Hello Crisis, My Old Friend

I expected March to finish behind LY, so the goal was just to keep the YTD numbers in the black. How’d I do?

March
 
Total income: -25.8%
Total COGS: -31.1%
Payroll: +37.1%
Marketing: +22.5%
Net Income (Profit): -262.7%

Year to Date: 

Total income: -1.0%
Total COGS: +7.6%
Payroll: +24.1%
Marketing: +30.0%
Net Income (Profit): -327.7%

I did not expect March to finish that far behind LY. This week was the worst of the year so far. I don’t know why. Maybe it’s something to do with Easter, that wild card of a holiday. Or maybe Google is punishing me because my site was offline for half of Monday.

There's nothing good hidden in those numbers. YTD sales are really down by more than Quickbooks knows, because QB thinks that an invoice that I prepared for a customer price quote was a sale. QB thinks gross sales are only down by $144, but Excel knows that it’s really more like $900…at least until that customer closes on his estimated sale. The numbers will line up again if he eventually comes through.

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The SEO dude that I talked to last week knows his stuff. An hour-long follow-up phone call convinced me that they can increase my monthly traffic by at least 6,000 visitors, and possibly as many as 12,000, just by optimizing my site (using non-sleazy methods) for my four best keywords. I figure that would increase sales by a minimum of $1,200 per month using the most conservative assumptions and as much as $4,800 under the rosy scenario. Unfortunately, their cheapest plan runs $495 per month, and it takes 90-120 days for SEO to deliver the calculated improvements. I could spend $2,000 before traffic picks up sufficiently to cover the new line item…and, of course, there is no guarantee that it really will. This month’s sales figures make it obvious why that can’t happen. With payroll taxes due in a couple of weeks, my old familiar cash flow crisis is back again. The 10 vendors currently on my new-product wishlist will have to stay wishlisted indefinitely.

So I put the guy off until July. Who knows? A miracle could happen between now and then. Last week’s post called down a plague of SEO spammers, as I expected, so I shall not write  those letters again. At least I learned a few tricks that I can implement myself that should improve things incrementally.

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Citizens Bank announced that they were going to screw me over by changing my seven-year-old Business Partners checking account to a Business Advisor account. Um…what? Old terms: $12 monthly fee, $10,000 average daily balance to avoid it – and, thanks to a 2005 business recruiting drive, mine was supposed to be free for life. New terms: $25 monthly fee, $35,000 average daily balance, and no more promotional waiver. Gah!

A quick phone call unveiled their Business Green account: $10/mo fee, $2,000 minimum balance, and a mere five transactions per month to waive it. Whew. Why didn’t they tell me about that in my notice letter? Undoubtedly because some fraction of their customers will suck it up and pay the new fees.

Blood from a Turnip

Attentive readers might realize that I’m looking for a way to jazz up my sales without a lot of expense or risk – to dip a toe slightly outside my comfort zone, as it were. This month Facebook advertising flopped and I successfully resisted assimilation by the Amazon collective. I was wondering what to do next when a SEO salesman called. Ordinarily I terminate telemarketers the moment they say “How’s your day going?”, but this one’s timing was lucky. I let him pitch me the usual complementary site analysis and follow-up phone call.

Typing those letters is like throwing chum in shark-infested waters. Telephone spammers will frenzy minutes after I hit the Post button. So be it. Search Engine Optimization has been on my to-do list for years. I’m not clever enough to implement most of the free advice that I’ve been given over the years, even when I can understand it, because a PHP shopping cart isn’t as straightforward as a plain HTML website. Consequently I can’t do much more than write keyword-heavy product descriptions and plug meta phrases into Sunshop’s provided fields. I know that I need professional help if I'm ever to get serious about SEO.

Nathan satisfied me that his company is thorough, knowledgeable, and non-sleazy. They don’t use link farms or make grandiose promises. Their analysis ranked me at 53 on a 1-100 scale where anything under 40 is pathetic and 70 is well-optimized, so I’m already doing better than I would have expected. I’m quite sure that they could improve my natural search rankings and, eventually, my sales. The big question is affordability. Tight cash flow is a common lament in this blog. SEO is a long-range prospect; improvements made today don’t bear fruit for weeks and it takes months for incremental sales increases to add up, yet the bills are due immediately and in full.

