The Old Bait-and-Switch

Curio City needs three service companies. I've been with Turnkey Web Tools, creator of the Sunshop shopping cart, from the beginning. It's familiar, it's reliably supported, and I can recommend it with minor reservations. Then there's my web host, MDD Hosting, upon whose server Curio City actually lives. I drifted through at least four bad homes before settling into MDD, whom I can't recommend highly enough. I hope that they'll keep on doing what they're doing forever and never be acquired or go belly up.

Finally, there's my so-called "merchant services provider" -- that's bank-speak for credit card  processing. This is a sleazy, deceptive industry that skims money from every sale for providing a token (but indispensible) automated service. Byzantine pricing structures make comparing bank plans as difficult as choosing a new mattress or negotiating a car price and just as enjoyable. 

These banks like to change their terms every time contracts come up for renewal. Last April the bank that I'd been using for a couple of years suddenly started screwing up. After a few weeks of drama didn't solve anything they broke off communication and forced me to jump ship. Ultimately I surprised myself and went with PayPal.  

It turned out to be a smart move. Total bank service charges fell by 24% ($634) year-over-year, right in line with the $700 savings that I had estimated. So my heart sank when PayPal sent me an email called "Updates to Your PayPal Pricing." Crap. 

Here at PayPal, we're periodically looking at our customer accounts to make sure services and rates fit your account activity and needs. Because of that, we determined that you might be paying a non-standard rate on some or all of the PayPal transactions associated with your account.

On February 1, 2015 we will transfer your account to the standard rate, you don't need to do anything. For new rate information, you can check out our PayPal User Agreement. With that update, when you process any transactions through Payments Pro or Virtual Terminal products, you will be charged the rates outlined here for those transactions.

My transaction fee will rise from 2.2 to 2.9% and I'll start paying $30 a month to use their PayPal Pro gateway. The monthly fee alone wipes out half of what I was saving and the additional 0.7% will more than swallow the rest. That means I'm back in the market for a new merchant services provider yet again -- which is why I used those keywords in this post. The spam floodgates are open.

"No annual contract" seemed like a selling point last April. Here we see the downside. Oh well, even if I'd locked in my rates the contract would have been up in a couple more months. I wonder if appealing to the salesman who gave me the sweetheart rates would do any good. I'm going to give that a shot after the holidays. Nothing good ever happens during the last two weeks of the year. 

**************************

Now the rhythm of a new year begins. I slew the $6,100+ Mastercard bill (including nearly $100 in interest from last month's unpaid balance...ouch!) with $1,500 to spare. I need $600 to cover my last Christmas paycheck next Monday and another $4,100 for the government, my CPA, and Amex, ideally by late January. That means raising $3,400 on top of normal operating expenses between now and then. Historically, I can expect $4,300 in sales. If it looks like I'm going to make it, I can start rebuilding inventory after my next credit card statement closes on Jan. 12.

Right now I'm trying to whittle back advertising without killing sales. During the peak  I was spending well over $50 per day on clicks. This week, daily sales struggled to reach $50. 

Last week I mentioned that I didn't have any serious competition for Metal Earth keywords. This week I've been in a bidding war. The lowest qualifying page-one bid has crept up by a penny or two every day. Their price point and sales velocity are too low to justify spending very much on ads. I decided to suspend my Metal Earth ads until I can afford to beef up my depleted stock. Maybe the lull will make my competitor complacent...assuming that he isn't a script, that is. You can't outbid a script until it hits its cap, and that's usually way too high.

Good Bets and Bad Bets

Excel's "Net Sales +/- LY" column shows black ink on 11 out of the first 13 days of this month, often by $100 or more...and yet, this December's final number will still be the worst since 2007. Why? Lots of nickel-and-dime sales and no big scores. Every December since 2007 has brought at least one bulk sale over $1,000; this year had none. Each of the past three years peaked with a $5,000+ week; this year's high water mark was $3,800. (Blame the decline of Panther Vision caps for that. I just don't have anything else that people buy by the dozens.) On top of that, Christmas ended right on schedule on Dec. 15 this year, whereas it dragged on for a week past that LY. Five of the most recent seven days came up short by hundreds of dollars a day -- I "lost" $500 on Monday alone. I'm still getting a Christmassy 8-10 orders a day, but they average an un-Christmassy $20 -- enough to keep me hopping without making much money.

