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.
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Friday, December 25, 2015

Christmas Post-Mortem

This week (unofficially Week 8) only needed to average $132 per day. So far, it's at $154 thanks to a strong Sunday. December only needs another $201 to equal LY as far as Excel is concerned. 

Is it too early for the annual After Action Report? Nah, let's do this while it's fresh. These are mostly notes to my future self, should he deign to look back next fall.

·         I filled 437 orders in November and December with two known packing errors. There were 1,174 orders all year (with enough time left to hit a nice round 1,200). 37% of my sales came in November and December. September was 2015's low point with 53 orders. I've always thought as September as the month that fall begins, but for the past couple of years it's been the month that summer dies.

·         Panther beanies reached the point where lighted caps were five or six years ago, when they crossed over from novelty to mainstream but before competitors ate my lunch. Panther starts to run out of beanies by early November, so I need to stock up as heavily as possible as soon as the Oct. 13 credit card statement period starts. I did that this year, but not aggressively enough. I sold at least 100 black beanies alone this year.

·         The $1,833 that I invested in Metal Earth ultimately returned $2,167 before I turned off the ads and stopped counting. Disregarding the stock that I already owned, the theoretical perfect score at their average markup would have been $2,700...so that's a winner. Vehicles (especially military, and especially aircraft) outsell landmarks by at least 20:1. Next year, I should order new models first because those start disappearing by Nov. 1; then reorder my bestsellers; and then do a general fill-in if there's any money left. I should limit my initial spend to $1,500, tops, and try to squeeze in a $500 reorder in early December.  

Metal Earth is going to get its own post in the near future. I want to make it a year-round line, but regardless of what I do in terms of advertising and presentation, they don't sell until the 2nd week of November and they die right after Christmas. When other products aren't competing for advertising dollars, Metal Earth can generate 60-70 clicks a day at a cost of $30+, often without any conversions. The interest is obviously there, but I can't afford to court it unless I'm amply stocked.

·         Speaking of marketing: as few as three people ever see my Facebook posts about products and coupons. Newsletters reach 100 or so people and can bring in as many as two or three sales, but no more than that; they're only worth the time that I spend writing them because my time is worth so little. Bing ads draw a lot of clicks but don't convert often enough to justify their price; Only Google AdWords is cost-effective, and it gets more expensive every year. From Nov. 1  to Dec. 17 I spent $732 on Bing ads that landed 41 sales, or $17.85 per conversion. During the same period Google pocketed $2,550 to deliver 238 sales, or $10.72 per conversion. If you remove the "Google Shopping" part of the account and only look at my Search ads, the cost rises to $17.56...so Google's advantage over Bing owes entirely to their automated Shopping feature. Unsurprisingly, Bing is rolling out a clone next year.   

·         Ordering early and carrying a credit card balance seemed to pay off in robust November sales. Did the "extra" business justify $200 in interest charges? Hard to say, but I did learn this much: I mustn't carry more than $5,000 of debt into December, because operating expenses and payroll (yay me!) make it hard to pay off any more than that. I brought a $7,400 debt into the month this year and it took everything I had to slay it, leaving me limping into January.

·         "Gifty" stuff adds interest to my product mix but it only ever brings in minor sales, and this year it barely even managed to do that, apart from ornaments and similar Christmas tie-ins. Kitchen gadgets are dead, dead, dead. I ought to cut a couple of vendors entirely next year. I also need to refrain from restocking everything that sells out -- novelties should be one-offs, not as core stock. Take the Pizza Boss, for example. I sold 24 of them over the past two or three years so six per year looks like a safe bet. This year I sold none. Why did it suddenly die? Shoppers are fickle. Odds are that I'll wind up selling them at cost. Obsessive Chef had a very similar trajectory; after dribbling 15 of them out over the past few Christmases, the five that I'm stuck with now are likely to be with me for a long, long time.

·         I have done an excellent job of reducing my average package size. In the early years a pile of 25 orders was too big for my Miata; this year, I could fit 25 orders into my carrying tote. Bird kites are the glaring exception, and those scarcely sell during Christmas. I'd like to see people fill bigger boxes with assorted piles of random stuff, but this year very few looked at anything beyond my bestselling lines. I blame smartphones for people's unwillingness to browse.

