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, November 26, 2010

The Turkey Month

First there was Black Friday, and it affected me not at all. Then there was Cyber Monday, and it affected me not at all. Now, courtesy of American Express, there is Small Business Saturday. Anne told me about it last Sunday morning. I signed up for a free $100 Facebook ad even though the promotion supposedly ended three days prior. These geo-targeted ads hawk physical stores, so it should affect me not at all. Even though the “official” promotion is a non-starter, I sent out a newsletter with a coupon that I still hope will spur more than the one sale it has garnered so far.

When we last saw Week Three, it was dragging behind LY by $850 with a day and a half left on the clock. I had hoped to narrow down that gap by the $450 that I racked up during the corresponding two days last year. But a good Saturday couldn’t make up for Friday’s embarrassing $40 total and the week ended down $600 – my biggest Christmas shortfall yet this year. It would’ve been a weak week even without that $160 customer return blowing a hole in the middle.

Last year a single $1,000 day pushed the otherwise lackluster Week Four (Thanksgiving week) over the top. This year a surprise $750 lighted cap order placed on Thanksgiving morning kept Week Four in the game. Now I just need average November sales on Black Friday and Small Business Saturday to finish the month very close to LY. (My weird accounting calendar puts Sunday the 28th in December).


Total income: -3.7%
Total COGS: +3%
Payroll: -7.8%
Net Income (Profit): -3.9%

Year to Date:

Total income: +12.1%
Total COGS: +23.2%
Payroll: +29.4%
Net Income (Profit): -59.3%

UPS plumped up my COGS last week by losing an incoming shipment worth $124. I’ve filed a claim for reimbursement, but even if it goes through I don’t have that merchandise to sell and I’m carrying a $124 inventory shortage on my books. This year has thrown me one such curve after another.

Inventory shortages made December '09 weaker than expected. That means there’s still a chance that this December will repair the damage of the past few months and get Total Income back to my +15% goal.


The 900-pound gorilla who’s paying obscene bids for lighted cap keywords turns out to be an amazon.com seller pushing the cheap 2-LED version that Panther Vision created for the promotional market. Although he must be doing amazing volume, he can’t be making much money between his bargain prices and ridiculous advertising costs. Since I don’t carry that inferior product line he’s not a direct competitor at all. He can have his $2.00 clicks. In fact, I gave him a few clicks just for fun.

The manufacturer of Buckyballs is freezing out competition with an absurd $4.00 per click bid for that keyword. The maximum financially justifiable bid for that product belongs in the 50-60 cent range, and 40-45 cents is more realistic. They solicited retailers, required us to sign a price maintenance pledge (no discounting), and then kept us little guys from advertising – pretty slick! I’ve sold a few sets, but it’s nowhere near the star product that it should have been. I’m not going to need a single reorder. I should have believed the instinct that told me it was too mainstream.


And now I have a personal confession: My attention is not 100 percent focused on Curio City right now (shocking, I know).

My sole hobby is PC gaming – specifically strategy and epic-scale wargames, not the action games that kids play on consoles. When I worked in the industry, I needed to replace or upgrade my gaming PCs every couple of years. But when I traded the lucrative world of game development for the impoverished life of a self-employed shopkeeper, I lost both the compulsion and the means to keep my gaming machine up to date. My current 7.5-year-old gaming rig hasn’t been able to run anything new in the past three years.

Civilization 4 and Galactic Civilizations II are both wonderful games, but even with mods one can only squeeze so much gameplay from them. And so, despite my busy season (and biggest paychecks) being hard upon me (and with the tragically flawed but still compelling new Civilization 5 enticing me) I raided my ever-shrinking savings account to buy a new PC two weeks ago. My screaming new machine arrived from Cyberpower Tuesday night.

To say that both Thanksgiving and Curio City are distractions from what I really care about is putting it mildly. In the three and a half days that I’ve had the machine I’ve only managed to devote a few hours to setting it up…with almost all of that time troubleshooting its network connection. Getting a Win 7 machine onto an XP network is turning out to be trickier than I expected since I’m a newbie with the latest OS and not very good at networking in the first place.

Anyway, as soon as I get today’s orders on their way I’m spending the rest of the weekend doing what I want to do, rather than what I should be doing. I hope that I’ll have the new beast fully up to speed and ready for gaming by Cyber Monday.

Friday, November 19, 2010

On the Third Week of Christmas, Some Shoppers Gave to Me...

Blog entries will be terse between now and New Years as I focus exclusively on sales. I’m largely repeating last year’s posts anyway, right down to griping about leaf removal. The nine or 10 sales per day (16 yesterday!) that I’m averaging now is healthy, but not quite as robust as LY, when the discounted 2-LED caps were flying out of here.

