Why e-commerce isn’t a cake walk

I’ll put up a longer post soonish, but I figured I’d link to this rather interesting article about how Amazon is screwing their business customers over.

Quick summary – Amazon tracks all the data and information that you use when you use their store, and eventually when it is worthwhile to do so, they undercut you and sell your product lower and better.

It’s part of the reason why we have our own website and stopped with Ebay after a while.  It’s much better to have your own site, whateve rthe cost, if you intend to do this as a long-term business.  More control, more options and the ability to really ‘hold’ onto customers.

Availability function and pre-orders

So, as requested and discussed in our previous post; we have launched the ‘Availability’ feature on the site. It’s now part of the main search functions and can be sorted / searched using just that feature.

Note that orders will ship only when it is complete – that is, it will be held till all items of an order are put together.  If you wish to have an order ship before that, you would need to contact us and inform us of that, and we would then charge additional shipping for the second part of the order.

Expect to see a change in the way the individual product pages look relatively soon too as we update it to make the ‘Availability’ information more prominent.

Lastly, over the next couple of weeks we’ll be verifying the information on the availability we put up.  To make it easier, we did mass updates so some might be off.  Do tell us if you see something obviously wrong.

Valentine with Chibthulhu – 10 things it says about your relationship

This Valentine, why not give the Chibthulhu Plush to your loved one? After all, giving the plush says many things about you, your loved one and the special relationship that you have.

Here’s 10 things that it might say:

  1. I’ll wait millennia for the right moment with you
  2. Let’s go sacrifice some virgins together tonight
  3. You’re my high-priestess of terror and destruction
  4. I worship you, for your strength, beauty and brain eating abilities
  5. Love is never having to say “Ph’nglui mglw’nafh Cthulhu R’lyeh Wgah’nagl fhtan.”
  6. Your cute, cuddly exterior has me – and the UN – completely fooled.
  7. Come, let’s set the world on fire. Then eat it. [Warning: Plush toy is fire-retardent and inedible]
  8. It’s not love without a little terror
  9. Our love is eternal. According to prophecy.
  10. It’ll be a glorious return, one of insanity and mindless violence and just a little awwww…

Got your own? Why don’t you mention them in the comments.

Launching a Board Games Store Part IV

So, a question raised on BGG about how much it’d cost to launch a board games store online came up.  I was going to answer it there, then realised I might as well just answer it on the blog and point him in this direction since I’ve written a few articles on this already.

There are a few major costs associated with any online business that needs to be taken into account when considering adequate capitalisation.  Note that the normal; the more the better, for capitilisation holds true.  I am also not including operating costs (I.e. salary and hosting and the like) in this post.

So, major costs associated are:
– Incorporation, business license and other related costs
– Website Design and Set-up
– Payment Gateway
– Inventory
– Capital Equipment

Incorporation and other legal fees
The cost on this one varies, depending on whether you are incorporating or just going it alone as a sole-proprietor or partnership.  If incorporating (our suggested venue) it’ll cost you at least $500 after taxes; and this is if you do it yourself.  If you go through a lawyer (e.g. you need changes to the Articles of Incorporation or need a rock-solid shareholder agreement) it’ll go up from there.  Figure all in with good solid  legal representation (definitely a good idea if more than 1 person is involved in ownership); about $2,000.  This includes your business license which is generally pretty cheap and easy to get.

Range: $500 to $2000

Website Design and Set-Up
Asking how much this costs is sort of like asking how long is a piece of string.  It really, really depends on what your site specifications are.  For something as sophisticated as Amazon – think hundreds of thousands.  I’ve also seen quotes for as little as $1,500.  You could, using  Yahoo! Merchant Accounts probably get a site running for about $750; using pre-designed themes and editing it slightly to fit what you want.

For something more professional and serious, you will likely get quotes between $7,500 – $15,000 for full design, backend set-up and some customisation to what you wish.  You might be able to get it cheaper if you have contacts and/or are able to do your own design.  And obviously, you could go much higher.

Range: $750 to $15,000.  Middle range – $7,500 – $10,000

Payment Gateways
We’ve mentioned them before.  These are the guys who actually charge the credit cards put through the site (or for that mater, at a normal retail store).  Moneris is the larges, most sophisticated payment gateway in Canada.  Their set-up cost is $500 but generally charge a much lower % of the orders.  PayPal is free to set-up.  Generally, you can get quotes from other 3rd party gateways for between $250 – 500.

Range: $250 to 500

Inventory

There are two sections to this – firstly your various stock inventory and secondly, the packaging materials.  Figure at least $250-500 for packaging materials (different size cardboard boxes, a weighing scale, tape gun and tape, printer paper, etc.).

