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.
Friday, February 03, 2012
About Stuff (Part Two)
Most of my stock falls somewhere between winners and losers. Some of it sells steadily but slowly, some goes in seasonal fits and starts. I’ll mention a couple of lines that fit this description while trying to be diplomatic about it. I’ve learned the hard way not to badmouth products or go into financial details where their vendors might see it, and that search engine bots are unblinking.
Switchables probably should have made last week’s success list, but our relationship is complicated. We're getting along just fine right now, but it inevitably goes through prolonged dead patches. Switchables were a fresh, clever idea when I found them at the Boston Gift Show five or six years ago, and I enjoyed a near monopoly on online sales in those early days. Now several competitors are bidding for the same advertising keywords and pricing the best ones out of reach. I put Switchables in the mixed-success category primarily because of the cost of staying in the game. I stock almost 100 designs. Keeping just 2-3 pieces of each on hand takes up a lot of money and space, and new designs compel me to expand the line twice a year. Sure, 80% of the sales come from 20% of the stock, but one needs a large selection as a lure. Even though my biggest competitor carries everything (there must be 200+ cover designs, not to mention sidelines), I have to be selective. And that raises another minor gripe: Their lineup has always included both naturalistic/realistic and cutesy-cartoony designs. Guess which of those I’ve always preferred. Now guess which direction they’ve been leaning lately. One must go with what sells, obviously, and cuteness does sell. I just prefer a more sophisticated and cool image for Curio City.
Keyboard sticker sales are steady enough, but their price is low relative to their advertising and packaging costs, and this vendor never adds new designs. I felt a little better about them after I raised the price by a buck last week. I could probably justify raising them to their own main category; their current subcategory doesn’t fit in with my scheme very well. But the absence of new product makes me hesitate. And yes, I realize I was just whining about too much new product in the previous paragraph.
3D wooden puzzles aren’t widely available outside of museum gift shops and specialty toy stores (although one customer told me that Michael’s used to carry them, and at a discount to boot). They address a niche (children’s products) that I mostly ignore. They’re of high quality and reasonably priced. But they weigh too much. Inbound freight from California clobbers my margin, so I often run out of some models while I wait for a free shipping or extra discount offer to come along. Then there’s customer resistance to my outbound shipping fee. It’s not too bad if somebody buys multiple puzzles at once, or if they live in the Northeast. It’s a lot worse if I’m shipping a single puzzle cross-country. Last week a New Yorker got four puzzles shipped for $10.73, or 22% of the product value – on the high side, but not outrageous. A Californian paid $9.58 to receive a single puzzle, or a painful 56% of retail. That is outrageous, but it costs what it costs. You can imagine how many shoppers abandon their carts when they reach the shipping fee stage.
Ear buds aren’t really a product line because I get them from multiple vendors, but they’re a semi-successful category. Like keyboard stickers, they might do better in their own top-level category; unlike keyboard stickers, they suffer from excessive turnover. My main supplier typically only imports each design once, and they're just gone when it sells out. Being unable to reorder successful styles is annoying. Having to order their new designs in prepackaged assortments, rather than individually, is also annoying. But at least they’re easy to ship and very lightweight, and I’ve never had a quality complaint.
These characteristics can doom otherwise-good merchandise:
Big and heavy. Customers will pay up to 20% of an order’s value for shipping. Most will abandon their cart when the fee exceeds 20%. Ten to 15 % is ideal. But it costs what it costs, so heavy and bulky items are at a disadvantage.
You have to see it. Some things just don’t display well online (such as anything that features motion or touch), or require too much explanation. Most shoppers won’t read a wall of text for a minor purchase – hell, most of them don’t seem to read descriptions at all. Video can overcome that hurdle if the initial presentation is enticing. But for the most part, if it’s not obvious at a glance, it’s not going to sell.
Bad fit. It took me years of hit or miss to learn what makes a Curio City product, and I’m still refining the definition. The more my product selection converges on my evolving standard, the more focused my customer base becomes. I’ve slowly cleared out most of the oldest products that nobody wants at any price, but sometimes I just guess wrong. Not being a consumer myself is a handicap when it comes to figuring out what people will buy. But every failure hones my intuition for what does and doesn’t fit.
