Stumbling Out of the Block

January & Year to Date

Total income: -10%
Total COGS: +1.1%
Payroll: -11.7%

Marketing: +3.4%
Net Income (Profit): -118.4% (-$253)

If you omit four bulk sales that plumped up January 2013 this year’s underlying business wasn’t bad. I thrashed LY one week, got trounced another week, and basically tied it the other three weeks. With a day and a half left I’ll finish within a few hundred bucks of LY. Analytics says I’m still drawing 150+ visits a day, which ought to yield 3+ sales, but for the past few weeks I’ve only averaged two per day. Failure to convert is a bigger problem than traffic. My makeover plan might help with that if I can ever scrape up the money to do it.

Obviously, too much advertising bought too few sales, and that’s exactly what killed me last year. Ideally I’d like more sales from the same spend. As a fallback I need the same sales from a smaller spend. To that end I’ve changed my Google bidding method to give me better control over price. So far, I’ve shaved it by $10/day without a noticeable hit to sales. COGS is only up because I had some favorable one-time inventory adjustments last year.

I managed to pay off both of my December credit card bills and most of my taxes. Doing so delayed Monday’s paycheck by one day and left me with $2.71 in checking – how’s that for cash management? Now I need another $1,115 above and beyond my operating expenses for more taxes and tax prep. If I can swing that in February, I can think about doing my site upgrade in March. If I can’t, it gets postponed til April. That’s when Microsoft stops supporting Windows XP and amps up the pressure to buy a new laptop. The cash flow challenges never stop. 

The rest of this year’s sales targets look achievable. February should be especially easy if the random act of media that I wrote about last week pays off at all. The vendor refused to give me inventory on consignment, but says that they will fast-track a reorder. That will give me one chance to back up the 36 pieces that arrived today if Monday’s action is unambiguous. If I sell every piece that I have, I’ll gross a whopping $515 – not exactly the stuff of dreams. If it flops, I’m only stuck with another $216 worth of dead merchandise – a setback, sure, but not the stuff of nightmares. And I could do better if some of those 36 hypothetical customers buy other items, such as earbuds. With the newsletter and coupon that hit today, I feel like I’ve done everything that I can.

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Meaningless milestone: Sunshop cranked out order 111111. It’s not really my 11,111^th sale, but it was kind of cool to see the number anyway. Since numbering started at 100001, I’ll never see 222222. In fact, at the rate I’m going I should be safely dead before I hit 122222 in another 9-10 years.

That Cautious Old Man On the Flying Trapeze

Newsday plans to feature the Tunes for Two headphone splitter in a print and TV tie-in story about high-tech Valentines Day gifts. The print guide, scheduled for Feb. 3, will feature seven items with a picture of the product, its name, description, price, and where to buy…where I’m assured it will say “curiocityonline.com.” It will also run on newsday.com, as well as mobile apps and an e-edition. 

The TV spot is being shot on Feb. 5 (but might run later than that) on Cablevision News 12, where it will be one of 15 products without the tech theme.

Newsday’s print circulation is 265,000. If 0.5% of their readers are motivated to go online, that’s 1,325 potential visitors. My usual 2% conversion rate would produce 26 sales. The various electronic tie-ins (including TV) might double that to 52. So my conservative estimate ballparks this at 50 sales worth $600…but it could be anywhere from zero (such as I got from that New Jersey magazine) to several times that number. It all depends on what percentage of their readers will seek me out.

Downsides: This product has sold just four pieces over the past several years. I only have seven in stock, so I’ll have to order another 48 to support my sales estimate. They are, of course, nonreturnable. I risk spending $300 that I can ill-afford and getting stuck with a product with a proven record of failure. Feb. 3 publication is another hurdle; ordinarily Valentines business dies off two weeks before the holiday. If I’m underestimating demand, I won’t have any time to bring in reinforcements.

If I had money to spare, I’d rather risk getting stuck with unsalable merchandise than turning away sales. But money’s tight. Right now I have $55.13 left after my January charge bills and most of my taxes are paid. I was feeling good about being in the black even though February brings another $2,565 in charges and taxes versus anticipated revenue of $3,000. Add a few hundred bucks for payroll and the month breaks even at best. 

I was expecting to do a tightwire act in February and circumstances handed me a trapeze instead.

Right now I’m pursuing a long shot: Asking the vendor to provide the stock on consignment. That would maximize everybody’s potential returns without putting all the risk on me. I doubt that they’ll go along, but we’ll see. Assuming they turn me down, I need to make a hard decision later today.

The Post Office Is Going to the Dogs

You’re laughing; the post office has been renowned for inefficiency and unreliability since time immemorial. But that reputation was undeserved as far as package delivery goes until five or six months ago.

