2016 in Review: 2 Steps Forward, 1 Step Back

2016 has been a mixed year for us, mostly with overall improvements in the business but with some setbacks as well.

Industry Consolidation & Restrictions

We continued to see industry consolidation including the purchase of F2Z by Asmodee creating a single company that now owns about 70% of all board game sales.  We’ve already seen (and expect to see) further increases in our base pricing (as it stands, Asmodee products direct from Asmodee Canada are marked at 40% discount with an exchange rate of 1.5!).  In addition, PSI is working to block the sale of games to online only stores, which has caused some issues for us (especially during Christmas) in terms of availability.

I expect we’ll see even more price increases / restrictions in the coming 6 months as Asmodee North America decides what they are going to do about Canada and other publishers follow suit in an attempt to reduce the price devaluation of their products online.  This has been a trend in the last few years and I don’t expect it to change.  It does however put us in an interesting position, which leads to…

Geek Product Explosion

Armored Batman Figurine!Most of you probably noticed the huge increase in geeky products including clothing, pop figurines, graphic novels and more.  I know it’s caused some difficulty in finding new board games, which is why we created a whole new category for listing new board games, but it’s not perfect as yet.  The goal is / has been to widen and diversify our categories such that we are not as dependent on board game sales.  We’ve now reached what I expect to be a stable inventory value / volume, and we’ll just be rotating product like our board games for the next year.

Backend & Stock Management

We mentioned last year we were looking at better ways to managing stock.  That meant trying to (again) implement an ERP system.  That did not go well, and after 6 months of struggling with the software, we put it to bed before the Christmas season started.  It was painful in many ways since it did make ordering simpler, but order processing more difficult.  Unfortunately, it also meant that our push towards using barcodes went haywire.

Our Location Move

We are extremely close to finalising our location move and once all the paperwork is complete, we’ll be able to provide further detail.  Expect a full blog post about this once it’s ready.  This has / will consume a ton of our time in Q4 2016 / Q1 2017 and probably Q2 2017.

Kickstarter Fulfillment

The other area of major growth for us has been Kickstarter Fulfillment.  From smaller projects like the 7th Seas RPGs to the giant Scythe fulfillment project, we’ve been busy with Kickstarter projects. It’s been fun to work with publishers directly and our current plans including actually going to GenCon & (potentially) BGGCon to meet more publishers in-person. It’s never (likely) going to be a huge business in Canada since our population is so small, but it does pay for the occasional nice meal :).  You, our regular online customers actually benefit on the backend as the more product we ship, the greater our ability to negotiate lower rates.  It’s probably something you might have noticed in mid-May as we dropped rates by over a $1 all across the board as we signed a new contract.

Conclusion

Overall, 2016 was a good year.  We saw overall decent growth in our main game sales with some good growth in our new product lines / areas of business.  With the big move, it’ll be time to consolidate further and trim product lines and selection to increase turn rates and provide a higher overall return from our investments.

2015 In Review: Industry Changes

I occasionally write these posts about the year before, talking about how the year went or not. I sort of didn’t do a massive review for 2014 last year, more discussing what would happen in 2015 instead. This year, I’ll try to get back to doing my usual year in review post.

Exchange Rates

Probably the biggest thing that affected us this year was the increase in the exchange rate.  We’ve gone from around CAD$1.15 to CAD$1.40 in a year with the resulting explosion in prices. For a long-time we held our calculation on the pricing at $1.35 but we’ve had to alter that recently, with the expected resulting price increases over the next month.  Worst, it means to carry the same volume of product (i.e. same number of items); our inventory numbers have just increased by 22%. In the last 2 years, that means we’ve seen an increase of 30% in our inventory cost which as you can guess with a store like ours is a significant bump in inventory.

Out of Stocks and 3rd party sourcing

Another thing that didn’t help was the lack of product for a number of hot games. As usual, Dead of Winter was out of stock for large periods of the year. Same with a number of hot products like Codenames, Pandemic: Legacy and more.  In an attempt to keep stock in-place, we started sourcing from 3rd party websites and managed to keep some of these items in-stock, even if at a much higher price than we’d prefer.