Week Two ended up a little short of LY. O Veterans Day, why did you have to fall on a Thursday? You encouraged the Normals to take 5-day weekends, and you know that sales plummet when office workers are trapped at home with their idled children instead of happily shopping on the job. Together with Week One’s tiny surplus, the month was flat going into this week.

Week Three (ending now) is also falling short. The large customer return that I authorized last week sent Tuesday deeply into the red. It barely clawed its way back out of the grave (yeah, I’m watching Walking Dead) but the week never recovered from that setback (barring a miraculous resurrection in the remaining day and a half).

Last year’s Week Four included a negotiated $450 cap sale. There’s nothing like that on the horizon this year, although one company has been playing coy for weeks about buying a dozen caps. Next week’s prospects look grim with that big holiday squatting in the middle, and the Christmas season is half over.

Credit card sales seized up completely at one point. PayPal ordinarily makes up no more than 15-20% of my transactions…and usually the smallest ones, as people tend to use PayPal as a spare-change account. Last weekend PayPal suddenly accounted for 90% of my sales. Even perennial also-ran Google Checkout picked up a bit of share. I feared that credit card processing was broken.

My batch didn’t settle last Wednesday night. No biggie; it’s happened before. I batched out manually on Thursday morning and sent them an email, to which they replied that they’d done some routine maintenance and my account was overlooked in the cleanup. That’s when charge sales fell to nothing. My test transactions were fine, and I still got one or two real charges on Friday and Saturday – just enough to assure me that nothing was actually broken.

Small sales could partly explain the over-abundance of PayPal transactions. But I think Americans are trying harder to park their credit cards this year. I suspect that if I could distinguish debit from credit sales, the former would prevail. I would applaud my countrymen’s worthy efforts if Curio City didn’t depend upon them impulsively buying unnecessary stuff.

Credit cards came back from that dramatic fade, but I’m actually seeing more Discover charges as people try to maximize their cash back. Seeing my PayPal balance surge past my checking balance is creepy. PayPal has the advantage of paying instantly, and they pay a token interest rate on balances each month (just a few cents)...but their processing fees are the highest.


People are splurging on giftwrapping. I used to hate how it slows me down while the trivial amount collected (all of $51.50 last year) gets lost in the bottom line. I’m much more kindly disposed toward giftwrapping since I started diverting those fees to payroll this year. So far it’s put $95 directly into my pocket.

Friday, November 12, 2010

Here We Go Again

Every fall, I tremble before my November and December sales targets. I don’t care for Christmas personally, but professionally it’s everything. Right now we’re still in that relaxed phase when holiday sales are building steadily, but shoppers’ sense of urgency is still two weeks away and their desperation is farther out still.
Where on earth do people get all the money?

My paycheck today – the first of four healthy ones that I earn each year – works out to $7.75/hour based on two 35-hour weeks – higher than the federal minimum wage and only slightly below that of Massachusetts. Not bad! I’m going to raise payroll from 20% to 20.25% of net sales if I achieve my 15% planned sales increase in this difficult year. Of course, every dollar that goes into payroll is a dollar that doesn’t go into my profit payout at the end of the year. Without sales growth it’s a zero-sum game.

Week One just barely beat LY, but a large customer return that I authorized yesterday will wipe out that small gain (and then some). This week petered out after a very strong start; it’s still achievable, but it’s another nail-biter.


Four customers have selected “I clicked an ad on Facebook” since I added that choice to my optional “How did you find us?” dropdown list. Absent tracking code from FB, that’s my only ironclad evidence that FB advertising works. It’s certainly driving traffic; the “referring sites” category has gone from 15 visitors a day to 100, and Facebook is the single biggest referrer. What I can’t measure directly is sales conversions. I did get this message from somebody who saw my FB Switchables ad:

This is an extremely good idea. I am sharing this on Facebook. This is genius :-) The ad caught my eye. This is an EXCELLENT CHRISTMAS IDEA as well, to new home owners, people with new babies (or even old babies :-) (…) I shared your weblink with my FB friends (about 300) and will do so again because the idea is awesome, and your prices are very, very good for the quality and detail.

That alone is worth FB’s sky-high ad rates.

My biggest current worry is spending obscene amounts on advertising while just barely eking out my sales numbers. Keyword bids have gone insane – some genius is bidding $2.50 per click – not per conversion, per click -- on Buckyballs. Even an unrealistically high 5% conversion rate would mean paying $50 per sale of a $30 product. Nobody can compete with that…which is how it works. Astronomical bids ensure you top placement, but your actual charge is what it costs to beat the next-highest bidder. In other words, if the second-place bidder is “only” offering 75 cents a click, then our 900-pound gorilla’s $2.50 bid really costs him “only” 76 cents. If the number-two bidder calls his bluff and goes to $5.00 then suddenly the original gorilla is actually paying $2.50 for second place, while the usurper gets the top for $2.51. It’s a high-priced game of chicken that I can’t begin to play. Keyword inflation is happening across the board. Every time I go into my accounts to pare back my bids, I end up raising them instead just to maintain my positions.