Trendy. A few products rise like rockets and flame out just as quickly. Purse hooks, for example, were all the rage when I found them at the New England Gift Show a few years back. I could barely keep them in stock even at a very healthy markup. A year later they were moving slowly at a markdown. A year after that, I couldn’t even sell them at cost. Anything that uses the word “fashion”, or that’s tied to some other hot product (like iAnything), or that depends on popular culture, has an invisible expiration date.
Too much competition. This one can take three forms – too many retailers, too many producers, and too many alternatives. When shoppers can find something everywhere (too many retailers), they’re unlikely to buy it from me. Prohibitively expensive keywords freeze me out of advertising and deep-pocket competitors have flashier websites than I do. If it’s been featured in mass media and is sold in retail stores, it’s dead to me. Pursehooks didn’t die because too many retailers were offering the same original, hand-made in USA product that I did, but because cheap Chinese knockoffs flooded the market at a quarter of my price (too many producers). Finally, some items (like jewelry) come in such infinite variety that they won’t stand out from the crowd unless it comes from a truly unique concept or offers exceptional value.
Death by discount. When a product is too successful for too long, discounters eventually move in and ruin the party for everybody (except the consumers). I was selling a case of DayClocks a week in the olden days. Sales fell off when others moved in, but there was enough business to make it a steady seller for everyone. Eventually, though, somebody put a few cases on an eBay store at $5 over cost – with free shipping! Ordinarily bottom-feeders like that disappear when their inventory is gone, but this guy held on long enough to force a price war, and soon the product was no longer worth selling. It’s the same thing Wal-mart and Barnes & Nobel do: operate at a loss long enough to drive everyone else away, and then squeak by on razor-thin markup and huge volume.
Overpriced. I try to research competing products before I bring in something new, but when there’s no good equivalent I have to go on my gut feeling. Sometimes I’m just wrong, or sometimes the item’s quality doesn’t measure up to its price.
Fragile and complicated. I’ve had to discontinue two otherwise-successful vendors whose mechanical or electronic toys generated unacceptable complaint rates. Whether their manufacturing standards were too lax or they didn’t stand up well to shipping, I had to refund so many that I couldn’t carry them profitably (and shoddy merchandise harms my image, too).
Sentimental. I carry a few things just because I like them. Their sales don’t justify their existence. I shouldn’t tie up valuable inventory dollars there. But in one way or another they contribute to the Curio City “brand”, and so I keep them on as long as they sell anything at all.
I’d given up on a resort hotel on Grand Cayman Island after our lengthy slow-motion correspondence went cold last week. But they unexpectedly came through with payment for 150 Create-a-Bird kites this week. That big cash infusion erased January’s large deficit, but it’s not all sunshine and lollipops. I didn’t have the birds in inventory, so I had to spend about 60% of the money to buy them. Another 20% goes to payroll (yay!), and the credit card processor takes a stiff percentage from international sales. There’s not enough cash left after that to buy me any momentum, although I can now afford tax preparation and my corporate registration/annual report. It basically brings me back up to where I expected to be.
Of course there is a dark cloud around every silver lining; those kites mask a serious lull in routine business. Apart from the huge sale, Wednesday brought only $10 out of its targeted $200. Yesterday delivered just $30. In fact, if you take away the lightning strike, this week is running $500 behind LY. The newsletter that went out on Tuesday added 40 new subscribers for 243 sends. Five bounced, three people opted out, and one filed a spam report. The bottom line was 70 opens, 25 clicks, and no sales. Most of my customers aren’t in the typical demographic for Valentines Day. But I can usually cash in on overall higher shopping traffic, and that’s not happening. I must confess that I didn’t remember to update my News page with shipping advice until last night, so some shoppers might have just assumed it's too late to buy online.
Google Analytics tells me that traffic fell by nearly 100 visits per day this week. My advertising also fell by $5 per day, so that much is good news. But did clicks decline because overall shopping traffic is down, or is my traffic down because clicks declined?