MAP Policies & Acquisitions

Mayfair made a bit of a splash with us late last year with their sudden attempt to implement their MSP policy. Interestingly enough, they just lost their Catan license, which makes them somewhat less relevant as a business for us. Certainly, if we exclude Catan the only games that actually sell regularly for us is Caverna and Patchwork.

Of course, last year was also the year of the acquisition with Plaid Hat joining F2Z (who own Z-Man already) and just at the start of the year, the lost of Catan’s license to Asmodee North America.  I won’t reiterate my discussion about the ANA announcement either, though that obviously was an interesting addition.

Convention Coverage

Perhaps one of the newest additions for our convention coverage was the addition of the Calgary Comic & Entertainment Expo last year. We’d have to call it a success and we’ll be back this year for sure.  In addition, we added Yukomicon to our list of conventions we do with Starlit Citadel last year and we probably will be looking at expanding our convention coverage across more countries next year.

Fortress Geek & Product Range

One thing that readers of this blog might realise is that we’ve been expanding our second business, Fortress Geek; aggressively.  It’s actually growing quite well, but for a variety of reasons (mostly backend and long-term); we’ve decided to integrate both sites.  That’s been.. a mess… but it’s mostly been taken care of, just not in-time for Christmas which was sad.  Still, we’re hoping that the introduction to the site will see a wider spread of sales for Starlit Citadel, diversifying us further.

In the meantime, we’ll continue to push Fortress Geek as a separate site.  There are a few business reasons for that, but it’s also a matter of selection. I expect we’ll be stocking some stuff in FG that just would never make it / sell well in Starlit Citadel.

Overall

2015 was a good year for many reasons. We’ve worked out some backend issues, implemented a series of procedures that have significantly expanded our ability to grow and streamlined processes while continuing to grow our business.  On the other hand, there’s been significant challenges in terms of our stock and stock management and it’s probably the biggest area that I need to work on.  Our old methods of dealing with stock just no longer work, at least at the level that we need it to with the worsening exchange rate.

2015 – A Year of Change

2015 is going to be an interesting year for Starlit Citadel. We are undertaking a large number of changes in the business and I thought some of you might be interested in reading more about it.

Firstly, Kaja our Manager and co-host of the video reviews has left Starlit to pursue self-employment as a teacher in her business Valkyrie Martial Arts. Kaja has been with us for over 3 years (since mid-2011) and has seen the company grow through a significant number of changes and has been instrumental in ensuring the growth has been as smooth as possible. Among other things, she’s the reason we have some of the most up-to-date and well-written processes and procedures I’ve ever seen. Like, seriously – we have better documentation for our processes than multi-million dollar companies I’ve worked for before do. And of course, she’s been the ‘face’ of our video reviews for years.

Kaja’s leaving prompted us to review the video reviews and it’s place in our business and finally, our decision to cut them from our core business activities. While each video itself takes 20 – 30 hours to shoot, there’s also countless hours managing the various platforms and replying to viewers. With over 116 videos shot, we’ve decided that it’s time for us to move on and find better uses for the funds.

With the new funds, we’d like to review new channels and promotions. Perhaps one of our best forms of marketing have been our infographic and game app. However, they are now a year and a half out of date (only a year for the gameApp) and need updating, so we’ll need to fix that as well. We’d love to expand that further, potentially developing the app directly into the site.

Lastly, our second business Fortress Geek has begun to pick up significantly. It’s taken us a while to figure out the marketing and inventory for it, but now that we have we expect to see significant gains in sales – which will require more time dedicated to it by both the staff and myself.

Overall, I’m looking forward to 2015 but expect it’ll be a little rough in the beginning as we all settle down to the new changes.

2013 – the Year of the Pre-Order

I try to write a ‘Year in Review’ post at the end of each year.  Often, I never get around to doing it because life gets too busy and once I find the time, it’s June of the next year.  So, here’s hoping I can get this done…

The Year of the Pre-Order

Kaja named 2013 the Year of the Pre-Order.  We keep a list of unique orders (not including combined orders, etc) of orders awaiting shipping due to backordered / pre-ordered items.  Generally that list is in the low 100’s (or less!) but this year, we struggled to keep it beneath 200.  You can guess the usual suspects – Alien Artifacts, Tumblin’ Dice, Robinson Crusoe, Pandemic, X-Wing, Terra Mystica, the Resistance, Hanabi, etc.

