Good Riddance to 2016

The meme of the moment would have us believe that 2016 was the worst year ever. It certainly did bring losses, from celebrity deaths (David Bowie) to heroes' deaths (John Glenn) to the death of the American republic and even, in a harbinger for the rest of the country, the death of democracy itself (North Carolina). Legalized marijuana was some consolation, but we can't even buy it over the counter until 2018...and our legislature just postponed that small comfort from January to July. 

How awful was it, really? People -- celebrated or not -- die all the time. Companies and nations eventually do, too. Except for temporary hiatuses under Clinton and Obama, the US has been declining since the Reagan administration kickstarted inequality; the country only had to hold it together for five or 10 more years to outlive me -- 25 years in the worst case -- yet here we are, staring down apocalypse. Does Curio City also belong on 2016's hit list?  The top-line numbers certainly look that way, but the bottom-line numbers hint that maybe it's not time yet:

December

Total income: -44.4%
Total COGS: -45%
Payroll: -66%

Marketing: -64.7%
Net Income (Profit) vs LY: +559.7% (+$729)

Actual Profit/Loss: +$599

2016 (preliminary)

Total income: -22.9%
Total COGS: -23%
Payroll: -28.7%

Marketing: -28%
Net Income (Profit) vs LY: +22.5% (+$568)

Actual Profit/Loss: -$1,953

If I'd hit my marks I'd be a manageable $4,000 in debt. Instead Christmas came up short by at least $4,000 and left me $8,000 in debt. If you're a middle-class person or above, $8,000 might not sound crippling to you. To a bottom feeder like me, it's more than one-fifth of 2016's total sales, and $1,000 more than I paid myself last year. I have to come up with $1,100 in annual taxes and tax prep expenses before I can even start to whittle it down, and interest is accruing. 

Yet, 11 years of experience says that I can still turn this around, and the bottom line backs me up. In December 2015 I blew an outrageous $2,000 on advertising; I held this December to just $712 and could have pared it even more if I hadn't foolishly wasted $200 on Bing for some reason. Along with the reduction in sales, cutting my paycheck from 20% of net sales to 15% saved me $1,550 on payroll. That's bittersweet since "payroll" means "my pocket"; December 2015 lavished $2,200 upon me, compared to a paltry $734 this year. But my loss is the company's gain, leaving this December comfortably in the black, whereas December 2015 ended $130 in the red. The year as a whole lost only $1,953, compared to $2,521 in 2015. If sales don't tank I can turn that black in 2017.  
  
The implications of declaring bankruptcy are too complicated for my little brain, but I gather that it isn't a viable escape plan. The internet says that declaring a Chapter 7 personal bankruptcy discharges my personal responsibility for corporate debt, but not the corporation's liability. For that, (somebody) would take Curio City's assets to pay American Express. I'd lose my inventory and probably my laptop and cell phone, and I'd obviously have to fold the business...but they couldn't come after my sorry ass. That's good to know as a last resort. First, my wife absolutely refuses to even discuss declaring personal bankruptcy; second, there would be legal fees; third, it's a drastic way to make just $8k go away; and finally, I can't imagine that it would be good for my perfect 850 credit score. No, first I have to try to dig out the old-fashioned way, one dollar at a time.

I can see two paths through 2017. 

In the most likely route, I won't take any salary at all until solvency is restored. Assuming that 2017 sales match 2016, that $7,500 (including payroll taxes) is almost enough in itself to retire the debt, exclusive of interest. I've lined up a part-time copy editing job that will pay me three times as much as Curio City did per week for just 10 hours of work, and I can probably find another client or two as well. Curio City goes on autopilot while I focus on my second, much more lucrative career. All I do is fill orders daily, tweak my advertising here and there, and reorder as little stock as possible. If my editing business thrives Curio City might cease being worth the grief...but I won't make that determination until next Christmas. I would like to keep it going, if only because I've already invested so much in it. But, for now, I just want to clear some of the stock out of my cellar and get out of debt.