When you click the Get Shipping Rates button on my checkout page, Sunshop sends your package weight and destination to USPS and UPS rate servers that quickly return a list of services and prices. A few months ago, USPS started adding delivery time estimates to the Priority Mail rates that they return: 1 Day, 2 Day, or 3 Day. Now you might see a list that looks like this:

·         $3.47 First Class Package

·         $5.90 Priority Mail 2-Day

·         $17.99 Priority Mail Express 1-Day

·         $20.57 UPS Second-Day Air

·         $47.82 UPS Next-Day Air

You can get 2-day shipping for $5.90 from the USPS versus $20.57 from UPS? Great, make it so!

You order a bird kite on Thursday. Those don’t fit in a drop box so I have to request a carrier pickup. If I process your order Friday afternoon, USPS will (probably, but not definitely) pick it up on Saturday. It will be in transit on Monday and Tuesday. If they hit their 2-day target, you’ll get it on Tuesday – five days after your order – but it might be Wednesday or Thursday if they’re running a little behind, as they commonly do. Your “2-day shipping” just took the better part of a week. You’re a little cheesed off because you “paid extra for priority shipping,” as several customers have declared (and I’ve got to hand it to USPS marketing; people take “priority” literally when it’s really just the cheapest service for packages over 13 ounces). Who do you blame when two days stretch into five or more? Why, that would be me. You don’t know that USPS displayed that “2-Day” text without any input from me and you don’t know that it’s not guaranteed. You just think that I advertised service that you didn’t get. Are you going to shop here again?

One First Class Package disappeared without a trace since they made this change. After I filed a missing package report I got an email from the local post office saying that they would monitor my package status. Three attempted replies to that email brought no response; that package is just gone and the post office won’t talk about it. 

I’ve refunded shipping charges to two irate customers whose orders were significantly delayed after they “paid extra for priority shipping” and talked several others off the ledge. Some people accept my explanation, and some think I’m blowing smoke up their ass. 

On Dec. 31 somebody really did pay extra to have a small package delivered via Priority Mail rather than the cheaper First Class Package rate. It was supposed to arrive on Jan. 5. On Jan. 8 the customer contacted me; there was no tracking after acceptance in Braintree on the 31^st and she demanded action. On Jan. 10 I reshipped her order and filed an online refund request. Five days later the lost package reappeared on the radar screen – it took two weeks to cover the 99 miles to Springfield! Ten hours later it was in California. Now I’m not going to be able to recover that loss, either.

Last Saturday I received an order at 11:42 am. The customer paid $17.54 for “Priority Mail Express 1-Day,” added a note saying “I need it for Monday!!!!! Please!! I payed for 1 day Express Mail. Thank you” and emailed me to make sure. I verified that Express Mail is an overnight service to New York City and got a package bearing a label showing “1-Day” with a delivery date of 1/13 to the post office before their 1 pm pickup. On Monday night she complained that not only had her package not arrived, it was showing a delivery date of Wednesday. Three days from Boston to NYC! Even plain old Priority Mail typically gets there overnight.   

One must request service refunds at a post office counter. After my 10-minute wait in line the postal clerk apologized and promptly processed a refund. A manager tried to derail the process but gave up when I stood firm and the clerk took my side. I walked out with $17 in cash. In a rare flash of good luck, my customer was so thrilled with her mini-briefcase business card holder that she insisted that I keep the money. Profit! I ordinarily need $85 in sales to earn $17.

A good 9,500 of the 10,000+ packages that I’ve shipped in the past eight years have gone via US mail. Before the recent unpleasantness I had only lost two shipments without a trace in all that time. Sure, there were late deliveries, packages that disappeared after being confirmed delivered (presumed stolen), things that arrived damaged, things that were deemed “undeliverable” to legitimate addresses. Such are the vicissitudes of shipping. But UPS takes longer, damage is much more common, and they've lost one or two packages out of far fewer carried. (FedEx isn’t a player for my purposes and I only recently learned that DHL still exists.)

This all stops being funny when it costs me money.

What's Up with Government Websites?

Two years ago I mistyped my password and couldn’t get into the Social Security Administration’s Business Services Online (BSO) website to create my W-2. The site blocked further attempts after just one failure. I had to call their tech support for help. I don’t remember the details, but they got me in.

Last year the website scolded me for “too many attempts” the first time I entered my (valid) password, so I tried to do a password reset. The BSO sent me to a form to request a paper letter with the new code. When it arrived a week later, the temporary password didn’t work. I called tech support again. When the technician couldn’t reset my password or clear the error message, she suggested that I create a new employee using my wife’s name and SSN. That worked. A couple of weeks after I printed my W-2 I received an email from one “KGOOCH” saying that he needed more information and giving me a phone number. I filed that away against the next inevitable failure.

