itself, but I eventually filed my claim.

On Monday a customer service representative named Garret phoned (why do they always phone when the initial contact is online?). After some back-and-forth he promised to FedEx me a replacement print head. On Wednesday FedEx delivered an envelope containing an empty box, packing material, a return label, instructions for returning the defective part, and a packing list enumerating an empty box, packing material, a label, and an instruction letter. You’ll notice that there is no print head in that list.

I emailed Garret again to see if I should expect the print head under separate cover. On Thursday he phoned to offer me a whole new printer, with no need to return the old one. It arrived today. Setting up a new wireless printer is not trivial; it took 90 minutes. But hey: New $90 printer! Kudos to HP. You really can offer excellent customer service when you have deep enough pockets.

Lord Yabinghoo

First, an anecdote for those who won’t reach the end of today’s post:

A lady with a proper British accent called to inquire about a quantity of mini-briefcase business card holders. I was relieved that she wasn’t angling for a discount; processing fees and the hassle of preparing the shipment already cut my margin on international sales. No, she just needed help because Sunshop’s shipping estimator was being fussy about accepting her postal code. Rather than work it out over the phone, I asked for her order information so that I could process it offline. Name, please?

“The Earl of A____”

Um. The What of Who now? Yes, I heard correctly: She was the secretary for an English noble. In fact, Lord Arthur A_____ himself picked up the phone to ask some questions about the product and emphasize the need for speedy shipping. He intends to present the mini-briefcases to some visiting members of the House of Lords. “That’s our upper house of Parliament, similar to your Senate”, he explained to this dumb provincial.

I'm ordinarily cold toward the famous and fortunate and especially unimpressed by unearned privilege. I have zero interest in heredity or genealogy. But Lord A_____’s ancestor came over with William the Freaking Conqueror in 1066, for crying out loud – that's just plain interesting. I’d link to his estate’s website if I weren’t uncomfortable with the breach of privacy.

I’ve sold nearly 500 of this flagship product (SKU #16) and am running low again. Every time I reorder them the wholesale price goes up, and a minimum order quantity of 200 pieces makes them a hefty investment. It’s worth it, though. I'll bet I can get another buck for them after their brush with nobility.

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Microsoft is assimilating Yahoo Search Marketing into its own lackluster adCenter, which serves their Bing search engine with ads. I know this because Yahoo’s been emailing me about it twice a month with increasing breathlessness. Together, paid and organic Yahoo searches deliver about 10% of my visitors – not a lot, but nothing to walk away from, either. I guess Yahoo will still be a search engine. I think it will be technologically identical to MS’s Bing. But MS will start calling the advertising shots next month. Presumably capitalists behind the scenes have this all figured out. For me, the name on my charge bill will change and I need to learn a new interface to manage my little campaigns.

Dismayed by my foot-dragging, Yahoo started robo-calling me. I hate to admit it, but it worked. I finally tackled the 85 compatibility problems on their list just to stop those irritating calls. First I deleted such esoteric line items as “Geo-targeting, Network Distribution, Demographic Bidding, and Ad Scheduling will not be transition to adCenter. You need to set these up in your adCenter account” and “This attribute will not be imported into adCenter. In adCenter, the concept of Alt text more accurately corresponds to {Param2}.” By the gods, this is pure boredom.

Forty remaining warnings were about ads that don’t fit adCenter’s tighter size limit. I deleted a few old keyword groups and truncated a few ads. The drudgery finally out of the way, I hit some minor snags when I went to adCenter to complete the migration. Nothing worth relating here, though.

Can the merged Bing/Yahoo (Yahbing? Binghoo?) give Google a run for its money (or rather, for my money and yours)? It’s hard to imagine them denting Google’s 75% market share, but one dismisses MS at one’s peril. Maybe this merger of numbers two and three will threaten Google’s near-monopoly.

Now I just sit back and wait for new hordes of shoppers to storm the castle.

Exploring the Amazon

A pitchman from an online retailer called Amazon.com tried to sell me on listing my products there. If I bit by the end of last week, they’d have waived the $40 subscription fee for the first month.

Forty bucks a month to reach millions of potential customers? What could possibly go wrong? I watched their tutorials to find out.

