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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 28, 2012

Another Day, Another Quarter

Q3 was just about the worst quarter I can remember in terms of year-over-year sales. Things never came back completely after my annual vacation shutdown. Perhaps they never will. Yeah, September was another crappy month.


Total income: -30.4%
Total COGS: -37.7%
Payroll: -42.8%
Marketing: -35%
Net Income (Profit): +72.1%

Year to Date:

Total income: -5.7%
Total COGS: -6.9%
Payroll: -1.8%
Marketing: +3.2%
Net Income (Profit): -32,636.1%

The spin: Expenses fell a little more than sales did. The business is solvent despite tight cash flow; the only real loser is me, as my paychecks don’t even cover my weekly beer and cigar expenses anymore.

That ridiculous YTD profit number “only” represents a $1,300 difference, so it isn’t quite as bad as it looks. There’s no glossing over the fact that this was my worst September since 2008, though, and that the prospects of closing the bottom line gap are almost zero. It takes about 10 top-line dollars to produce one bottom-line dollar.

I don’t rightly know what my problem is. My meat-and-potatoes product, lighted caps, are showing some signs of life after a long dormancy. Just yesterday I decided to offer bargain-basement 2-LED caps as a special order item, in dozens only. (I won’t sell them individually because I don’t have enough room in the cellar to store a second cap line and because they would cannibalize sales of my more lucrative 4-LED caps). I usually get one or two big golf ball orders for tournaments each summer; this year, none. Bird kites  were really the only thing keeping me alive, and now kite season is over.

Oh well; Q4 is here at last and Christmas shopping has already begun. Last Christmas was no barn burner so the targets aren’t terribly intimidating. OTOH, I don’t have anything new in the pipeline. I stumbled across one new product line that would piggyback on the advertising that I’m already doing for 3D puzzles, but I doubt that it will sell dramatically and I don’t have the money to bring it in yet anyway. Payroll taxes will suck October dry of cash, and by November it’s too late to gear up for Christmas. I think my only viable Christmas strategy is to hunker down and control expenses while gift buyers liberate some of the inventory dollars that are frozen in old junk.


I sat through the worst webinar ever this week. Sponsored by Endicia (the postage reseller), it was supposed to unveil strategies for coping in the era of free shipping. Most online retailers now offer that perk and the overwhelming majority of shoppers expect it. Needless to say, I don’t.

The first half was a plug for using USPS (which I already do) and a commercial for Endicia. The second half was a commercial for some jazzed-up shopping cart software that supposedly reduces costs by improving efficiency through integration, which is irrelevant when your labor costs nothing. 

The five minutes that they spent on actual strategies mentioned discounts for high-volume shippers (last time I checked, that meant 200,000 parcels per year, or 2,000 times more than I ship). My shipping costs run around 15% of gross sales. High-volume shippers can get a 13% discount. Mystery solved…but fat lot of good it does me. The only relevant ideas they brought up were a free shipping threshold (e.g., orders over $100 ship free), or possibly flat rate shipping ($9.99 per order).

The threshold strategy would convince some shoppers to place larger orders, but I’d have to cover the most expensive parcels out of pocket. If only those customers who are already close to the threshold add more products then the incremental sales would not cover the cost. Plus, it’s worthless if shoppers don’t know about it and Sunshop doesn’t give me any way to add banners or popups. The flat-rate strategy would completely kill the small orders that constitute at least half of my business unless I set the rate considerably lower than my actual average cost (and it’s not free shipping anyway). 

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