The less likely path involves angels. I know at least three people who probably have $10,000 they don't need; who would trust me to repay them $12,000 over four years; and who would be willing to settle for a 5% annualized return on their investment. Ten grand would get me solvent immediately. In this scenario I would start taking a salary again and devote most of my attention to Curio City, holding the editing business to the 10 hours a week that I've already lined up. I would immediately set to work refreshing my product lineup, as explained last week, and would most likely become profitable again by the end of the year. I only see myself praying to angels if the editing gig falls through...and it's entirely possible that none of them would bless me anyway.   
    
So the meme is right: 2016 was a bad year all around. Politically, 2017 will surely be worse. Economically, Wall Street thinks it'll be good for the investing class; for the rest of us? Who knows. Personally...well, as a heterosexual white male of a certain age, at least I won't have to fear the pogroms, but I was really counting on Medicare and Social Security. Professionally, only one thing is certain: The spambots will flock to the words "loan" and "debt" in this post and the volume of daily robocalls will increase. I'm already blocking four or five new numbers every day (they seldom use the same one twice), and have completely stopped answering the phone. 

Incidentally, blog posts will be less regular next year. I won't have much to write about if I'm only paying minimal attention to business. 

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For all that Christmas set new records of suckage, I still shipped 96 orders in November and 175 in December with zero errors. Yay me.

Unproductive Products

A couple of weeks ago I fingered my product assortment as the primary suspect in this year's Christmas massacre, so let's look at the evidence.

Beanies and lighted caps: Panther Vision lighted caps were Curio City's first sustained hit. The days when I used to sell them by the caseload ended four or five years ago; nowadays they only dribble out slowly and singly. All good products eventually die (usually killed by discounters) -- in fact, the better a product is, the more competitors it draws and the faster it dies. The retailers' loss is the consumers' gain. 

Beanies revived the brand two years ago. Last Christmas I sold more than 200, and could have moved more had they not run out by early December. To head off shortages this year I brought in 96 right up front and stood ready to back them up as soon as the six- and 12-piece orders started popping up. Well, they never did, and I ultimately only sold 15 of those 96. Discounters are selling a shoddy knockoff product for as little as $4, and reputable sellers of the genuine article abandoned ship with two-for-one clearance sales. I spent $1,000 and earned back only $300. My remaining stock will last me for years, assuming it revives at all. Unfortunately, the batteries won't last that long, so I might need to join the discount race to the bottom. On the plus side, I'm already well-stocked for next Christmas. (Yes, I still intend to live through another Christmas...and yes, I'm already thinking about it!)  

Metal Earth needs a deeper look, so I'll just relate the lowlights today. Over the fullness of 2016 I spent $1,000 replacing last year's bestsellers, $1,000 adding older models that I had skipped before, and $500 on the newest stuff -- making this my bet-the-company move. Well, I lost that bet, and it might indeed cost me the company. I had expected to just recoup the $2,500 that I spent. Their actual $949 in revenue makes them the biggest loser. They also suck down an inordinate share of my ad dollars -- over the past 30 days I spent $392 on clicks that brought $430 worth of sales, for a whopping return of $1.10 on each dollar spent. In fact, Metal Earth accounted for half of my entire ad buy. One could argue that their sales doubled this year, since they just about matched LY's revenue even while overall sales fell by 50%. 

This much is true: I have invested too much money in these to walk away from them, and this subject is going to come up again.

Christmas ornaments should have been a slam-dunk because I had good data going back several years. Instead I sold barely a third of what I expected. I don't know why. On the bright side, I have a lot left for next Christmas, and they won't spoil or go obsolete.

Switchables have been a reliable seller for 10 years. I overbought when I learned that they are going out of business. Despite very disappointing Christmas sales, I'm still reasonably confident that most of that stock will trickle out over the next year as the supply chain gradually runs dry, but that's another big pile of lost dollars in the near term. 

Golf balls were big before the manufacturer set up their own retail sales site, beating me on price, selection, and shipping. Now they're a footnote. 

Bird kites are my last really successful product line. If anything is going to get me through next year, it's kites...and that vendor has seemed a little wobbly for the past year or so. If they let me down I'm just dead. 