·         I need some more expensive products. Some people want to spend big on gifts and most of my stuff tops out at $20. Also, small packages are less likely to be stolen but more likely to get lost in transit.

·         I've been wasting money buying insurance from USPS. Most actual losses are from people who claim they didn't get a package that was confirmed delivered, but insurance only covers packages that are lost before delivery or that arrive damaged. Although my stated policy emphatically disavows responsibility for theft and misdelivery, it costs me customers, and sometimes money when they threaten me with a chargeback. Signature confirmation should eliminate those losses, and it's cheaper than insurance, too. So far nobody has complained about the hassle. New policy! 

In spite of a good November and an acceptable December, the annual numbers are going to look kind of grim next week. I am beginning to wonder if my cost structure makes profit impossible. But let's leave that thought for next week's post. 

Friday, December 18, 2015

Week 7: Another Christmas In the Bag

Week 6 finally surpassed Week 5 by a wee bit and finished just a couple of percent behind LY, bringing the month-to-date deficit to about $500. Disappointing, but not deadly.

Week 7 needed to average $283 per day, or a little over half of last week's sales. The odds did not look good. It looked like Christmas died on 12/10, two days earlier than LY. Then Sunday kicked this week off with 21 orders worth over $1,000. The daily average right now stands at $406 and the week is ahead of LY by $450 (almost erasing the deficit in the previous paragraph) with a day and a half left to go. That means I will definitely overcome my first and biggest hurdle, paying off my Mastercard.

Advertising is breaking the bank now, so I've been hacking away at it as much as I dare. I keep paring the least profitable keywords on Google and nudging down my budget, but the daily spend stubbornly persists. Turning off my Panther Vision cap ads for the first time ever felt like a radical move, but with my stock so depleted it also felt like the right move. I was down to advertising only beanies, Switchables, and Metal Earth on Bing. Then a run on Switchables fixtures cleaned me out last night, so I shut down those ads, too, until I was able to reorder this morning.
As much as I hate to do anything that will cut revenue, I can't keep buying $100 worth of clicks per day as sales fall into the $300 range -- especially as my stock continues to deplete. Paying off all of the advertising on my bloated Amex bill is my next big hurdle; Google is the only one getting rich here...but of course we all know that that's how the game is rigged.  
The $1,833 that I invested in Metal Earth has now returned $1,951. Profit! Betcha didn't see that coming, did you? I've spent more than $400 advertising those in the past 30 days. Converting a sale costs an average of $11.25 for a product that sells for as little as $6. That's fine when people buy four or five models at a time, but it becomes a losing proposition when the orders dwindle to one or two pieces. Postage overcharges probably cover most of the ad expense; without getting into the nitty gritty of it, Sunshop product weights have to be at least 0.25 pound, and Sunshop doesn't know about flat rate boxes. Shipping charges for single-piece orders are accurate, but they start to diverge as people buy multiple pieces. Those unintentional overcharges can reach as much as five bucks on >4-piece orders going to the West Coast. On one hand, overcharging for postage is slimy and I don't like doing it; OTOH, I obviously need the revenue and fixing the rate lookups would require some custom programming. 

As for Week 8...well, there is no Week 8. I consider next week to be post-Christmas as sales drift back down to the high side of normal, and then to the low side of normal the week after that. I'd have to beat those targets by rather a lot, percentage-wise, to save this month from edging out last December as the "Worst December since 2007." It could happen. It probably won't.
So now the focus is on paying off Amex and cutting the ad spend. Then comes restocking. Then paying taxes. If I can get past those three barriers I'll be around for another year. With powercaps and Switchables both coming next week, I'll at least have something to sell after Christmas.

Friday, December 11, 2015

Week 6: Stripping the Shelves

Week 5 finished 10% behind LY. Week 6 needed to average a smidge over $500/day to equal or surpass that; the actual average through yesterday is $607, thanks to an $874 Panther Vision cap sale that came in out of the blue. That's the largest unexpected order that I can remember (although I've had many on that scale by pre-arrangement). Not to seem ungrateful or anything, but that cleaned out fully half of the merchandise that I'd hoped to sell over the next 10 days, and all of the debt that I racked up in October won't let me reorder anything until my credit card statement rolls over on Monday. Big sales like that also set up a big hurdle for next year; at the same time, it gives me some hope that I'll still be in business next year!