We’ll talk cost next Monday. I’ve warned Nathan that I’ll have to put him on hold, if I can even do it at all. Payroll taxes are due in April. I already have nine vendors on my new product wishlist, and tomorrow’s Cavalcade of Crap might add even more. I need to reorder four of my mainstays. And Intuit wants $184 just because. That gobbles up any free cash in April and probably May as well…and then we’re in the summer doldrums. But he’s a salesman, and he smells blood.

(Incidentally, as a longtime blood donor who’s homing in on his 4 gallon pin, I offer this disclaimer from Wikipedia: A turnip cannot be coaxed, squeezed, or cajoled into producing blood. All efforts at obtaining blood from this vegetable will be futile. There's no substitute for rolling up your sleeve.)

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Reasons to hate UPS: An envelope from the UPS Dimensional Adjustment Bureau is not the exciting science fictiony thing that its name suggests. It ordinarily heralds a surcharge for a package measurement error. Miracle of miracles, this particular envelope held an unexplained check for $1.55. Why is this a reason to hate UPS? Because they issued and mailed a paper check that I had to endorse and schlep to the bank’s ATM; the bank had to process it and return it to UPS; and UPS presumably has to reconcile their account...all of which must cost more than $1.55. Why didn’t they just refund my credit card? They never hesitate to charge it when an alleged error is in their favor.

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Reasons to hate Quickbooks: For $184, Intuit would like to sell me some new bloat that I’ll never use and keep my current install fully functional for three more years. The only “services” that I use are emailing purchase orders and invoices directly through QB, and automatically downloading bug fixes. $15 per month to preserve a “service” that I might use two or three times is not exactly a good value; I can easily save documents as PDFs and email them myself. OTOH, Curio City is essentially just a website, a MySQL database, and a Quickbooks file. I feel compelled to keep those components up to date even when there’s no clear benefit. I suppose I should shop around and see if anybody sells it below Intuit’s $184.

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Here’s what $350 of Facebook advertising finally bought me:

•    391,111 impressions;
•    141 “social impressions” (impressions shown with the names of the viewers’ friends who Liked my page);
•    93 clicks (Not according to Google Analytics, but OK, if they say so);
•    4 people Liked my page;
•    And, of course 0 sales.

Resistance Is Futile!

Amazon wants me. All of the objections that I raised about the Amazon Marketplace last September are still true, but I did end that post with “I’ll revisit this idea going into next summer’s doldrums.” Now here we are.

150 million unique monthly visitors hell-bent on shopping add up to one huge reason to join the Borg collective. Amazon recently made it a little easier to sell out. And what man can say no to 7 of 9?

First, the array of “revenue share” points has been winnowed to 15% across the board (except for jewelry at 20%, but I would not list that). Second, Amazon now handles the initial setup; the complexity of that was a big turnoff last time. The 40-product minimum is a burden, but I could easily pad that requirement with Switchables covers.

Drawbacks besides the logistical ones that I wrote about last September:

•    2 million other merchants are cutting one another’s throats in the same space, and most of them are more ruthless than I am.
•    Amazon uses its participating sellers’ sales and pricing data to compete with them directly. You will soon find your “host” moving in on your successful products.
•    Adding my best products enhances Amazon’s appeal, not mine, while Amazon’s name weakens my brand. Customers don't understand the difference between buying from Amazon and buying through Amazon. I don’t want to be a mere distributor in the collective.
•    Amazon owns the customers who buy through their website and forbids its sellers from marketing to them – not a big practical concern, since I do almost no direct marketing, but it bothers me anyway. I assume that Amazon’s Terms of Use (such as their privacy policy) supersede mine if those customers are its property.
•    Amazon prevents sellers from controlling product images and descriptions by applying standards to each UPC.

To succeed, one must have an appealing product at a competitive price that Amazon and its merchants aren’t already selling in any quantity. The UPC code requirement rules out my more offbeat items.

A recommended strategy is to keep your bestsellers for your own site, and use Amazon to test new products or liquidate losers. That’s one argument in favor.
 