Everything else: Leftovers were one of my better non-categories this year. It's gratifying to liberate money that has been locked up in these products for as long as 10 years, even when I'm just recovering my cost. Pot Holders did well in 2011 and '12, so I brought in 36 pieces for '13...and they've sat in the cellar ever since. Suddenly they started to move again this year, finishing with just seven left (total lifetime sales: 125 units). Maybe they got some random media attention somewhere, or maybe I'm just the last store on the internet that still has any. 

New products: Year after year, I order low-priced novelty items from the same three or four vendors. Year after year, I sell about half of them and more or less break even. This year I skipped those vendors and searched for something more expensive and less usual. (Because people like to spend more money on Christmas gifts). Somewhere, the Dinosaur Bottle Opener caught my eye and drove me to SuckUK, who also sold me the G-Clamp Bottle Opener, the Skeleton Hand Jewelry Holder, the Rechargeable Bottle Light, and the Skull Tidy. The dinosaur was my biggest gamble. Going into last weekend I had sold exactly zero of my 18 pieces...and then, inexplicably, I moved 11 in two days. Again, that's either a random act of media or me being the last store on the internet that still has them in stock. The Skeleton Hand sold 5/6 for another win but the Skull Tidy sold only one, even marked down to slightly over cost. As for the G-Clamp...

The first dozen went quickly enough to know that I needed more. I doubled down when my sales rep told me that they were available for immediate shipment. Since they were supposed to ship on 12/10 and the transit time from Maryland is only two days, I decided to accept customer backorders -- something I never do because of the potential for screwups. Long story short, they screwed up. After selling almost all of the 24 pieces that I didn't have, my reorder never came. On Tuesday I finally had to refund $245. This would have been the only week of Christmas to beat LY if it hadn't been for that.

Never again. You always get burned when you trust other people. 

Conclusion: One can only flog the same old, same old for so long, and my assortment is feeling its age. At a bare minimum, I need to find a solid new line to replace Switchables. Ideally, I'd like a major hit like Panther Vision was 10 years ago. That alone would turn around the company.

Even though I'm not a consumer myself (how could I possibly be on my $7,000 yearly income?), I still have a fairly good instinct for what my customers will and won't buy. What I lack are the tenacity to go out and find it, the money to actually bring it in and try it, and the optimism to do either of those things. I hate shopping in general and I fear another Metal Earth miscalculation, so I get paralyzed. Then it's suddenly Christmas again and I've got nothing.

What am I going to do? Stay tuned next week.   

Broken Records

At the risk of sounding like a broken record, I'm still trying to understand why this Christmas is breaking records as the worst ever. Last year this was the busiest week of the year, clocking in at $3,500. Led by Panther beanies and caps, it included a $1,176 day. This year the entire week won't be much better than that. I sold 200+ beanies last year and might have done better if I'd been able to get more. Last month I conservatively bought 96 for starters...and I've sold only 11 of them. Monday's encouraging 14 sales were only worth $366 (vs. $605 LY), but it looked like things were finally normalizing. Nope. It looks like that's going to be this year's high water mark. I haven't had a day with more than 10 sales since then.  

Last week I ruled out technical problems with my website. The only substantial change I made last year was switching from "http" to "https" URLs to improve my organic (free) search results, because Google supposedly rewards secure pages. Analytics says that made no difference. Organic search delivered 30% of my traffic over the past 30 days; paid search  brought 53%, and the rest was referrals or direct visits. Those numbers are within a percentage of the comparable period last year.  

So if it's not the website, it's got to be the products or the advertising, right? You'd think I'd have already bored into this boring stuff, but you'd be giving me too much credit; I was convinced for too long that I had technical issues. Since this year's been running 25% behind LY, I had expected that to carry into Christmas sales. I figured I'd cut advertising by a similar amount. So let's look there first.

