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?
YES…..but not in the traditional sense. Let me explain:
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 though it’d be interesting to take a look at all the Google Analytics since I installed them on House of Rave somewhere around the beginning of 2006. I’ll only use Google Analytics because they are probably far more accurate than my server’s reports (which I believe counts viewing an image as a full unique visit which may distort the number of TRUE visitors to the site):
I had to put this report on a weekly view rather than daily so the rest of the years analytics even show. There was an “event” that caused hits to go from a few hundred per day to about 50,000 one day then 25,000 the next day. That was great, but it really screws up viewing the yearly analytics.
HoR has always been a very “sticky” website, and 5.41 pages per visitor is a pretty good stat I’d say.
Some funny activity in the beginning of the year was most likely attributed to this very blog. Whenever I talk about the business in a way that interests people, I can see little spikes in traffic. I don’t particularly care because those visitors from my blog rarely buy anything from HoR…so it doesn’t make me any money. In fact simply talking openly about this business has caused a slew of people to copy. Why on EARTH anyone would want to copy a business model I did back in high school is beyond me… If I could do it over again I would’ve preferably picked a much larger niche.
Judging from this chart, HoR was pretty stagnant or even declining during 2007.
I ended up doing all sorts of improvements to HoR in 2008 in my own sporadic way. I suppose it helped as traffic went up. Traffic may also have something to do with this blog. Once again, traffic doesn’t necessarily = income. Although I’m sure it doesn’t hurt.
2009 (Up till Sept. 1, 2009):
Here is a snapshot of 2009 thus far. These stats don’t account for 4 busy months of the year, so I’m not sure how trusting I am of them yet. Looking at the stats I notice the Avg. time on site is lower than it was 3 years ago. I suspect 3 years ago people had slower computers and less web savvy. Or maybe the site just sucks and people aren’t staying as long. Who knows.
Site traffic seems to be consistently growing a small bit. Based off my estimates (with information not presented here) it should overall grow to a new high.
From the information presented I need 102,689 more visits this year to equal the traffic of the heavily inflated 2006 sample. Based on the 2008 sample, a yearly avg. for monthly traffic would be 27,303 uniques per month. Multiply that by the extra 4 months in the year and that comes to 109,214 which would put 2009 as the highest traffic year. That 27K average is also probably a low average, since generally the 4th quarter is a higher traffic time for almost every business in the United States.
In addition HoR has an ancillary rave blog that gets 200+ visits per day…those are not included here.
Effects of recession:
I always get asked if this recession has had any effect. Well…yea.
Anytime you get people making less money, lots of money fear etc. etc. people will buy less…especially stuff in the party/retail sector. Also, with lots of big corporations in extreme money-saving mode, most of the really large orders I would get from them have disappeared along with those fat-ass budgets.
This business also sells stuff people don’t really need. We actually have managed to grow believe it or not, but not by the 4X factor we were hoping for late last year. What hurts the most is the indirect effect the recession has taken. HoR sells “hard to find light up stuff“…and “hard to find” roughly equates to “not manufactured that often.” It takes LOTS of money, time and resources to manufacture/store/ship/distribute a single product, and lots of the cool products we once used to carry have gone bye-bye (much to my chagrin). If anything, this has been the single most destructive part of the recession to the business.
Well, recession or not, cheers to a decent 2009! *clink*
I’m starting to get all this newsletter stuff in place, but realized I didn’t have any form on HouseOfRave that allows passer-by’ers to signup for the newsletter.
I’ve gone ahead and inserted a Vertical Response email form which automatically adds the contacts to my existing list:
Also I’ve upgraded to a new server this weekend. My old server had been continuously running for 4 1/2 years….about due time for a hard drive failure. It’s also outdated compared to newer servers, so my hosting company bumped me up to a new server gratis.
They simply imaged the current drive and put it in a new server, and 99% of everything on there worked just fine after the transfer. However HouseOfRave had some problems since the paths on the new server were different.
I tried fixing it myself this entire weekend but to no avail. I don’t have a yearly service contract with Shopsite, so I ended up paying $245 to get a technician to look at the problem. The problem was fixed within 10 minutes of my service request.
It really reminded me of a story I once heard:
A nuclear power facility was having trouble diagnosing why the reactors were getting dangerously hot. The engineers exhaustively examined every piece of equipment and couldn’t find any faults or possible causes for this. This was a very dangerous situation so they resorted to hiring a consultant who charged $10,000 per day.
The next day the consultant came to the plant, grabbed a cup of coffee and casually walked around for a few hours lightly inspecting the machines and looking at gauges. After about 3 hours, the consultant took a can of red spray paint and drew a big red circle around one of the machines. He then told the engineers, “Replace this machine and the reactor will return to normal,” and he proceeded to leave.
