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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, September 03, 2010

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.

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