Buckyballs are this year’s biggest disappointment, btw. I was sure that they were this year’s Big Thing before I found out that I can’t afford to advertise them. They’re getting some clicks, but nobody’s buying.

Actually, scratch what I said above; my biggest current worry is raking the yard. Every year I vow that I will hire someone to do it for me next fall; every year, I can’t afford that. So I’ll lose 2-3 hours each afternoon for most of next week (getting dark at 5 pm doesn't help). We have a tiny lot, but a lot of huge old trees. And now I need to eat lunch, box and ship orders, and start raking. What a smegging waste of time.

Friday, November 05, 2010

I Fought the Web (And the Web Won)

Technology seldom beats me outright. Oh sure: constant change, complexity, and expense bedevil me as much as the next guy. I don’t understand smart phones at all, for example, or why we need to pay $110 a month for dumb cell
phones on top of $120 for normal phone/cable TV/internet. I know only the rudiments of using the DVR. I don’t own a MP3 player and I rarely take my cell phone out of my office. I haven’t been able to run a new game on my 7.5-year-old gaming PC for at least three years now. I have never seen a Blu-ray disk. I am, in short, permanently stuck circa 2005.

And yet, the years that I worked in software development equipped me with the basic skills to muddle through this whole internet thing. When I can’t solve a problem myself, I know where to seek help. Persistence and money usually bend technology to my will. Usually. Some problems can’t be solved.

The PayPal Checkout Loop goes back to at least 2007, but that’s a Sunshop bug – there’s nothing I can do about it. Turnkey can’t fix it because I can’t reproduce it, and since nobody but me has ever reported it it is likely to endure forever.

The Admin timeout bug has plagued me ever since I moved to MochaHost. It’s caused by an operating system setting on my shared server that they refuse to change – unless I upgrade to a dedicated server or change hosting companies, I must continue logging in every 24 minutes for the rest of eternity, like Desmond pushing his button. At least the island doesn’t move when I blow it off, Brother.

Now we can add USPS shipping times to that short list. Here’s the background that I wrote back in February:

In January the USPS raised rates on Priority Mail and Express Mail; First Class and Parcel Post rates stayed the same. Customers usually choose the least-expensive Parcel Post option, and I've always upgraded those orders to either UPS Ground or Priority Mail. The upgraded price is still at or below my actual cost, the customer gets better service than they paid for, and everybody’s happy.

Or was until now. Priority Mail rates went up and Parcel Post did not. That means that my shipping costs rose while the fees I collect – which come from rate table lookups -- didn’t. The advent of zoned pricing sometimes makes West Coast upgrades a losing proposition. Shrinking the small spread between fees collected and costs paid out is harming my bottom line.

To rectify that, I could:
1. Raise my handling fee. But that penalizes my First Class, UPS, and east coast customers.
2. Increase product weights. But that punishes my most desirable customers – those who buy multiple products at once.
3. Eliminate Parcel Post. But taking away the lowest-priced option would make my shipping charges visibly higher and harm a competitive advantage.
4. Leave everything unchanged and accept the smaller spread. But that makes it more difficult to reach my sales plan (which I calculate based on net sales after shipping costs) and ultimately comes out of my pocket.
5. Actually ship via Parcel Post more often. But shipments that now take 2-3 days would take 7-10 days. Customers won’t like that.

An attentive reader suggested a sixth solution: Show customers the transit times. If they see “Priority Mail: 2-3 Days” and “Parcel Post: 4-10 Days”, most will pay the incremental cost for Priority, my rate spread will be covered, and profitability will improve. Brilliant! I just need to edit the shipping method dropdown list that appears in the shipping estimator and at checkout. That’s, like, five minutes’ work at the most, right?

Yeah, about that. USPS domestic, USPS international, and UPS each have a shipping module consisting of a single small file. When I edit them in Textpad my UPS text shows up immediately. USPS text never does. So is it stored somewhere else? The independent developers in Turnkey’s Modifications forum keep referring me back to the same USPS.php file that’s not working. Turnkey itself remains silent; they’re not obliged to support user mods. In one last shot at ending the stalemate, I prevailed upon my developer to investigate. His verdict:

Usps.php has an install method that clearly writes this stuff to the database when the module is "installed" and it looks like checkout is calling a function in global.php called "get_shipping" which really looks like it's reading from the database to generate dropdown options... but I don't know how any of this stuff ties together... so I could be way off base.