Internet Retailer magazine said that sellers who have fewer than 40 transactions per month pay only 99 cents per sale. Forty doesn’t sound like much, yet it would be a 40% increase over my typical 100 monthly sales. Can I suspend my Amazon products when I reach 40 sales? Their salesman wants to sign me up as a “Pro Merchant”, which I think precludes the 99-cent small seller option. He wasn't interested in discussing the small-potatoes approach that interested me.

Mostly, the 15% haircut is a killer. Consider what happens to each merchandise dollar that I ring up. A bit over 50 cents pays for the stock. Twenty cents goes into my pocket, and I have to pay another 3 cents or so in payroll taxes. Ten cents goes to advertising. Payment processors take 4 cents. That leaves 13 cents to cover everything else – packing and printing supplies, licenses, annual taxes and fees, professional services, Internet and telephone, etc. My actual profit is whatever’s left after I meet all of those miscellaneous expenses (which obviously ain’t much). Amazon covers payment processing costs, so that reduces their take from 15 to 11 cents per dollar. That would leave me only 2 cents out of every dollar for miscellaneous expenses and profit.

OK. For 2 cents to do the work that 13 cents is doing now, dollars would need to increase by…well, I don’t know how much. It’s less than sixfold because some of my expenses are fixed (advertising would not rise proportionately, for example), and because the 11-cent Amazon expense would only affect the Amazon portion of total sales. But it’s definitely a lot.

Ultimately, though, it just feels wrong. Curio City’s niche is selling products that you don’t find in mainstream retail. Amazon defines the mainstream. Joining the mainstream contradicts my core concept. So, for better or for worse, I rejected their pitch again – permanently, this time.

What next? I do want to jazz up my game this year without risking a lot of money or radically changing the way I do business. Growth is already returning to Curio City as the economic recovery finally trickles down to the middle class. How do I enhance that without risking it? Facebook advertising didn’t work. I decided against selling on Amazon. What next?

Next week: The dread Ess-Eee-Oh puts in another appearance.

The Gambler

My Facebook advertising experiment needed to generate $2,500 to be an unqualified success; $1,500 would have justified continuing and refining the ads. I was sure that it would at least recoup its $350 up-front cost – that’s only 10 sales, after all. Actual sales that I can pin to FB ads: $0. This year’s FB referrals fell by 34% over the same period LY, from 56 to 37. My “weekly total people reached” moving average rose from 47 to 42,158. The only result I’m seeing from that 10,000-fold increase is a spike in marketing pitches. I did pick up seven new “Likes,” which might be worth slightly more than zero. Very slightly.

The ad agency had strongly recommended linking the ads to my FB page rather than to my store, as most FB users don’t like to leave FB. You’re apparently supposed to send them to a landing page with a “click for special offer” gimmick that gives people a discount code and refers them to your website. That might have worked a little better…but spending extra to generate discounted sales is a losing strategy.

So that unambiguous failure makes the cancellation decision easy. I spent $700 on three tests over two years to prove to myself that FB advertising is 100% worthless for selling products.

OK, I gambled and lost. What now? It just so happens that I’m weighing another gamble. That will be next week’s post.

It's a Lock

Back in December a customer asked why there was no lock icon on my checkout page. Huh? The page is secured under an “https” URL and my SSL certificate is up to date, and yet there it was: An open lock icon. I made a note to ask my developer the next time I needed to hire him for other work.

This week I was checking out an unrelated Internet Explorer bug report. I was aghast when my checkout page popped up a security warning. When I told it to load only the secure content, my Facebook “Like” button disappeared.

Hmm.

A few versions back, Turnkey implemented a Facebook plugin for Sunshop, but I could never figure out how it was supposed to work and I didn’t need it anyway since I had implemented some FB code on my own. Now it looked like I’d have to remove my custom code and either use their plugin or drop the “Like” button entirely. This would be much more daunting than it ought to be. When I finally remembered where I had inserted that code ages ago, I noticed that it linked to a plain old non-secure “http” URL.

Just for kicks, I changed the “http” to “https”. Lo and behold, it worked! The error message is gone, the lock icon looks locked, and the Like button seems to work.

I really ought to be paying myself more.