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.
Friday, November 11, 2016
After working my patootie off in October to clear November's decks for action, I'm unexpectedly twiddling my thumbs. This is shaping up as the worst November ever.
Things stirred to life a little later than expected on Nov. 11 and perked along a little below expectations through the 16th. On Nov. 17, sales fell to zero, and over the next four days I only netted $135 when I was expecting $1,500.
It sure seemed like something must be wrong. Everything tested normal in three different browsers on three different machines, and the few orders that did trickle in indicated that there weren't any technical problems. Traffic didn't look like a problem as I was getting a healthy 400-500 visits a day. There were no security warnings and the address bar lock icon was locked -- there was nothing to frighten people away. My product assortment is a little weak on new stuff, but I'm very well stocked on proven sellers like Christmas ornaments, Switchables, and lighted beanies. Last year I sold well over 100 beanies and had trouble getting enough stock. This year I think I've sold eight so far with 120 sitting in the cellar. There had to be something wrong...but what?
On Tuesday it occurred to me that I ought to test the mobile version, since nearly half of my visitors arrive on mobile devices. I wish that inspiration had struck earlier; mobile's always an afterthought to me. Turned out that menus weren't working right and my site was impossible to navigate on a smartphone or tablet. Finding something wrong was a relief -- tech problems can be solved. But mobile traffic converts at such a low rate that I could lose all of it without noticing (and very likely did; it's probably been broken since August). Even without the smartphone people, I should still be seeing 6-8 sales per day from proper computers. I kept testing and poking and prodding and everything kept looking stubbornly normal. My developer graciously solved the mobile problem during the holiday week, so at least that's back online now, not that it will make much difference.
Regular readers know that I was counting on Christmas to erase most of my debt. Instead the hole got deeper while my daily advertising costs exceeded sales. The mysterious drought might be ending. Tuesday and Wednesday both delivered five (small) sales, and today's Black Friday has been pretty good so far, thanks to one big camo cap sale. A heroic December could just about salvage the season. I don't see any reason to expect that, but it's not out of the question. If I can match last year's performance over the next three weeks, I'll be bloodied but still standing going into the new year. If I fall back into the doldrums it's going to be hard to see a way forward.
On Wednesday, voters awoke to a vastly different America than we had been led to expect as the Electoral College once again overturned the will of the urban majority, routing the Washington establishment and setting up uncertain but seismic change for the next four years. Since I occasionally weigh in on politics I'm going to comment from the perspective of a (liberal) nano-businessman. I shall endeavor to avoid the histrionics that you can find aplenty elsewhere and focus on economics.
First, the stock market didn't crater as many had expected it to do; on the contrary, the Dow set a new record. The investor class stands to do pretty well from infrastructure and military spending hikes, massive tax cuts, and corporate deregulation...if those are, in fact, coming. We can only guess at what next year's federal budget will look like. Even while basking in its unexpected victory, the Republican Party is far from united, and those cracks will grow when the new president is sworn in. Donald Trump is promising massive deficit spending. The Republican Party's lodestar has long been the Paul Ryan budget plan that seeks to balance the budget by cutting Medicare and Social Security. Without knowing whether the big spender or the deficit hawk will prevail, we can't predict what's going to happen to the economy.
The biggest other wild card is Trump's threatened trade wars. If the flow of cheap imports gets choked off prices will rise while selection constricts; as our trade partners retaliate, exports get choked off. Again, we don't know if he will really tear up treaties and provoke China or if that was just campaign bluster.
"We just don't know" comes up over and over again. Trump is neither a Republican nor a traditional conservative, so the usual GOP agenda is not a blueprint. We do know that, since World War 2, the economy has performed better under Democratic administrations by all objective measures (nine of the last 10 recessions were under Republican presidents). There's nothing ambiguous about those numbers, and your own experience bears them out: Surely you can remember that George W Bush left behind a flaming ruin; Barack Obama put out the flames and tidied up the wreckage. The ensuing recovery has been long but sluggish and only recently started to benefit the middle class. That's going to change next year, one way or the other. Spending $1 trillion on legitimately needed infrastructure improvements would certainly produce a growth spurt for a year or two before inflation and the exploding debt choke it off; Ryan's austerity would quickly bring a recession. Even if Trump's plan makes it through Congress, it's unclear how much stimulus an already-growing economy can absorb, particularly since we are already near full employment. Would a burst of overheating lure enough sidelined people back into the workforce? Will we have enough immigrants to take up the slack, or are we going to have to replace them, too? Self-driving trucks will soon render 1.9 million professional drivers superfluous...but how soon? The more deeply one delves into the future, the more questions one raises.
But you're wondering how all of this will affect Curio City. I'm hedging my bets. Just last week I wrote about how environmental regulations might have indirectly signed my store's death warrant, and that's squarely on the Democrats. The tired old GOP agenda embodied in the Ryan budget would be terrible news, but I think the danger of that passing is low. Trump's own policies are vague, as is his level of commitment to them. I'm not even going to go into the implications of ending Obamacare, but they're going to be major. Trump's fantasy wall and anti-immigration stance will certainly be important if they really do play out as threatened. The only sure thing right now is uncertainty. I am not jumping on the impending-disaster bandwagon; in some ways, I'm even cautiously optimistic.