I do see something that looks like it might be setting up a http call and parsing a response in usps.php as well... so maybe it's a web call. *shrug*

I'm fairly confident it's not reading values from USPS.php (that would be... extremely idiotic)

Turnkey hasn't made this very straightforward... so it’s not trivial to figure out how that's being generated.

If you want me to figure this out I will, but you're going to have to give me a few weeks to find time to do some hardcore reverse engineering and put up with me hacking up (and very likely breaking) your shipping functionality for a bit while I troubleshoot.

Higher shipping charge receipts would eventually recoup the cost of hiring Brad to reverse-engineer this function – assuming that he can “fix” it at all; if the text is being passed from the USPS server along with the rates, I’m just screwed. And “eventually” is a long time; I can’t afford any more unplanned expenses in a year that’s already been hammered by them.

So I am back to Square One. Right now I’m still absorbing the increased costs. If sales were running anywhere near plan I might remove the cheap Parcel Post option; very few other shops offer it. But sales have still not crawled out of the crapper that I plumbed last week; I can’t risk doing anything that might flush them deeper.


Speaking of last week…Forget everything I said about Facebook advertising. Turns out that I can advertise products directly, so I started with an ad for my old warhorse, Panther Vision caps. After a week my exhorbitant 75-cent bid bought 5,555 impressions without one single click. Crap. On Monday I added Switchables and Buckyballs to my campaign. On Tuesday I reordered golf balls and started advertising them. As of this morning Switchables has racked up 54 clicks, golf balls have 45, Buckyballs have only six, and Panther caps remain stuck at 0. FB’s tracking code is in beta, so I can’t be sure, but I don’t think that the $27.75 I spent this week brought in a single sale. Click-through rates are abysmal on FB, and the cost to buy impressions is very high. As nice as it is to see overall traffic spike past 300 daily visits (!), I can’t afford this for very long.

FB’s infamous intrusion on its members’ privacy is its main appeal to advertisers: I can target my ads very narrowly based on the interests that users willingly reveal. I’ve decided to cough up $50 of my own to prolong this experiment for another week; if I can figure out how to use this precise targeting to reduce my cost, it's worth flogging through Christmas.


Speaking of the crapper…Christmas is finally starting to crawl out of it. For the rest of this year I’m throwing plan out the window; I just need to match LY. At the moment sales are running 22% behind last year with a day and a half (21% of the week) left to go. It’s going to be tight, but I might just barely make my nut for this important first week of November. It’s a fairly big nut.


Now that the voting is over I can get back to being my usual level-headed, moderate self. After one parting shot at politics, that is.

After spending $250 million on midterm campaigns, corporate America has got the Congress it paid for. I’ve cut next year’s planned sales increase by 50% to reflect the two additional years of economic stagnation that voters just ratified. There will be no second stimulus package. There will be no more unemployment benefit extensions. The economy has been cut loose.

Americans did not vote the Republicans in so much as they voted the Democrats out. Republicans owe their gains to two factions (apart from the Tea Party’s billionaire backers), and the fate of their party depends on which one they reward. Their main support in 2010 came from the same independent, moderate voters who flocked to Obama in 2008. These swing voters expect them to work with the Democrats on solving this country’s real problems, and they will desert in 2012 if they don’t see tangible progress. Republicans would be wise to deliver it. The other faction -- Tea Party extremists – promised conflict and confrontation. Their uncompromising ideological purity, if indulged, will ensure that nothing gets done. Republicans certainly owe them some grand symbolic gestures, like introducing a doomed health care repeal bill, but they would be unwise to give them anything substantial. Tea Partiers have no alternative to voting Republican so the party need not kowtow to them.

This struggle for control over the Republican Party is fascinating fallout from their recent victory. I’d actually feel sorry for Republicans if the poor and middle class weren’t going to be the main casualties of this power struggle.

My home state of Massachusetts successfully fought off the Republican wave entirely. They did not win a single position of consequence here. Our Commonwealth remains solidly blue and unashamedly liberal after roundly rejecting budget cutters and tax cutters. So I’m somewhat insulated from whatever shenanigans they pull in Congress – except inasmuch as the harm that they do to the national economy drags Massachusetts down with everyone else. Nobody’s going to take away our universal health care or gut social programs or repeal our rights here, so I can be sanguine about developments that are alarming progressives elsewhere.

From Curio City’s point of view, two more years of tepid economic growth are the most chilling result of last Tuesday’s election. This business was predicated on rapid growth to bootstrap from zero to a living wage. The Great Recession already trimmed my sails; Republican-induced stagnation could ultimately sink the ship. It just depends on how much longer I’m willing to keep bailing.

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