The monthly fee is trivial compared to the 15% they skim from the top of every sale. My budget line items – payroll, advertising, bank fees, shipping supplies, etc. – are based on a 50% overall markup after discounts and incoming freight charges. Most of my products are in the 45-50% range. I won’t go below 40%. A few standout items bring in 60% or better, but those tend to be low-priced products of dubious quality. I’ve managed to achieve an average 48.62% markup, meaning that I spend $5.138 out of every $10 to buy merchandise (that’s the “COGS” in my monthly sales reports).

Forking over 15% to Amazon would blow everything away. My company might survive on a 33% margin if sales quadruple; many high-volume operations get by on less. High-volume, low-markup business is so far outside my experience that I’d have to morph into something very different from the one-man, home-based operation that I’m comfortable with now.

I could stock an Amazon storefront only with high-markup products and raise prices on other merchandise that doesn’t have many competitors. Amazon’s 15% cut includes the payment processing fees that currently devour 4% of my sales, so I’d really “only” need to cover the 11% difference. Either keeping my markup where it needs to be, or living onless, would be difficult with Amazon sapping it, but it’s not impossible.

The lack of integration between my Amazon storefront and my Sunshop store is a harder challenge. Their salesman didn’t know anything about third-party shopping cart integration. He vaguely suggested that I google it. Wow, I never would’ve thought of that!

How can two web stores share the same inventory if they don’t communicate? Trying to keep the two in balance manually would surely create out-of-stock situations and increase inventory errors. To get around that, I’d have to allocate separate inventory numbers to each store: That is, if I have 100 widgets, Sunshop and Amazon each get 50. Firewalling my inventory would require keeping more pieces on hand than I do now – my many items with only 3 or 4 pieces in stock wouldn't appear in both stores. Running two separate stores that happen to share a name and some products – Amazon for high-markup, high volume stuff and Sunshop for everything else – also raises some thorny accounting/budgeting challenges that I won’t bore you with here.

Setting up the Amazon storefront is not trivial, either. Their listings require UPCs, for example; I currently don’t use those at all. Curio City's shipping charges use realtime carrier rate lookups based on product weights and shipping destinations; I’ve honed that system over the past five years to cover my costs without overcharging customers. Amazon uses fixed shipping tables. One must set a base rate plus increments for either the number of items purchased or their value. Making Amazon’s shipping charges line up with Curio City’s would take a lot of finagling…or require Curio City to use fixed rate tables, too. Some customers might prefer that, but it's less fair.

The biggest objection, though, is this: Amazon is the very definition of mass market retail, and Curio City is its antithesis. I don’t think of Amazon as a competitor so much as an unrelated entity. People shop there for consumer electronics, small appliances, software, and…um…well, I’m not sure what else, not being a shopper myself; that’s all I’ve ever bought on Amazon. I’m reasonably sure, though, that they aren’t looking for offbeat gifts or impulse items. The concepts might be inherently incompatible; I might wind up running two different stores with little crossover.

I tried a similar path years ago with an eBay store. That was more expense and hassle than it was worth. Dealing with combative eBay bargain-hunters was not at all pleasant. Amazon probably gets a better-quality customer, so I probably ought not to let my eBay experience cloud my judgment.

The prospect of reaching a huge audience and potentially moving large numbers of at least a few products is tempting enough to make me ponder these hurdles. Just putting Curio City’s name out there might be worth $40 a month even if the storefront flops. As I told their salesman, though, I can’t try it while my own store is gearing up for Christmas. Two months from now I’ll be struggling to keep up with the business I already have.

I’ll revisit this idea going into next summer’s doldrums.

Not Off-Track Betting

I could easily spend $1,800 right now to restock low and sold-out items. I’ve got my eye on another $1,300 worth of new products. My Open-To-Buy (OTB) says I’m $231 in the red.

That’s sort of a problem.

I haven’t changed my process since I examined OTB in depth two years ago, so the problem remains: My OTB replaces what’s been sold rather than borrowing ahead into predicted sales. That works alright for three of the year’s quarters, but it pinches when the stakes rise in Q4. I need to test new products for Christmas…but if I spend the money too long before holiday receipts start pouring in I risk carrying a credit card balance -- which I do not want, ever; debt is the beginning of failure. (The same caution that keeps Curio City solvent also retards its growth, but that’s just how I am).

