Neville's Financial Blog

Over at House Of Rave it’s been busy because of the Christmas holiday shopping season. Owning a store that sells light-up and relatively unique items, I’m always tickled by the surprise hit products that seem to sell like crazy during the holidays.

Every year I see odd products that previously didn’t really sell, then all of a sudden see huge spikes in demand. Often it’s products that are unexpected hits, the manufacturer runs out of stock, so it goes out of stock at most stores, so people flock to whatever store they can get it at.

By far, the most demanded item I saw on HoR this year was this Lava Plasma Lamp:

It’s basically a Lava Lamp that has one of those electricity-looking plasma balls inside. It’s a new product and actually looks like a slick little room decoration…which makes it prime gift-giving material.

Unfortunately the Lava company didn’t anticipate such a high demand for it (likely because this tight economy doesn’t permit companies to easily extend huge lines of credit for large manufacturing runs). Or maybe there was a fire at the warehouse and they all got burned up. Who the hell knows. The end result was EVERY store was sold out.

I opened my orders one day and found 20+ orders for JUST this item, all from new customers…it was a little odd. For a while I could send them out, but of course my supply dried up also. I of course immediately cancelled and refunded all the orders since I couldn’t fulfill them….but kept the item up for a while in order to grab new customer info (so I can send them my email newsletter later). Kind of sneaky actually….

I eventually put the “out of stock” status on the item because so many people kept ordering it and the customer service required for canceling and refunding got a little tedious….plus it pisses people off when they order something so close to Christmas then get an email their order has been cancelled.

Another funny runaway product line this year was BACON stuff. Yes, bacon. These are some of the items that recently came out and started selling REALLY well this holiday season:

Bacon Bandages:
There’s a whole lineup of these novelty bandages, and by far the bacon strips sell the best.

Bacon Gumballs:
Why bacon flavored gumballs sell so well is beyond my understanding.

Bacon Toothpicks:
I’m not even kidding…

Who would’ve thought the American public has such a fascination with BACON products?? Like the popular Lava Plasma Lamp a lot of these bacon-related products sold out quickly too.

Another weird item that really took off and I had to keep canceling orders for was this Gravy Fountain Gag Gift Box:

It’s a fake gift box you put a real gift inside to fool your unsuspecting subject. I presume this gag box is great for White Elephant gift exchanges, hence the popularity. What’s weird is there are other gift boxes like this, but by an exceedingly large margin the gravy fountain box was the most popular. Baffling and kind of hilarious.

Most of these small items don’t have a huge margin, so even if you get lots of orders per day for them it’s not a huge amount of profit. However you gain new customers, some of them buy a lot of other stuff, and it’s always fun to see the weird products that hit a nerve with the buying public!

I consider my first REAL business to be House Of Rave (link), but before that were a bunch of other hair brained ideas to make money.

When the economy sucks, the government will generally lower interest rates so it’s more enticing for you to SPEND money rather than SAVE.

At the beginning of this month one of my goals was to make a blog post every 2 days on this blog…well my last one was THREE days ago, so I need to make up (Carnaval in Austin definitely got in the way)!

I have 12 minutes to write/edit/publish this post before the security guard at the library kicks me out, so here goes:

I just read a post by Dave (brought my attention by Adam’s Twitter stream) about his transition from having a job to owning a business.  I always like it when people take that leap, even if it doesn’t work out, I’m sure they will learn a massive amount.

It made me reflect on my own experience with this.  I’ve never had a job except one in college where I did NOTHING but work on my own businesses then promptly quit when they made me do work.

After college I never got a job…I didn’t (still don’t) even have a resume.  I simply continued running my businesses I had already started.  It’s really the only way of working I’ve ever known, and I must say…I like it.    Judging by the way most people talk about their jobs, it seems I’ve made the correct choice.

One thing I really like about owning a business, aside from all the fun stuff like being able to label your own role or change what you do by starting a new business….all your success depends entirely on you.

In ten years if I’m homeless and living on the side of the road, you can point directly at the person whose fault that was.  I like that responsibility because it puts you in charge of your destiny a little more than working for someone else.  In a sense, they control your future.  If they go out of business, you do too.

I know people who worked for Dell at the right time in history who made millions on stock options, and people who worked the same jobs a few years later who weren’t quite as fortunate.  That irks me.  It’s kind of a lottery you play.  You COULD get successful, but your involvement doesn’t dictate it.