That reckoning finally came this week. The first two times I tried calling their 800 number, a recording told me that the service was unavailable. The third call got me into their queue; after five minutes I got a ringtone, a click, and silence. KGOOCH’s number was “not available from your area,” whatever the hell that means. Sleuthing their website finally uncovered an email address so I wrote up this whole story and sent it off. Rather than emailing me, they called (one of my biggest pet peeves) after business hours and left a message referring me back to the 800 number where I started.

Remember that I’m not asking them to do me any favors. All of this is to create a form that the government requires so that I can, you know, pay my taxes.

I gave up the next day after more “call back later” blocks. On the third day I got through on my first try. The weary-sounding technician took my hand and led me like a dull child through the forgotten-password routine. Of course, I immediately hit the old familiar problem: Instead of taking me to a reset page with security questions, the “Forgot password” link took me to the password-by-mail page. And of course the tech blamed me, my browser, and my computer. I’ve been in the tech-support seat before so I patiently let him rule those out one by one until he had to conclude that the BSO website was the problem. 

He: “It’s not supposed to do that. I’ve never seen it do that.” 

Me: “Yeahhh, that’s the same thing that happened last year.” 

He: “OK, well I can generate the password by mail here to make sure you get it. Is your mailing address--?”

Me: (Interrupting) “Um, no, that didn’t work last time and it’s not going to work this time. Can’t you just read me the new password over the phone right now and let me try it?”

He: “No, that’s not how the system works. The computer generates the password and mails it to you.” 

Me: “Can I try logging in as my wife?” 

After fumbling down that path for a few minutes I finally managed to set a new password and log in. Incidentally, BSO passwords expire every 30 days, so I can look forward to this again next year. Why would a site that most people access only once annually require a password reset every month?

He: “Can I help you with anything else today?”

Me: “Yes, can you delete my original account so that I can start over?”

He (dubiously): “I can deactivate it. That should let you create a new user from scratch. Or maybe it will try to reactivate your old account.”

Me: “…”

The BSO’s shortcomings don’t rise to the infamy of healthcare.gov, but this is a site that’s been up for years. After working fine for seven years, the Massachusetts Health Connector crashed and burned when the state paid a contractor $60 million to bring it into compliance with Obamacare; workers are still taking applications on paper over the phone and the state has given up on trying to fix the site. When the DUA introduced its new website last summer employers (including me) had trouble reporting wages and submitting payments. Tens of thousands of unemployed citizens lost their benefits when the site was later expanded to serve beneficiaries. My fully-employed wife received an unexpected check for a couple of hundred bucks; a DUA employee couldn’t explain it but assured us that we could keep it. We finally concluded that the computer had finally corrected an underpayment that we’d given up on and forgotten about years ago.

So what is it with government websites? I have some theories: 

1.    Governments use contractors rather than employing dedicated IT professionals. Outsourcing ensures that the people who do the work are not vested in the system and don’t fully understand it.

2.    Government IT managers earn below-market salaries; you get what you pay for.

3.    The contract goes to the lowest bidder; you get what you pay for.

4.    Government specifications and oversight are inadequate thanks to points 1 and 2.

5.    Penalties for cost overruns and performance deficiencies are inadequate. Contractors are eventually going to get paid the contracted amount; the lower their costs, the greater their profit. So they skimp on development until the end, when they can pour on the absolute minimum necessary to achieve their deliverables. 

Hiring a full-strength governmental IT department at market wages won’t solve anything. You’d have a large pool of chronically underutilized workers, or you’d have constant waves of hiring and layoffs as projects gear up and finish, or you’d generate a lot of make-work projects to justify everybody’s taxpayer-paid salaries. 

The problem lies in the nature, management, and oversight of contracts. First, the lowest bidder should not necessarily always win the job. Second, contracts need to be written in a manner that does not encourage the contractor to minimize up-front costs in favor of a fix-it-later mentality (by requiring payment milestones, for example). Finally, government needs to do a better job of spec’ing, testing, and overseeing their own projects before the contract even goes out to bid. 

Of course, problems aren't limited to government websites. You know how my blog always starts out with a pithy image stolen from elsewhere on the web? Yeah, the insert image function isn't working on Blogger today. For some reason Google breaks the editor every now and then. I had to insert the HTML manually.
 

OK, 2014, Let's Dance

I wish that I could predict sunshine and lollipops for 2014. I ought to be counting my money and planning how to invest it; this year I’m not going to be able to pay my January Amex bill. Mastercard will want a few hundred bucks a couple of weeks later, and then I’ve got to scrape together $1,115 for tax preparation and fees. Right now all I see are bills stretching out forever and a checking account that’s stuck in neutral.    