The number of orders is trailing off even as their average size gets a little better. I honestly don't see how it can keep up for nine more days (LY died on 12/20) when all of my good stuff is sold out. I still have way too much stuff that nobody seems to want...but nobody seems to want that. I'm starting to trim back the advertising costs that reached nearly 50% of gross sales yesterday. There's still a lot of hours between now and the end of the week; if pressed, I'd expect Week 6 to finish down 10%, just as Week 5 did. And as December goes, so goes the year. We've still got one more week to go, obviously, but my expectations for Week 7 are low.

The $1,833 that I invested in Metal Earth has now returned $1,593. Ignoring the cost of advertising them (around $20 yesterday alone), I could still break even.  


More evidence that mobile phones are the worst thing that's ever happened to communication:

you have all the night lights listed on the samepage when you you get the nigh light and then order just the covers to switch them lateryour prices and items don't say if you are getting just a cover or both please let me know how to work your website

...um, what? (She got a polite response, of course.)

Friday, December 04, 2015

Week 5: Crest of the Wave?

With 14 sales, Black Friday tied for the busiest day of the year up to that point, but since they only averaged $21 it wasn't all that lucrative. As much as I'd like some $100+ orders to bring the average up, that's OK; little sales are a bit more profitable due to a Sunshop fluke that overcharges for First Class postage. Nickels and dimes, my friends, it's all about those nickels and dimes. November ended as the best since 2012 and came in 6th overall. 

But that was Week 4 and this is Week 5, LY's high water mark and probably this year's, too. Sunday's 17 sales raised both the "busiest day" bar and my hopes for Cyber Monday. After a slow start a  late-night surge pushed it to 19 sales, but once again the average amount was surprisingly miserly. I had sent out a newsletter advertising free shipping for $50+ orders. I posted it to Facebook (all of three people reached...thanks, Facebook), and that post also appeared in the Twitter feed at the bottom of my store's front page. For good measure I added the promotion to my News page and personally emailed some friends whom I suspect are blocking my newsletters. For all of that, only two people used the coupon. 

Fine. Eating the shipping costs slashes profitability by 15-20% and I'm already running in the red. A front-page banner would have been effective, but one only ever sees the same old sliders unless one empties one's browser cache. Returning customers wouldn't be able to see the new slider at all and new visitors would see it every time they came back. That makes it too dangerous to use sliders for temporary promotions, alas. I wonder if smartphones have caches that work the same way. 

Anyway, Monday's 19 sales stood as the busiest day this year, if not the most lucrative, until another late-night blitz pushed yesterday to 21 -- again, mostly in the $15-20 range. This week as a whole has tracked LY pretty closely. As of this writing I can't tell if Week 5 will beat LY or come up short; I need a huge Friday, and it's not encouraging so far. I sense that people have completed most of their shopping and are down to small, fill-in purchases -- if so, that's happening nearly two weeks earlier than expected, and it's going to be a serious problem. I shouldn't see much tapering for another 10 days yet. 

One fellow sent me this message: "Tried to order some hats and couldn' ".  Hmm, not very enlightening; can you give me details? "Couldn't place my order. I would like 6 of those hats with lights." Believe me, I would very much like to sell them to you, but "couldn' place my order" tells me exactly nothing. I asked him to either tell me the exact error message or call me so that I can place the order for him, as I'm sure it was either user error or an invalid credit card. That apparently was too much to ask. Pity; I would have liked his $114.   
The $1,833 that I invested in Metal Earth has now returned $1,068 -- better than halfway to break-even (not counting advertising, which I don't even want to think about), but it's slowed to a trickle as the most popular models are gone. I know what I did wrong and will rectify that next year. I'll get around to a "lessons learned" post after Christmas limps across the finish line. 

Last year Week 6 fell just a whisker short of Week 5 and December depends on that happening again this year. My last shipment of Panther Vision beanies, due on Wednesday, might help, although those have been disturbingly quiet for the past few days. We shall see.

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