Quite literally, the publishers could not keep up with demand.  A game would release and it’d go immediately into back-order.  We’d sit waiting for months for games to release as release dates were pushed back and back or insufficient number of copies were printed.  I’m sure it was frustrating for publishers too, but for us, it was just a killer especially during Christmas.

Investing for the Future

2013 was also about investing for the future.  We moved to a new, much larger warehouse which costs (painfully) more.  It meant adding hours to our part-time employees as I had to (for personal reasons) reduce the number of hours I worked.  It meant upgrading aspects of the site to handle future loads.

It meant launching the new business and dedicating funds and time to it, time that we were short on already.  We spent a lot of money in 2013 investing for future growth, building out shelving and adding things like carts and work tables in the warehouse, and hopefully it’ll play out right.

Plans for the Future

2014 should be interesting.   The exchange rate has grown significantly worst in 2013, pushing up from about 1.02 to 1.07.  We don’t expect to see it drop beneath 1.05 anytime soon, so our margins have grown worst.  It’s something we can plan for, and we’re hoping we won’t need to adjust our prices but we shall have to see.

Canada Post is raising their parcel rates again.  That makes Free Shipping even more expensive.  It already costs us about $18 (including box & packing cost) on average for each order to go out.  I expect it’ll go up again.  We’ll have to see if we have to adjust our threshold to meet it, it’s hard to say but if margins get squeezed on both ends it makes things tough.

At the same time, it looks like we should be investing in more miniatures.  That means more shelves and dollars in stock, but the demand seems to be there from our customers.  The question of course is which line and how deep.  I’m going to have to spend some time figuring out which miniature lines we should have more stock of as well.

Lastly, we’ve got a major headache with how we’re dealing with stock.  It’s a backend thing, but if fixed it should reduce stock outages and increase overall stock accuracy.  Of course that will cost more funds…

2012 In Review

2012 has turned into both an exciting and disappointing year for us.   There’s numerous reasons for this, ranging from a number of unexpected costs, a game industry that is changing on its head and internal process changes.

The Changing Face of the Industry

We talked about how the industry has changed in the March of last year with distributor exclusives and Kickstarter.  Since then, Queen Games and Mayfair Games have gone exclusive as well, while Tasty Minstrel briefly dabbled with exclusivity.  Kickstarter games have started arriving in droves, and the shine has begun to wear off.  Certainly, I’ve started being much more careful about which Kickstarter games to stock as we’ve been burned a number of times due to low on-going demand.

All of the above has actually driven our costs up – from direct Cost-of-Goods-Sold to inventory holding costs.  We’ve had to review pricing in some cases and are likely going to continue doing so for the next little while on a number of lines.  In addition, the plethora of games that are arriving means we are going to have to be much, much more careful about what games we stock.  This year’s 300+ games in our Boxing Day Sale was a tad much.

Site Updates

Many of you noticed the huge site redesign that appeared in the middle of November.  Frankly, the redesign was scheduled for 2013 after Christmas but a number of bugs had appeared on the site that required significant fixes.   In the end, it made more sense to upgrade and redesign the entire site rather than to do patchwork fixes.  Unfortunately, since it was budgeted for 2013 it meant that we had (have) a huge expense that was not really planned for.  Thankfully, it’s not something we will have to do again anytime soon, though we are still fixing small bugs as we find them in the new site.

In other good news, Interac Online is finally up.  We’re hoping it’ll drive our costs down; though as mentioned in my previous blog post it’s going to be a few years before it makes back our initial investment.

Video Reviews

The video reviews were a qualified success.  The reviews themselves have been a great success with the majority of comments highly complimentary.  However as an advertising / revenue generation vehicle they have not panned out to the extent that we had planned.  It’s one reason why we have to cut down to 26 videos (internally funded) and why we reached out to viewers to fund more videos in 2013.

Wider Categories

We seem to have missed the entire CCG explosion that is going on in the industry in general as we continue to develop in other categories on the site.  We’ve broadened our board game stock, added more RPGs and deepened our stock of miniatures.  We’ll be trimming some of our miniature lines in 2013 and expanding others, while RPGs are likely to hold steady as they are.