I have two goals for this year. The first is simple: Don’t fail. That just means paying the bills and beating the low targets that 2013 laid down. In business as in life, I only ever hope to survive, but that won’t cut it this year, so the second goal is to succeed: That is, to beat 2011’s high water mark by 1% and restore real growth. That requires a seemingly impossible 22% increase over LY. 

The only strategy that I have in mind will cost a little money, but maybe not too much money.  

  
I passed up the last two Sunshop updates because they didn’t contain enough features or fixes to justify the cost and risks of upgrading. The only intriguing item is something called “responsive themes.” I’m not entirely sure what that means except that the new templates are supposed to make the store display better on smartphones. 

Who cares? I don’t have a smartphone, I don’t understand them, and I can’t afford to get one, so adopting a “responsive theme” is a shot in the dark. My existing website already looks better than I expected on my wife’s Android phone. Analytics says that nearly half of my December visitors arrived on a smartphone and that they were worthless. 84% of mobile users bounced away without looking at anything (vs. 67% of desktop users); those who stayed only looked at 1.5 pages (vs. 3.33); and only 0.48% of them bought anything (vs. 3.9% on desktops and 2.6% on tablets). Knowing that smartphone traffic is of notoriously poor quality I had already reduced my ad bids for mobile devices by 25% to avoid wasting money on their clicks. But they came anyway. If I can’t get rid of them and I can’t force them to use real computers, I have to figure out how to exploit them. 
  
Even if the “responsive” thing goes nowhere, a new coat of paint can’t hurt. Curio City’s appearance hasn’t changed since 2007. Turnkey will do the upgrade for just $75, which is considerably less than I usually pay my own developer (assuming they don’t charge $75 per version!). I might be able to squeeze in $75 as early as next month. I'll be throwing away six years of accumulated customizations in my old “modern black” template. Bringing them along could cost hundreds of dollars in developer time plus potential downtime. But I need to play the only ace up my sleeve early in the year if it’s going to make any difference, even if that means starting over with a generic, uncustomized template.

If Turnkey releases the all-new Sunshop 5 it negates all of this, but that’s been just around the corner for two years now.  

I need to do this as soon as we get through the holiday hangover and I can cover my immediate bills. Meanwhile, I’ve cut my bids for mobile devices further so my limited ad budget can reach better quality customers.

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Advertising is my only major variable expense. I probably can’t cut the actual spend without slitting my throat, but I might be able to squeeze more revenue from it. For starters, I’m taking another hard look at Bing/Yahoo ads. I spent $200 for just 13 conversions in December, but I screwed up the statistics when I wasted $84 advertising cheap Buglit flashlights -- 3,359 clicks and 0 conversions before I caught that mistake. I’m going to monitor my Microsoft Adcenter spend through January and cut it off entirely if it doesn’t perform. This isn’t the first time I’ve threatened to do that, but it’s the most serious I’ve been about the threat.

How did 2014’s first accounting week go? Well, I beat LY on five out of six days and would have enjoyed a small lead had it not been for a $500 bolt-from-the-blue Switchables order LY. So I’m already running 50% behind LY. And I had two other bulk orders in January 2013 that I can’t expect to repeat this year. I’ll declare victory if January 2014 can merely match LY without the benefit of any big shots in the arm.

I like to end on a positive note whenever I can. That’s a reach this week. Economists are predicting two or three years of normal, healthy growth, and that passes for boom times in the wake of the Great Recession. Curio City has historically done best when the economy has done worst, and vice versa, but I don’t think there’s a causal relationship there. Trickle-down economics has been resoundingly discredited, but a rising tide should lift all boats by at least a couple of millimeters if we can stop the leaks.

I’m in decent shape for merchandise and supplies. I shouldn’t need to buy anything for a few weeks.

There are a couple of silly tricks in my favor: First, Excel’s 2014 will have 53 weeks after it steals December 29-31 from 2013 and January 1-3 from 2015, because both of those three-day segments belong to the four days of their adjacent weeks. That fiction won’t affect the Quickbooks numbers that I report here, but it ought to be good for a few hundred bucks in the numbers that I use for planning and measurement. Second, we decided not to take a summer vacation this year because our cat is too old and fragile to leave alone and we need to put the money toward a new roof. That ought to be good for another few hundred dollars, but this plan could change if Iggy dies soon.

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I realize that this blog is in a hand-wringing rut. I’m tired of writing about lousy sales and broken budgets, so Friday entries are going to become more sporadic. Readership has fallen into single digits anyway; maybe more engaging topics will lead a surge back to double digits.