Ok, the guard is giving me the stink-eye, time to jet!

Here’s a question I’ve been getting more and more geared towards my business House Of Rave:

Have your sales gone down in the poor economy?

It’s actually a fantastic question and relatively interesting to hear different answers from different business owners.

So, have your sales gone down in the poor economy?

Most people expect that sales simply stopped coming in after the economic downturn, this hasn’t been true even though House Of Rave sells things people buy only on disposable income.  In fact, if you never told me there was a “recession” going on, I probably wouldn’t have noticed too much….people still order all the time (although I’ve seen a very significant drop in big orders from large corporations).

The MAIN problem I’ve had which takes a DIRECT shot at lowering my sales is all the cool products are out of stock.  Almost all of my previous best sellers are no longer being manufactured.

HouseOfRave sells “hard to find” and “unique” products….which often means “they don’t sell it in big stores”.  This has been great so far, but a problem I’m seeing now is manufacturers are on tight budgets and don’t have the capital required to mass produce slower selling items.  I may be able to sell 10 per day of an item, but a manufacturer might need to sell 10,000 of them per day to keep cash flow moving.

….so unless an item can move HUGE quantities quick, the product might be discontinued.

This has been the predominate way that my business has been affected.  The cool part is, with more marketing and more effort I’ve been able to maintain and grow both the profit and sales of the business, but it’s required more effort than in the past (keep in mind I used to put NO effort into it at all).  Before, I would just slap products on the site and they sold….it doesn’t seem to be quite as easy anymore.

Many smaller manufacturers and product patent holders are going out of business now.  Think about it, to manufacture just ONE simple product you must spend hundreds of thousands of dollars for materials and labor, store them, then find people to buy them.  Before you make even one CENT from the product, you could blow through a half-million dollars on credit.  If the product is a flop (note the importance of beforehand PRODUCT RESEARCH) you’re screwed…..and I’m just using the example of small-scale manufacturing of novelty products.

While my business doesn’t have the extreme overhead of these manufacturers, I feel their pain indirectly when a cool product of theirs goes out of stock.

I’m rummaging through my old Gmail records looking for traces of “Silverback Apparel” and found several emails dating back to 2007 and 2008.

The next instance was pretty recent, when Jonathan Oullet contacted me saying I kind of helped inspire him to start a company.

However I’d like to tell you another quick story before we proceed (don’t worry, it all goes together):

My Downtown roommate kept talking about manufacturer high end and sweat proof undershirts as a business….and I immediately raised a crooked eyebrow at the idea.  However he CONSTANTLY talked about it and researched getting shirts made with silver thread (or something like that) which reduces bacteria, smells, sweat etc etc…and even “double fabric armpits” and all sorts of odd features.  (This is seriously a true story).

So one day I sat down with him and did some quick competitive research (aka I Google’d it). We came across very few places that had anything like he wanted to make, except one: Silverback Apparel.  It was kind of an “Awww-shit” moment for my roommate who realized someone had beat him to the punch.

Nevertheless he was glad such a product existed and wanted to buy some.

I still thought anyone so interested in sweat-proof undershirts was INSANE.

Annnnyyywaaysss….

About one week after we realized some guy had already made these shirts, Jonathan Oullet left some comments on NevBlog  and contacted me via email about his company I “partially” inspired…SILVERBACK APPAREL!  He designed and manufactured these super-high-end undershirts and was selling them to really high end stores.

I was flabbergasted I had TWO nutjobs in my life that were obsessed with sweat proof undershirts!  <— awww…link love.

A few emails later and Jonathan sent me some samples of these undershirts.  I honestly didn’t think I’d be impressed.

I WAS WRONG!!

I’m LOVING THESE SHIRTS!  You see, I live in Austin, TX. and it’s hot as hell during the summer.  On some days, even just walking around my back tends to sweat through my shirt.  In fact I don’t wear colors like blue so I don’t get massive sweat stains all over my shirt.

The first time I wore one of these undershirts, I just wore it around as a t-shirt to do errands.  I got in my car (which had been parked in the blazing sun) the whole day and did all my errands.  I noticed something weird: My back wasn’t sweating like it normally does.  My (under)shirt also didn’t feel dirty like most shirts do after walking around on a hot day.