The major addition has been our launch of the Used Games category.  It’s still very much in an experimental stage, with us reviewing the cost associated (providing quotes, receiving shipments, checking contents and setting up the games on the site) and our profit margins on the category, but we’ve been generally happy with the new initiative.  The only thing we will be tweaking the sale price / quote prices to ensure we are making a sufficient amount for all the work that is put in.

2013

So what now? We’ve been talking about potentially moving locations to gain more space & windows but that’s another major expense.  With a new part-time employee and all our other expenses from last year, we don’t actually have a lot of free funds for 2013.  In addition, we’ve added a ton of new processes and it’s time that we started reviewing them to see if they are actually worth the trouble.   With a lower expectation of growth for next year considering the disappointing growth figures in 2012, it’s going to be tough to do all the things we’d like to do without some major overhauls on the backend.  Overall, 2013 is going to be a tough year of backend fixes and more rigorous review of costs.

Year in Review : 2011

What a year, 2011 was our best year so far; with solid growth through most of it.   There were significant challenges throughout the year; but I continue to be grateful to all our customers who have made this possible.

Sales & Categories

We continue to be a board game store primarily – the vat majority of our revenue and inventory is devoted to board games.  However, we’ve seen a strong increase in our sale of accessories and the introduction of RPGs has added a new category that seems to be doing really well.  We did introduce a few CCGs and miniatures; but so far; it’s not been something that has taken.  We’re likely to dump our stock of CCGs very soon; and I’m on the fence of our (limited) miniature support.

The Postal Strike

I did say sales was good through most of the year – the Postal Strike being the obvious exception.  We certainly saw quite a drop both before; during and even slightly after the Strike.   On the other hand, the Strike was the impetus for the addition of FedEx as a shipping provider and while the % of orders that ship via FedEx has been low; its addition is a nice back-up. Recent checks on the cost though has had us remove the Free Shipping option for FedEx entirely – it’s way too expensive to offer profitably.

Hiring

This was the year of hiring it seemed.  We added Kaja as a full-time employee in the last 6 months of the year or so; and then proceeded to realise that we needed another full-time employee.  We’re once again in the process of looking for a full-time employee as Pierson unfortunately had to leave for personal reasons.   What hiring new employees also meant that we had to review our processes completely – what worked for myself alone or with Kaja doesn’t work with 2 full-time employees.  We’re still in the process of changing the processes to ensure things run smoothly with 3 of us in the store now.

What it does mean that with new employees, I was able to focus on the website a lot more and start making some real changes.   Some of the changes are rather obvious (Quantity buttons in the front, Pre-Order information pages, etc); others are less so but all are things I’ve been wanting to get done for a while.

Video Reviews

Perhaps the biggest addition this year for customers has been the introduction of our video reviews.  The reviews seem to have been well received; and we’ll begin shooting mid-January.  We’re hoping with that, we should have some reviews available by end-January at least.

The Future

So, what next? It’s hard to say right now.  We’re still paying off all our bills from the Christmas-period which means any future plans are going to wait.  The goal of course it to update the site, redesign it a bit more to make it easier to navigate and of course keep the video reviews going.  Beyond that; this looks to be a year to focus on trimming our costs and working on efficiencies in-house.  There’s a lot of things that need to be done; and a lot of it could be done faster, easier and more accurately with some process changes it seems.  It just means hunkering down and figuring out how – and what new technologies we need to invest. in.

 

 

The year in review : 2010

It’s February, so this is a rather late ‘year-in-review’; but between the Con and getting our books in-order, I haven’t had time to really analyse the year.  For obvious reasons, I’m not discussing our actual revenue figures.  However, now that we’re 98% done with the books for 2010; I am able to review how the year went in more detail.

Overall

2010 was a rather disappointing year once we had the numbers down.  While it seemed our cash position was better, it was in large part due to the introduction of the HST.  We collected a lot more taxes this year than we had paid out, which means we were carrying the taxes as a nice ‘loan’ from the government.  We have to pay it back now, though our cash position has plunged back to it’s normal level.

In addition, while our sales had gone up, so had our costs.  In fact, we ended up making $100 more than we in 2009 (excluding salary for myself).

The Finances

There’s a few factor’s playing into our financial results this year.  Firstly, the type of sales we were getting was significantly different – our cost of goods sold had gone up significantly to nearly 70% in some months (and I’m not even talking about our Sale months).  A quick review has shown that our costs of goods for certain products have bee higher than we are comfortable with; specifically two big sellers for us this year – Castle Ravenloft & Heroscape have to be sourced from a very expensive distributor.  In addition, the Rewards Program also chipped away at our margins.

