Newsletter subscriptions

One of the most disappointing aspects of the switch to the new software has been the lost of the newsletter subscription data we had built up over a year in the previous site.  The importation of the data was horrendously inefficient and messed up, and by the time we had freed some time to look at it again, it had been months since the switch over.  Making a decision to not import the data again was mostly to err on the side of privacy.  Still, losing access to all that information was annoying.

Now the new software doesn’t automatically prompt customers to add themselves to the newsletter.  In fact, customers must go out of their way to do so by logging into their account or using the small newsletter box.  This has seen a much reduced number of new subscribers, a factor that isn’t great for prompting return customers.

Thus the recent redesign of the site to put the newsletter box to the right, and hopefully above the fold for most customers.  This should prompt more customers / guests to  add themselves to the newsletter.  In theory at least.  We will see.

Pack Rat I am

So lately, I’ve been running down to the US once a week.  This is great because it means we are doing well in sales.  It’s not so great for our storage space as we continually get a ton of packing materials and boxes.

Now, the packing materials we save for reuse since they are mostly weevils and brown paper anyway and I’d hate to discard them.  Of course, that means I now have 5 big boxes of packing materials sitting around the warehouse waiting to be used (and this is the overflow after we ship everything out).  But at least I feel justified keeping them around as I know sooner or later, I’ll be using them.

On the other hand, our orders all come in very large boxes – at least 3 feet by 2 feet by 3 feet.   As a pack rat, I hate discarding these boxes for any reason – after all, I could use them again.  Really.  I could.  I mean, I get an order that needs a box of that size every… month. Maybe.

Yup, you see the problem.  I get 2  to 3 boxes of that size every week, and every month I use 1.  I’m suddenly finding my storage space piling up with unused large boxes.  Logically, I should send these boxes for recycling.

But the pack rat in me keeps going ‘mine’.  We could use this. You know. 10 years from now. Really. So for now, I’m procrastinating… but I can see this ending badly very, very soon when my pack rat nature gets overwhelmed by my practical nature.  At which point, a cleansing shall occur.

Battle Line Review

Battle line is Reiner Knizai’s best 2-player game, combining the  elegance and simplicity based on set collection as seen in Lost Cities and the myriad strategic decisions of Blue Moon.

In Battle Line, players take on the role of generals commanding armies arrayed in a battle line, spread over 9 posts (flags).  To win, players need to win either 5 flags in total or 3 adjacent flags.

Winning a flag is a mater of having stronger forces, in this case, determined by the colours and numbers played on the flag (to a maximum of 3 normally).  With 60 cards, in 6 colours with strength ranging from 1 to 10, players will need to create forrmations to beat their opponent.   These formations are basically drawn from poker hands, with the straight flush the strongest down to the straight and single numbers winning.

It’s a concept that is easy for players to grasp, but throwing in flags and tactic cards make the game more complicated and strategic. Battle Line is a definite winner for any 2 player card game and should not be missed.

Small Publisher Contests

So, I’ve been thinking about how I could get some more small publisher board games onto our shelves in a timely manner.  Frankly, with the number of games released each month, its pretty hard to keep track of them all and make certain that we stock the good one’s.

My initial idea is to run a small publisher  (i.e. this excludes Rio Grande, Mayfair, Days of Wonder, etc.) contest every month at Starlit Citadel.  The winner would get a free copy of the publisher’s game and the publisher gets exposure and at the least, a small order from us of 5 copies (1 as a contest, 1 for ourselves personally and 3 to stock on the site).  If it goes well with the sale to customers, that number would obviously increase.

What would we get? Well, since we can only promote 12 board games a year (preferably games that are released that month or the previous month); the publishers would pitch their games to us to be included.   That sends the information direct to us, instead of us searching through a ton of new releases to understand which might sell.