Maybe all the bamboo and silver thread the shirt was made of actually worked?  I also noticed the armpits were double-fabric, as well as the entire back of the shirt (so even when I did sweat I couldn’t feel it AT ALL on the back of the shirt)!  I didn’t realize at first how many “extra features” this shirt had.  It also just felt really damn comfortable.  I also would brag to friends, “I’m wearing a $60 undershirt!”  ($50 plus shipping for the high end stuff).

This post wasn’t a paid post, I just genuinely like the product Jonathan created.

This is why I risk posting biz information on this blog even though some people might copy it.  I think it’s hella cool he got at least SOME inspiration to start a business from me.  Kind of makes me feel all warm inside (but NOT sweaty!) <–wow…that was a lame joke.

Something like one month ago I put up the now-famous “Facebook Like Button” on a business I run called HouseOfRave.com.

House Of Rave is an eEommerce company that sells light up and glow stuff.  Simple enough (see how it works).

The Facebook Like Button is a simple button people can press, and it will automatically “Like” a particular web address on their Facebook Feed.  It puts a small sentence saying, “Neville Medhora likes WhateverTheLinkIs” on your Facebook.

I did a little poking around and found the Like Button was really easy to install on the Shopsite shopping cart software I use.  To install it on your site, simply Google the term:

“How to install the Facebook Like Button on (insert your platform here)”

…and you’ll surely find a solution.  It took me about 3 minutes to install, and 2 minutes to test if everything was working correctly.  It turned out looking like this on every product of HoR:

Obviously the number of “Likes” varies from page to page.

Now this was just a simple test to see what would happen….and I was surprised to see that some of my product pages already had several “Likes” on Facebook.  Off to a good start!

Now a month later, some of the more prominent products on HoR have been gaining traction.  The Finger Lights above currently have 100+ Likes!…meaning somewhere on Facebook exist 100+ links to this product (most likely buried in the archives of people’s news feeds).

So the results of the inflow of traffic were as follows (there was already a small amount of traffic coming from Facebook, so the numbers aren’t that skewed:

WHAT I FOUND INTERESTING was that Facebook users clicking on their friends links to House Of Rave were pretty decent traffic.

The traffic had slightly higher bounce rates than the average visitor, fewer pages per visit and spent less time on the site than average, but….

It’s FREE traffic I didn’t do a DAMN thing to acquire!

Sweet :-)

The cool thing is, even if the conversion rate is much lower than the site average…SOME of the visits do convert, and in the first few weeks I noticed hundreds of extra dollars in revenue due to that completely free traffic.

That was revenue that didn’t exist before, but does now.

Those were customers who didn’t exist before, but do now.
This is a new channel of free traffic that didn’t exist before, but does now.
…all for 5 minutes of work!

As people start using Like buttons more and more, it could even become more profitable.

So Facebook Like Button…for making me free money while I do NOTHING….I LIKE you!

P.S.  An unexpected benefit I noticed is that products with lots of “Likes” are getting slightly better conversion rates now.  It seems people trust the Like button because the website owner cannot manipulate the numbers themselves.

I currently now have FIVE different methods of getting around:

1.) Walking

2.) Riding my bike

3.) Riding my scooter

4.) Driving my car

…and now the newest addition to my fleet of transportation…

5.) Snagging a Car2Go!

But wait…I get to drive around this sexy beast, but I didn’t BUY it.

Car2Go’s are an experimental transportation system that are available in 3 places:

• Ulm, Germany
• Hamburg, Germany
• -and-
• Austin, TX. USA (yet another benefit of living here)!

Basically it’s 400 Smart Cars scattered randomly through the city.  If I see one, I can freely hop in, drive away, then leave it wherever I want!  EVERYTHING is included in the price….gas, insurance, parking etc.  All you need is a little member ship credit card thingy to access all the cars.

It’s like using a car only when you need it….but without having to return it to a rental place.  The cars are tiny, and you can park them pretty much anywhere, even nose-first style. I’m nearly as big as the whole car!

I can easily wrap my arms around the width of the Smart car:

This is how I parked one night…no parallel parking needed!

Big pimpin’ in one of the Car2Go’s laying around on the street before a quick spin:

Now it’s cool to just stumble around and find one of these, but if you need help, there’s a free Car2Go iPhone app that locates every available Car2Go around you.  It will even tell you fuel levels, how clean it is or if it has any damage.  There’s roughly 400 of them humming around the city:

The test drive was fun, and I know several friends who’ve essentially stopped using their cars because they use these so often.  What a useful concept!