Secondly, we had an increase in our on-going operations fixed cost.  Rent, insurance, heat, hosting  & internet bills all rose between 20 – 200% last year.   Over time, as we grow into our new space, the proportion of these costs should go down; but for now, it’s a significant hit.

Thirdly, and this is a pure accounting issue; but we ‘booked’ a lot more shipping expenses this year than last year.  Normally, we are on terms with Canada Post; but due to some issues with their accounting process; most of our December expenses for this year showed up in December instead of January.  Of course, 2009’s December’s shipping showed up in January 2010; so our  books are reflecting shipping expenses for two XMas’.

Fourthly, outsourcing and hires occurred in 2010 as well.  We had others do our bookkeeping for most of the year and of course, we had a few people in to help with shipping.  Both significantly  increased our expenses here, something which we hadn’t really had to pay for in 2009 compared to 2010.

Lastly, we had a series of one-off charges happen last year as we transferred control / directorships from Alison to myself.  This involved a number of legal fees and filings, which again impacted profits.  Also, the expense of the move has to be factored in including the new shelves and the new warehouse equipment we bought.

 The Silver Lining?

Other than Canada Post & the Cost of Goods Sold, most of those changes and costs were necessary for our next growth phase.  Hiring others to help with the bookkeeping and shipping meant I had time to tackle projects that had been on the plate forever.  The new space was necessary to keep growing, and we’re definitely not going to need to move for at least another year or two.  So if we manage to grow a little this year, we should be able to actually post a higher profit.

The Industry & Gaming in General

I’m always wary of speaking about the gaming industry or the board gaming industry because there is so little data out there.  In addition, we’re in year 3 going on 4; so we’re still in that growth phase.  Each year, our revenue numbers are going to be higher.  Now, when we hit year 5; I’d expect a leveling of – but till then it’s hard to correlate our growth with that of the industry.

However, we’ve seen a lot more games released this year compared to previous years.   A lot of good, strong games were release; some of which just haven’t done the sales that we had expected.  Some of the larger game companies (e.g. Wizards) have re-entered the board game market seriously while a ton of small press publishers have released some solid games (e.g. Summoner Wars, Alien Frontiers & Catacombs).

On the other hand, all these new releases seems to be squeezing the classics even harder.  Sales of some of our classic games have dropped significantly (e.g. Puerto Rico, St. Petersburg, San Juan) especially when you factor in our growth.

Lastly, deck-building games were the major story of this year.  Dominion continues to be a roaring success, outselling the other deck-building games by at least 3 to 1.   I expect we’ll continue to see a flood of deck-builders in the market, and I’ll be interested to see where this category goes.

Last Thoughts?

2010 was a transition year and I expect 2011 to be another one.  We’re going to have to hire again sometime this year, there’s no doubt about that.  For now, the workload is manageable by myself but as sales continue to increase; I’m going to have outsource more and more as the hours needed to manage all the sales continue to increase.  Outsourcing and hiring is going to be another major cost, one that I’ll have to be carefully budget for.

On the other hand, 2010 has  shown that this business is viable.  I’m no longer putting money into the company to keep it floating, and I’m now drawing a regular salary.  I’m not buying a  Yacht yet; but there is no danger of me quitting to pay the bills.

Year in Review – 2009

Well, it’s 2010 now and let’s start by saying Thank You to all our customers.  It was the first year that one of us would work full-time at Starlit Citadel (me!) and the first full year that we brought shipping in-house.

Some of the major issues and lessons learnt:

1) Logistics

2009 was our first year downtown and shipping all the orders by myself has taught me a few things.  Firstly, that I desperately need to hire someone to work part-time on shipping (especially during Christmas) and secondly, while I can do it, I’m not the world’s best.  The small attention to detail that  is required is not one of my strengths and we had roughly a 2% error rate – mostly during Christmas when things was so crazy it was hard to double-check everything.

So our first goal of this year is to find a part-time employee to start training.