I’d have to set a minimum rating for games to be pitched (minimum number of stars on BGG with 5 ratings, etc. or a good review from a well known reviewer, etc.) since I’d have to be able to evaluate the game.  Obviously, I’d have to be able to purchase the game (directly via the publisher for a reasonable cost and/or via our distributors) but that would be the only other criteria.  This would exclude most European publishers I must admit unless they already have distribution in the US because the cost of ordering a small quantity of games would be too high.

I’m thinking the best place to publish this would be on the site and at BGG.  The question is – Geeklist or Forum Post?  Any other comments / suggestions / etc on this idea?

Cash flow – or where is my money?

It’s a funny thing running an online board game store.  As any accountant will tell you, Cash is Reality, and for an online business, that’s particularly true.  You find yourself staring at your bank account quite often, wondering where all the money is even if you are making good sales.  It’s something I didn’t realise till I got into it, and I tend to think of it as ‘cash  flow lag time’.  This is  particularly problematical when you take into account payments to distributors for stock.

Here’s a quick, simplified example of what I‘m discussing.

On Day 1 (a Monday), you make an order for 20 games at $25 each.  Let’s say you have 15 day terms with your distributor (common); so you are expected to pay them on Day 16 a total of $500.

It takes 2 days for the order to arrive at your warehouse and 1 additional day to check the stock and update the website for selling.  It is now Day 4 (Thursday).

Let’s say you sell, on average, 2 orders a day.  You get two orders on Friday, Saturday, Sunday and Monday.  You only ship on Day 8, Monday (for ease of the example).  Now, assuming you sell each board game for $50, you have now generated (8 * $50) $400 of revenue.  Not a bad amount of revenue.

However, your merchant provider only processes those transactions at the end of Monday (Day 8) and only ‘clears’ your account every 2 days.  That means, you wait till Tuesday (Day 9) for the revenue to be sent to your bank account.The banks however take 3 days to clear  this payment (depends on your bank, smaller banks will do this slower, larger banks will get this done in 1 day), so you are now at Friday (Day 12) before your funds ($400) from Day 8 arrives.

Now, you make additional sales on Days 9 – 11, 2 copies each day for another 6 copies that all clear and are processed to transfer to your account on Thursday; Day 11.  That is another $300 that will now arrive on  Tuesday, Day 16.  So, on Tuesday Day 16, you will have $700 in the bank, enough to pay your distributor.  Perfect.

Wait a second! You need to get your check to the distributor by Tuesday, Day 16 but it takes 2 business days to arrive at your distributor so your check has to leave Friday.  And your bank account is only seeing $400 on Friday.

Now you have to decide either to send a check that might bounce if your distributor cashes it straight away before your money arrives or make the distributor wait till Tuesday to send the check (which will then arrive on Thursday, Day 18). But you made sales didn’t you?

The solutions

Well, there are a few things you can do.  Firstly, you can just make sure you have enough cash to flow through, always keeping a ‘float’ amount in the account.  Lines-of-Credit are particularly useful for this, and were made for this particular reason in mind.

You can also try to reduce lag-time.  Areas that are particularly problematical include shipping time between you and the distributor, processing time with your payment gateway (e.g. Moneris ‘sweeps’ your money into your account everyday) and using a larger bank (they generally process your transfers faster than credit unions).

However, all the above have costs associated with them.  Faster shipping times might mean paying for XPressPost.  Moneris charges a minimum monthly fee and works with only a few banks.  Larger banks have very high banking fees (starting at $60 a month and charging you per transaction including all those deposits…).

It’s all a balancing act really, but if you don’t notice and keep track of the lag time in receiving funds, it’s something that could easily put you out of business as you find yourself unable to meet your obligations.

Operating Expenses – the Soft Costs

Part I of the blog post on Operating Expenses dealt with ‘hard’ costs, that is, cost that you had very little discretionary power on.  Most of these ‘soft’ costs discussed in this blog post are services which are discretionary.  You can choose a variety of ways of undertaking them, and the costs here can often be reduced significantly through the liberal use of pleading looks and good connections.  Yes, as a small business, who you know is going to count for a lot.