One thing's for sure: That last-minute Santaur order was a smart gamble. I sold a total of 54 altogether, and I'd easily have doubled that if I hadn't run out three times. Being entirely without function and kind of bulky for its price, Santaur doesn't fit my definition of an ideal Curio City product. But when I accidentally stumble upon something whimsical that people want, I'm happy to take their $800.    

Unfortunately, I made too many bad bets. The "long tail" -- the 80% of products that deliver 20% of sales -- didn't wag at all this year, especially in the previously reliable Kitchen and Party (shot glasses, ice cube molds, etc.) categories. Things like the Buddha Butter Dish, the Pizza Boss 3000, and even last year's hit Manatea -- all proven performers -- sold no more than 0-2 pieces, and some new things that looked like surefire winners (like All About the Benjamins) didn't sell a single piece. None of these products will ever be bestsellers but ordinarily I expect to break even on them, or a little better if I'm lucky. This year they were a money sink to the tune of a couple thousand bucks. It's the first time that my shotgun approach failed completely.

In spite of these complaints, I'm right on the verge of turning a profit for the year. In fact, I'd probably be in the black now if I hadn't written off a couple hundred bucks worth of dead merchandise this month. While a small loss would be good for my personal income tax bill, a small gain would stroke my ego (and could even tip this year's total compensation over the magic $10,000 mark).

What Next?

Metal Earth has been one of this season's bright spots. I've carried those models for at least three years now, and they do a little better each Christmas. Oddly, though, they never sell at all outside of November and December -- presumably it's something that everyone thinks somebody else will like, yet nobody buys for themselves. If that's true, is there any way it could become a year-round line?

It's an ideal product in many ways. Being a uniform small size and weighing next to nothing, they're cheap to ship and easy to store. There are no batteries to go bad or trigger shipping restrictions, no moving parts to break, and they aren't fragile. The range of subjects is wide enough to appeal to anybody who likes models. I can advertise a lot of individual items with one small group of keywords, and the bidding for those words isn't ridiculously expensive -- meaning that I don't have a killer competitor yet.

If I have any money left after my next paycheck, my Mastercard bill, and my tax payments are covered, I'll beef up Metal Earth again and keep my ads running. I desperately need a solid seller to supplement the somnolent Panther Vision line. Beanies did pretty well but the caps are a shadow of their former selves.

***************************

I feared that Christmas had ended early when business crashed to just six sales on Dec. 10; ordinarily, the expiration date is Dec. 15 or later. Things came back strong yesterday so I guess the season still has legs. A $2,500 Panther Vision special order during this week last year doomed this December's prospects right from the start. If you subtract that outlier, my numbers are running slightly ahead of LY, but I'm not feeling the frenzy this year.

I don't know. Maybe we're building up to a big finish. This December's likely to rank low in the pantheon of Christmases, but it's probably going to be big enough to pay all the bills. That's really all I ask. I'm thoroughly tired of Christmas by now and ready for it to end. 

Yup

Cyber Monday proved that there is nothing wrong with my website. Christmas blew in with 15 transactions worth more than $800. Sales peaked on Wednesday with a nice, round 30 orders -- half of them for Santaur ornaments, and half of those going out of the US. It's already been a very good week. Now I need two more just like it. I don't know if it's possible; my most popular stuff is already gone or very nearly so, and we're still a week away from the desperation stage when people buy the unpopular stuff.

Most of my competitors jacked Santaur's price to $20+ after Gizmodo and Reddit featured it; I quickly sold 30 at $15 and could have sold twice as many if I'd had them. It's probably stupid, but I reordered yesterday knowing full well that I won't see them until 12/11. Since sales usually crash by 12/15, I probably just spent $225 on something that won't sell for another year. But maybe I can l blow out one more shipment if the hysteria keeps up.

PayPal didn't kill me, obviously, although $8.23 inexplicably disappeared from my balance. I'm meticulous about my deposits and half an hour's error-checking didn't uncover any mistakes. I finally decided not to waste any more time and wrote it off...but I don't see how money can just disappear unless PayPal is playing some cute game. I've had a lot of international sales; maybe they took extra charges for exchange rates? I don't know. There's no line item showing the debit and the merchant interface is useless.