2)    Conventions & Events

We made it to three conventions this year as a vendor.  As always, both Anime Evolution and V-Con were a ton of fun and we did well at both.  The new location for Anime Evolution in the convention centre offered us a truly large, well laid out booth to showcase our games while VCon continued to be the quiet, intimate convention that we have always loved.

The Stargate Convention was an utter waste of time and effort – in fact, we will never go near another convention run by Creation.  It’s no surprise that we were the only vendor in the room if the way we were treated by the organizers was any indication of their normal practices.

Lastly, the Trumpeters Game Society convention was something that we had initially planned to join but our invitation to be a vendor was withdrawn at the last minute.  We’ll try again this year, but I doubt we’ll get in.

We also went / hosted a few events in 2009 including Gottacon, Starlit’s Anniversary Party and playing at the Gaming for Diabetes event.  They were all highly entertaining events that we’re looking forward to doing again this year.

So our calendar for this year includes being a vendor at GottaCon, VCon and Anime Evolution and hosting the Anniversary Party and sponsoring the Gaming for Diabetes convention.  If you’ve got suggestions for others, do tell us!

3)    Stock
Cashflow was much less of a problem this year, due to some changes and additional funds.  In addition, we’ve added another 700 plus SKUs to the site in the year, putting us over 1,500 SKUs and more addedeach month.  In fact, we’re looking at adding between 20 – 30 SKUs at a minimum each month, often hitting 50.

We adjusted a number of our policies this year including ordering weekly which has improved our ability to keep a wider range of stock at close to the same level of capital.  However, that caused numerous stock-outs during Christmas – in fact, we probably had too little stock even though we doubled or even tripled our stock levels for some important games.

It’s definitely something else we learnt, and intend to improve for next year.

4)    Accounting
Not much to update here, beyond the fact that we’ve got some interesting trend-lines and data now.  We’ll be doing a variety of blog posts once things have slowed down enough to properly compose them.

5)    Marketing
This year has seen a bit more of a focus on branding the website as well as trimming some of our marketing expenses.  We continue to dedicate a significant % of our budget to marketing (roughly 3%) which has included everything from banners advertisements on Board Game Geek and other game sites to Google Adwords and Sponsorships and Contests run on the site.

For the most part, our marketing exercises have been quite successful and we’ll be continuing with most of our current advertisers   While it’s quite often hard to track direct results from some of our advertising, we feel that most of it has had a beneficial effect.

Lastly, our on-site contests have seen mixed results.  The Review Contest continues to do well, with quite a few great new reviews and a ton of entries.  Unfortunately, the Small Publisher Contest was a mixed success.  While some publishers provided great support – over and above the call of duty – others, were difficult to work with.  In the end, with the amount of time dedicated to running it and the eventual results and lack of interest (from publishers and customers); we’ve decided to discontinue the contest.  We’ll still be looking at how better highlight these smaller games, but for now, we’re putting the contest on hold.

6)    Website and IT Issues
Many of you will have noticed a substantial increase in site speed as we have improved code and streamlined some of our processes on the back-end.  There are a few new updates awaiting testing and implementation, which in a few months should see another substantial upgrade in site load times.

In addition, we have a few new modules planned including our long-awaited Customer Rewards Program and changes to how the site looks including improving the availability information on the site.

7)    Customer Service
I like to think we have improved on the customer service substantially, keeping customers informed and resolving issues faster.  Overall, I am much happier with how we’ve done in 2009 compared to 2008 and hope to continue that improvement through this year.

Future Directions

2009 was our hump year.  We had to see a substantial increase in sales to make Starlit Citadel viable and for me to start drawing a salary in 2010.  We achieved the first objective and we’re just awaiting the final invoices from December to see if we can deal with the second.  I’m not concerned at all about it, but I prefer to cross my t’s in this.

Now that we’re over that hump, I expect we’ll be better able to focus on the business even more including the new hire.  At the same time, we’ve decided that we will not be opening a retail store any time soon.  Many of the reasons for launching a retail store in Vancouver no longer hold true.  There are now a ton of great game stores in Vancouver, Alison who had all the retail experience is no longer able to work with us full-time and I’m more suited for working behind a computer.

So that means renewed focus on making us the best online board games store on the web – which to us means great customer service, great selection and the best and most user-friendly website possible.   I’m quite excited at what we’ve got planned for 2010 and I’m sure you will be too.

Tao

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