Because my seat-of-the-pants OTB formula doesn’t account for seasonality, I use intuition to override it. Some things can’t be formulized. Of course, other things can: Most new items get backordered for future shipment (and billing). I don’t currently track delayed shipping – I just subtract the whole amount when I place the order. Micromanaging scheduled ship dates would require a whole new spreadsheet and complicate ordering considerably for dubious benefit; backorders rarely ship on schedule, and some never ship at all.

There is an easy way out. I let Kraken Enterprises retain 25% of its annual profit for growth -- that’s generous of me because I have to personally pay the taxes on that money. Last January I parked Kraken’s nut in an ING business savings account, where it’s earning a handsome 0.9% return – a staggering $20.75 so far this year.

Saved money is sacrosanct. Once it goes into savings it only comes back out under extreme duress. Even though this attitude is downright dumb when interest rates are so anemic, spending saved money is extraordinarily hard for a skinflint like me. I need to think of it as an investment. If I invest that money in inventory, and if that inventory sells through, and if annual sales grow as planned, then it could earn a 15% return. Since 15 > 0.9, I should defy my Grand Rapids Dutch upbringing, run my OTB deeply into the red, and deplete that cushion -- which is still not enough to buy everything I’d like, but who ever has enough money to do that? If Curio City has a good Christmas I can replenish my cash – and then some – next January.

With this decision made, it becomes a matter of playing my credit card float. Spacing orders a week apart, as is my wont, doesn’t matter when payment for all of them is due at the same time. The statement breaks on the 12th. If I hold off on deficit spending until Sept. 13, the bills won’t come due until Nov. 3. If revenue isn’t perking up by then I’ll be in a heap of trouble.

Shall we review what’s selling? The short answer is an emphatic “Not much;” September is off to an epic poor start. But let’s pretend. If nothing else, these product links might perk the search engines up a little.

The aforementioned Panther Vision caps hit a prolonged lull a couple of months ago. Is someone out-competing me? Has the product grown long in the tooth or too widespread? Or is this just a random fluctuation? They aren’t carrying the load they used to, but they’re still an important workhorse. I hope they’ll come galloping back.

Switchables recovered a little bit after I boosted them to a top-level category. Slowly, I’m learning to think like a search engine. It’s not like the Good Old (pre-competition) Days when their internet sales were all mine, but at least they have a faint pulse. Repeat sales are the beauty of this line – they’re made for collecting.

With kite season winding down, I risked my search rankings and gave Bird Kites the same top-level treatment. Kites unexpectedly became my strongest product line this year after I embedded some YouTube videos on my product pages and started pitching them primarily as scarecrows for marinas and gardens. I sell an awful lot of them in Florida. But now they’re sputtering out along with summer.

Funkeyboard keyboard stickers probably deserve their own subcategory. Although I’ll never complain about merchandise selling well, these $10.49 orders (the shipped price of one piece) take as much work to process as a $23 cap or a $48 assembled kite. I’m less than thrilled when keyboard stickers dominate any given day’s sales…yet still grateful that most days have sales at all.

Whisky Stones are still dribbling out of here. They might rival last year’s sales if the manufacturer can avoid shortages this year. I’m overstocked right now, and I can’t afford to tie up any more OTB dollars to safeguard against running out.

Golf balls are another golden oldie. I only landed one big institutional sale this summer, though. I typically get half a dozen inquiries from tournaments, and one or two of them pan out.

As far as new stuff goes, I’m still playing my cards close to my vest. I’ve ordered one thing with blockbuster potential, but I’m not sure that it’s really a Curio City product. On one hand, it’s been featured in such hip venues as Esquire, Rolling Stone, and Wired. OTOH, People and Entertainment magazines – the very definition of mass market mainstream – also picked it up. It’s not useful or practical. OTOH, it really looks pretty cool, its manufacturer is enforcing the retail price, and I might sell a ton of them for Christmas. Sorry I can’t link to it until it’s in stock -- subscribe to my newsletter, if you haven't already.

The same sales group wants me to carry the nation’s current #1 game, which looks to me like a dumbed-down version of Scrabble. Carrying mass market merchandise cheapens my brand in the long run, but I’m tempted to tap into some mainstream dollars if it will blunt the current sales crisis.

Sadly, Panther Vision’s lighted reading glasses probably won’t make the cut. Panther is using the same pricing structure as for their caps, but there’s no way the glasses will sell in the same volume. If they were to cut the minimum order quantities in half, I might go for it. As it is, the cost to introduce them is just too high relative to their sales potential.