This is probably a good idea to haveif you hold any significant amount of stock.  After all, a bad accident could wipe you out completely especially if you had to replace most of it out-of-pocket.  Figure at least $750 annually for insurance, possibly more depending on the plan that you choose.

Marketing expenses
I won’t provide numbers here since marketing expenses are truly dependent on the marketing and corporate strategy chosen by a company.  I’ve seen numbers range from 3 to 10% of gross profit, with most consumer good companies ranging to the higher end of that number.   In fact, I would say that next to development costs, this is probably the most expensive part of running an online business as one form of marketing expense or another is going to be necessary – unlike retail stores that will have foot traffic that “finds” them, an online store must actively draw customers to them.

The main ways to gain customers are via advertising on other sites or advertising on search engines.  A single month’s advertisement on a site could easily cost US$250 a month, while advertising on Google Adwords can cost a minimum of CAD$300 a month.  Figure more if you intend to go through their content network and/or are going for higher placement on broader keywords.

Search Engine Optimisation is a great strategy, but requires a high level of expertise and time.  Google generally will not index your site and rank it for at least 6 months from launch, and you can expect to be spending a large chunk of your time working on it.  If you do not have expertise in SEO, hiring a company to do it on an on-going basis can be expensive – I‘ve seen quotes starting from $46 (don‘t even touch) to $500 – 2,000 a month.  Larger sites, thus requiring more time dedicated, can expect even higher  quotes.

I’ll skip the other forms of marketing,  an entire blog post could be (and probably will be) written discussing those aspects.  But of all your on-going expenses, marketing is likely to be the one that fluctuates the most and is the highest as an online store.

There are two contractors that you can expect to require – graphic / web design and backend coding.  As an online store, you are likely going to need new banners as well as changes to your site graphics on a relatively regular basis.  Costs on this can range but is generally about $35 – 50 an hour for graphic / web design support but this is not on-going.  Figure at least needing them once every few months for a couple of hours.

With regard to coding, the best option in our view is to put them on a retainer.  You’ll find that the site will give trouble for no apparent reason – sometimes due to updates on other browsers, sometimes due to capacity issues, possibly even because you added a new product to the site.  Having a 3rd party available to trouble-shoot problems can be extremely handy – especially if it’s stopping your customers from buying from you.  In addition, as you grow, you’ll find the constant need to update your site with better graphics and better options a necessity.   Again, having your IT personnel on retainer allows them to work on these side projects when your site isn’t crashing.  It’s hard to provide a fixed amount to this, but a couple of hundred dollars is a minimum that you can expect to be charged.

I’d note that if you went through a  3rd party software for your e-commerce backend (e.g. Yahoo! Shops), much of this will be done for you for one low fee.  It is all part of the package, and they will eventually pass on additional tweaks and updates.  On the other hand, you’ll always be behind the curve for the latest sales tools (not necessarily a bad thing) and many of these companies charge a % of your sales.

Legal & Finance
Yup, accountants and lawyers are a ton of fun.  They are also quite expensive, but necessary come tax season and registration.  This is again a variable cost – depending on the size of your business and if you get audited, it can range from a couple of hundred dollars a year to thousands.

Miscelaneous Costs
This is a catch-all and can include everything from the cost of paper for printing your orders to food and beverage expenses for really late nights at work to nails and a hammer to fix a broken shelf.  It’s all costs that will crop up, quite often unexpectedly, but which are relatively minimal individually but do add up.  I’d suggest you budget about $50 a month for this kind of thing.

Or what you’re paying yourself.  I’ll leave you to figure out how much this is, but let’s just say that in the beginning, the guy at Timmy’s is probably earning more than you are.

So, is there anything I’m missing? Want further clarification on something? Give us a shout.