Inventory really depends on the strategy that you are taking, from being a one-stop shop for all customers to only picking out the best-selling board games and charging a higher premium.  Obviously, the sky’s the limit for the amount of inventory you would need for the first option (e.g. Funagain games stocks according to their site over 4,000 board and card games.  At $20 cost per game, that’s $80,000 at the minimum in inventory).

The other side of the spectrum would require you to have a minimum of 200 board games.  Even at $20 per game and holding only 1 copy (highly unrealistic since these are the games you are expecting to sell consistently like Settlers, Blokus, Ticket to Ride, etc.); you are looking at a minimum of $4,000.  I would say you would need at least $6,000 to give a proper go at this, probably more like $10,000.

Now, note that this does not include funds for new games that are coming in (e.g. say Age of Steam or the next print run of Dominion).  To be safe you would like to have at least $1000 or so free to buy these games and any additional games special ordered by customers.

There is another wrinkle to this – how fast can you get games from your distributors.  The faster the transit time between when you place an order with a distributor and your receipt will dictate how deep you will need to carry popular board games (if it takes a week to arrive, you will need at least 2 weeks worth of stock to be safe).

Last note, this is specifically the amount for board games.  Role-playing games and miniatures and varius game accessories could easily increase the cost here.

Range: $6,000 – 80,000.  Mid-range – $10,000 – 20,000

Capital Equipment

This category covers everything else you will need to run the business including a computer, a printer, a dolly and shelving for your games.  Again, cost varies depending on what you want and if you already have equipment you could use (e.g. a personal computer and printer).  Shelving costs varies from $35 IKEA shelves to $90 metal shelves. Dollies are cheap – figure about $50 – 100 depending on make and brand.

Range: $300 – $3000

Conclusion

So, to do an online game store, with a minimum of investment – $7,800.  A more reasonable capitalisation amount would be around $20,000.  I’m certain I’ve forgotten some other expenses here and this obviously does not include any on-going fees you will have to pay – this is just start-up costs.

I would also add that most stores end up stocking between 400-500 games at the least.  Figure your inventory costs to that amount with reasonable depth (i.e. 4 to 5 copies) for the more popular games.

Pre-orders & a new feature option?

We recently added a ton of new pre-orders to the site and will be adding more very soon.   Along with this, we have also turned on the ability for customers to make pre-orders of these products.  Our usual rule about  pre-orders hold – orders will ship only when the complete order is available (or we’ll hold your pre-order awaiting payment of a second shipping expense).

Lastly, we are looking at adding a new information section to our site for ‘Availability’ to replace the current ‘In Stock’ and ‘Out of Stock’ options shown on the site.   The main reason for this is to allow us to keep more stock of games that really sell well (e.g. Dominion or Agricola) while lowering our stock  of other less popular games (e.g Catz, Ratz and Batz, Heroes  Incorporated) that occasionally, customers do want.  Most of these games would be games that are normally stocked at our distributors anyway so receiving them is just a matter of placing an order and  getting the games in.

It would look very similar to the feature available on Chapters for finding books.  Specifically, it would say:

Availability

  • Normally ships within 48 hours
  • Normally ships within 4 weeks
  • Pre-order

As usual, we would only ship an order once everything in the order was ready to ship.  Would you prefer an option to order games in this way and does it make sense to you?

Logical logistics problems

Well, the first 3 days of taking back logistics and shipping out is over.  With us going down to the States personally once more and shipping ourselves, we have gone full circle to where we started.  The only major difference is who is doing it (me instead of Alison) and where (an office instead of out of her apartment).

The trip down to the US was a nightmare once more- 3 hours in line waiting to get through the commercial border.  Thankfully, the Canadian Border Service was efficient – it took less than 20 minutes including completing and submitting the paperwork to get out.  After that, we had to unload and start shipping.

We finished today, with every game owed now in the post except for 2 final orders that are pre-orders on unreleased games.  So if you have an order that should be shipping but you haven’t received a confirmation, bug us! There shouldn’t be, but you never know…

One thing I do regret was not getting a bigger office – we forgot to take into account one minor fact.  While we have more than enough room to work with for shipping, storing, editing the site, what we don’t have is space to unpack new product.  Eh, live and learn.  I’ll probably start using the hallway briefly when we do runs.

Office move complete and new stock

Finally! We’ve moved to the new office at 111 Smithe St.  So all pickup orders now go there.  Pickup is by appointment only please – we are not always in the office, so dropping by unannounced can be detrimental to your peace of mind.

Generally pick-up’s can be scheduled between 3pm – 5pm Tuesday and Thursday and 3 – 7pm Mondays, Wednesdays and Fridays.  If you cannot make any of those times, please call us and we can see what we can schedule.  If there is sufficient demand, we can look into a Saturday pick-up.

Along with the move, we also took a full physical inventory.  Including stock that is coming in tomorrow; stock is now 100% up to date.  A full list of board games back in-stock and coming in new will be updated soon to the site.