Curio City is too tiny to be affected very much by macroeconomic trends, except insofar as general conditions encourage people to spend or hoard their money. And most of Curio City's merchandise comes from China, so the potential trade wars loom large. My best year ever was 2008, when the Great Recession was wreaking havoc. One could draw a contrarian conclusion and say that hard times somehow help my business. But that, too, is a stretch. I am not rooting for recession. Right now, I'm just hoping for Christmas.
Instead of bringing in the $1,000 worth of Christmas sales that I expected, this was quite possibly the worst November week ever. Is that the election's fault? Probably not; a $600 lighted beanie sale that I had last year wasn't repeated this year. Christmas is just getting off to a very poor start, and it's a stretch to blame our national political crisis for that.
Friday, November 04, 2016
Switchables sent out this email this week:
The glass company in America that we currently purchase our raw materials from to make Switchables, has recently closed their doors. The EPA has stepped in and recently regulated the furnace emissions in the six companies in America that make stained glass. This EPA regulation not only caused the closing of the company we buy our glass from, but it also has raised the prices considerably from all other companies.
Once our manufacturer was faced with this news, they decided to double our prices. Doubling our cost, along with the closure of our Glass Manufacturer, has necessitated us into facing a major decision. As of December 15th, 2016 Switchables will no longer be able to continue in the wholesale venue.
That sounds like the blame-the-government spin that conservatives habitually put on misfortune. But this time it's true. If you Google "epa crackdown stained glass" you'll find dozens of news stories chronicling local business closures and job losses. Government regulation really is ravaging the US stained glass industry, and Curio City might be collateral damage.
As a liberal, I want to convince myself that a marginally cleaner environment is a worthwhile tradeoff for losing a minor industry. Switchables could have remained in business had the owners not already been eying retirement. Maybe they couldn't sell the company because of the industry upheaval, or maybe because the owner was the talent behind their designs. But as I contemplate losing my second-largest vendor and most of my repeat customers, I can see what drives otherwise-decent people to become Republicans. Thanks, Obama!
Switchables have been steady and reliable sellers since I found them at the Boston Gift Show 10 years ago -- one of the few success stories to come from the Cavalcade of Crap. I've sold 1,200 fixtures and thousands of covers. Last month they comprised fully 25% of my sales; this week they're nearly 100%. Losing them is going to hurt, and hurt badly. If you're a regular reader you know that I've been struggling all year; this could be the knockout punch if I can't find a comparable replacement by next spring. Basically, I'm depending on Jackite now, and they were less than dependable this year; if they stumble again next year I'm finished.
Last year I bet that Metal Earth would become my Next Big Thing. It didn't. I brought in over $1,000 worth of models and sold about $1,000 worth, just breaking even while expanding my selection. This year I doubled down; $2,500 of my $10,000 debt is tied up in Metal Earth. That's a bet-the-company gamble. Sales so far: $20. But I only started advertising them a couple of days ago because they draw a lot of (expensive) clicks that convert at a very low rate. If I sell $2,501 worth over the next four weeks that will be a win.
I've written before about why they're the perfect product from my perspective. Now if only my customers would fall in line. These models only sell during Christmas, and it's impossible to keep up with the line's growth. The 116 models that I have in stock represent a substantial fraction of what's available, but dozens of new ones appear each year. Deep-pocketed stores will always have a better selection than I do...and, because I can't afford to restock my inventory between Christmases, I'll always have trouble getting the best sellers. These might be too mainstream, with too many competitors, for me to become a player.
Meanwhile, the Switchables emergency compelled me to spend $900 beyond what I had thought was this year's Christmas buy. I should have enough stock to coast for six months or a year. Selling them down without spending to replace them will be a short-term boon, at least until the most popular covers are gone; I'm raising prices to match the MSRP, so the markup is well above average. It's anybody's guess what will happen once word gets around to the customer base. Will they strip the shelves in a desperate frenzy, or will they shun a loser line?
Just to set the record straight (because I'm compulsive that way): Last month ended as the third-worst October ever, not the worst; fully half of the month's sales came in the last week, and fully half of those came in the 36 hours after I posted the numbers. It actually finished with a $57 profit despite the meager top line. Still not good, but not as bad as it looked.
I'm taking a pay cut, from 20% of net sales to 15%, effective with my next paycheck. Ordinarily, I earn two to three fat juicy paychecks per year. This year they'll be 25% less juicy, with the difference going to debt relief. I'm going to cut another 5% when the holidays are over. If all goes swimmingly, I'll be able to pay off my debt and restore my salary by next November. At least, that was the plan before the Switchables disaster.
The editing opportunity that I mentioned earlier hasn't come through yet, so it's an open question whether I'll be able to replace my lost Curio City income. It wouldn't take much. If it flops I'll have to get a part-time job. The good news is that minimum wage goes up to $11 per hour next year, and that's at least 4x as much as Curio City pays me during the non-Christmas months.