Analytics says that paid clicks are down 44% from LY and my spend is down by 43%. You'd expect those two numbers to move in tandem. What wasn't predictable was a 14% drop in my conversion rate, resulting in 53% fewer transactions altogether; that agrees with last month's numbers showing November's total income down by 54%. Does that mean that I could boost sales by 50% if I increased my ad budget by that amount? No. It means that I might expect 50% more clicks for 50% more money, but only 40% more conversions. I can't just spend my way out of this, and because my debt crisis began when I overspent on advertising last Christmas, I am not going to try. Analytics also validates my gut feeling that the average transaction size fell; it's down by 18%, from $48 to less than $40.

This just quantifies what I already knew: Fewer visitors are buying anything, and those who do are buying less. Analytics can't tell me why that's so. I blame my product selection. This post is getting too long and it's too late to affect my product mix, so I'll leave merchandise for next week's post.

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Y'know what grinds my gears? All of my beanie keyword bids on Bing are a few cents short of first-page placement. I'd really love to sell some of those 80 beanies that I overbought so I raised the bids to gain a page one toehold. Before I even got to the bottom of the list, the top of the list had already been outbid again. It looks like somebody is running a script to automatically ensure that placement by $.01, effectively freezing me out of page one. This is why we can't have nice things. Oh well, if I can't poach his sales at least I can jack up his costs.

Somebody else is bidding $10.88 per click for the best lighted cap keywords. WTF, man? Your markup is only $10. Even if you convert 100% of your clicks you're losing money. Well, bidding works like this: One need only beat the next-highest bidder. If he's bidding $10.88 and the next-highest guy is bidding $1, Mr. 1088 is really only paying $1.01 (which is still too rich for me; I generally top out around 75 cents). $10.88 is a scary number that guarantees nobody will outbid him, but he's only paying that if somebody does.

If I had deep pockets I'd try to secure second place with a $10.87 bid and make Mr. 1088 cough up the big bucks, but there's always a risk that he's got a script to go instantly to $10.86, and I'd have to buy some crazy expensive clicks to find out. Big companies employ experts dedicated to gaming this stuff in real time. Us little guys have to be content with scraps. 

Cold November Numbers

The slaughter continues. I didn't think it was possible for Christmas to disappear completely, but here we are. Behold the first money-losing November ever:

November

Total income: -54%
Total COGS: -54.9%
Payroll: -50.9%

Marketing: -45.2%
Net Income (Profit) vs LY: -197.1% (-$632)

Actual Profit/Loss: -$312

YTD

Total income: -18.7%
Total COGS: -19.5%
Payroll: -18.2%

Marketing: -19.4%
Net Income (Profit) vs LY: -11.2% (-$269)

Actual Profit/Loss: -$2,659

Wow, that's just stunning. I had planned to come in 25% below LY based on YTD results and my parsimonious advertising plans. I was wholly unprepared for falling off a cliff. Last year this week averaged $500 per day; this year I expected $400 per day. At the rate it's going, the whole week won't break $1,000. (It's possible, if highly unlikely, that the next day and a half could still push fiscal November just barely into the black; another $460 would make it only the second-worst ever.) 

There are no technical problems. My analytics are within normal parameters. But the orders are all tiny, and people aren't buying what I want to sell them -- everything on this page, for example, has a solid track record and seasonal appeal; there's nothing speculative there, and yet nothing is selling. Where are all of the nice juicy $50 or $100 sales that should be rolling in? Tuesday brought seven sales worth just $135 (and I spent $38 on advertising). The packages were so small I could hold them all with one hand. Yesterday -- the busiest of the season so far -- landed nine sales worth just $285, with one healthy Metal Earth order saving it from mediocrity.

What's wrong, America? Is it me or is it you? 'Cuz I don't think it's me.

I don't mean to disparage small orders, btw. All business is welcome. I just can't make it on those alone.

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The app that was autoposting my blog posts to Facebook stopped working last week and its successor wants money, so I had to move on; without that link, my last post only had six readers, and one of them was probably me. Linking Blogger to Facebook is harder than you might think. I'm trying IFTTT (If This Then That), but it wouldn't let me specify my Curio City sub-page so I'm afraid it might just post this to the unused (personal) parent page, in which case I'll have to look for a different solution. We'll see in a few minutes, I hope.