For those interested, pics of the move – both before and after after the break. Continue reading “Office move complete and new stock”

2008 in review

Well, that’s 2008 nearly over and done with.  And we must say, it’s been one crazy year.  This is the first, full calendar year that we have been in operation, with the company first incorporated in April 2007 and the site launching in August 2008.  Yes, it does take that long to get a site launched.

So some of the major things that have changed and things we have learnt:

1)      Logistics

First, we moved to a new storage location to give ourselves more space.  Unfortunately, due to personal issues on Alison’s side, she could no longer reliably ship orders on a regular basis, so we went from shipping every day to 2 to 3 times a week.  That was obviously unacceptable.
We ended up changing to a logistics center in Delta, BC where we proceeded to ship every single day.  It’s been a big help, especially over Christmas.  Unfortunately, the cost of doing business with them has been incredibly high.  Each order shipped generally costs us about CAD$5.  That doesn’t include mistakes and receiving costs, which have finally resulted in us deciding to move out from them.

So as of next year, we will be bringing shipping in-house again, but this time the location is downtown.  This will provide us even greater flexibility and allow us to be open longer for customers to pick up orders during weeknights and possibly even weekends.  We will definitely be shipping everyday, it’s just a matter of sorting things out now.

2)      Conventions

We went to two conventions this year and we are likely going to do 4 next year.  Well, we might as well increase geometrically.  Both Anime Evolution and V-Con were a ton of fun, with the chance to meet some new and old gamers.

Next year, the plan is to be at the previous two, the Stargate Convention in town and the Tumpeter Games Society’s Gaming Convention Salute. Of course, that depends on whether we can get sufficient information from both.

3)      Stock

Long time customers might notice the ballooning of our stock – from an initial 230 SKUs to over 800 different SKUs now.  That has helped generate more business in many ways, but has brought about a serious problem in space and cash flow.  Towards the end of the year, we were really having problems with cash flow as Christmas sales had started much later than we had expected.  Something that we learnt for 2009.

In addition, pre-orders have become the bane of our existence.  There’s still an internal debate on whether to take pre-orders or not.  While there are ways to show a game is in-stock, and it does do so on the site (not as well on the current site admittedly), we have noticed that some customers do not notice these warnings.  And thus have expectations for when an order might be received.

4)      Accounting

Yup, first full year of financial accounts was done.  That was a mess, but with the accounts up to date (mostly), we should be able to get this done much easier for next year.  And it certainly provided some interesting insights after completing the accounts.  Including how tight our margins actually are.

5)      Marketing

The things we could write about this is miles long.  Overall, the slower methods of e-mail marketing and social marketing combined with Search Engine Optimisation have played out better than paid marketing.  It’s not say it doesn’t have a place and we are still testing various areas within this, but overall, I would have to say that paid marketing just doesn’t work too well for such a niche product.  Perhaps if we were in the US where the market was larger, but with such a focused marketing, it’s hard to get sufficient returns even using Geo-targeting approaches.

As usual, Google continues to be an exception to this.  Even then though, the Adwords program is barely making money – and losses in some months.  It takes constant pruning and changes to make sure we do not run a loss due to marketing.

Of course the question of lifetime customer value does play in this, but that’s a more difficult aspect to quantify – especially since we are still so young.   On pure gut feel, I would say that anything that breaks even on direct calculation is probably worthwhile to continue.

6)      Website and IT issues

Yup, we had those too.  Changing over to Magento from OSCommerce was a long, long process with the importation of all 800 plus products and thousand plus customer information.  And that’s not to include editing, etc.  We still have issues – specifically with some previously fixed problems (e-mail notifications and pre-order information to be exact), but we are overall very happy with the software.  In the long term, with the new wishlist system and product comparison options, all our customers will also be much happier.

In November, after the switch over and with the increase in visits from customers, our servers finally begin to have problems.  More than doubling our total number of visits and a new software that is much more server intensive made it slow and fail at times.  So we upgraded our servers as well (another cost!) but one that we believe should hold for a while.  Or 6 months.   Depending on how we grow.   We can’t really complain after all.

7)      Customer Service

Perhaps the area that has been our biggest failing point for this year, especially in comparison to last year.  Both our growth and personal factors have constantly thrown our response times and ability to properly deal with customers into areas that neither of us have been happy with.    We definitely would like to thank our customers who have stayed with us and apologise to everyone who have not been 100% happy with our service!

A lot of this should smooth out for next year.  With logistics brought in-house, the chain of responsibility gets much shorter and so we will be able to answer customers faster and get problem orders dealt with easier.

Overall, this year has been one of personal and business growth.  It’s been tumultuous for both of us but we are better and stronger and we are hoping to continue growing to serve our customers.

Once again, thank you to all of you.

Tao and Alison