As he was leaving, the engineers couldn’t believe he was charging $10,000 for only 3 hours of work, and demanded he give them a detailed invoice. He took out a pad and pen, then wrote:
Red spray paint: $1.00
Knowing where to spray: $9,999.00
So anyways…HoR is back up and taking orders. The site itself didn’t go down, but none of the add-to-cart or checkout buttons parsed properly to the cgi scripts (a.k.a. you couldn’t buy anything this weekend).
On the plus side, the new server is much faster than the old one. I’m getting a roughly 4X faster response rate across the board:
Even simple things like logging into the FTP and server backend are much, much faster which is always appreciated.
Speaking of appreciated, Happy Mother’s Day!
I had to format the product list myself since my software doesn’t automatically do it, but Yahoo makes it simple, so anyone relatively familiar with Excel could figure it out.
For BodyMonkey.com I use Yahoo Stores, so all my products are automatically listed on the Yahoo Shopping network. That business is rarely updated yet still makes some orders solely from Yahoo Shopping Network listings.
What I like about the Yahoo Shopping Network is that when people click your product, they are usually ready to buy. However since HouseOfRave is not hosted on Yahoo Stores, I’m curious to see the actual buying habits.
Unlike Google’s Froogle, inclusion in the Yahoo Shopping network costs money. I added $50 to my pay-per-click account and am anxious to see the results in the coming month. If an investment of $50 brings in <$50 in profit I wouldn't have had before, then the campaign will be a success and I'll increase my Yahoo spending. If not, lesson learned.
I recently wrote about improving the shopping cart layout and flow for HouseOfRave, and it’s definitely much better than it used to be.
I added upon that and started making new checkout buttons that stay congruent with the main site. Previously all the buttons looked like this:
There was nothing really wrong with the buttons, but they didn’t fit the color scheme of the site very well. I went ahead and re-designed some of the buttons to appear like this:
The changed buttons were basically transposed from the “Add to cart” and “View Cart” buttons customers see on all the products.
MAIN CHECKOUT BUTTONS:
Now I realize the “Continue Shopping” and “Checkout” button have not been changed. I actually DID change them, but reverted them back. I’m trying to make the buttons congruent with the site, but that was the problem, the new buttons blended in too well with the site. I think the checkout button should stand out a little more, and I’m still trying to find/make a good one. Even Noah commented on this saying checkout buttons should stand out.
I do like how it looks at the moment. The “Remove” “Empty Cart” and “Recalculate” buttons are routine user operations, and the associated buttons look completely different from the main site functions (Continue Shopping and Checkout”).
An extra backend function that was added to the site courtesy of the recent Shopsite upgrade is I can track user store searches. So whenever people search for something, I see the results in the backend. This feature was just implemented this feature very recently so there’s not much data yet, but it’s another metric I can use to improve the overall ease of use for House Of Rave.
I’ve discussed 3D printing before and how it’s poised to be a huge field in the coming years…but it’s still got time.
Perfect opportunity for the early bird.
I wanted to do this project, in fact I already started it, but I’m also at a position in my life where I realize I’m not Superman and can’t handle 10 projects at a time….well, I can, but each one suffers from lack of attention, therefore stifling its growth. So this is another one of those good ideas that bites the dust on my end, but there’s no reason it can’t be done very successfully by someone else with the proper expertise and time.
I wanted to create a 3D printing review site that would also tie in a 3D printing service. The 3D print site would need regular news updates, a comparison page, a user registration system along with integrated forums. This would require the person to actually be pretty interested in 3D printing, seek out demos, post reviews and pictures/videos of actual products being made. Basically like a “TechCrunch of 3D printing” or an “Engadget of 3D printing.”
If you have no idea what the above paragraph means then this idea probably isn’t for you.
So the site would have several different things to offer:
- 3D printing news
- 3D printer reviews
- 3D printer videos, demos, example prints
- 3D print forum where users can discuss
- 3D print files hosting where users can download 3D CAD and .stl files of ready-to-print objects (maybe even make some iStockPhoto style buying system).
- 3D print services where a user can upload a 3D file and have it printed for a fee.
The technical requirements seem a little daunting at first, but it’s actually very simple with the help of content management system Joomla. I found some great Joomla Templates at RocketTheme.com and posted one on a domain I bought called 3DprintFactory.com. They already come integrated with forums, user-uploaded news features, user registration etc….so everything is basically included. You can even move the different modules around with great ease, which makes Joomla and these templates extremely easy to use.
The person doing this should try to emulate how other niche-interest sites like DevArticles.com, SitePoint.com and others got to be so big….integrating good information for a variety of skill levels and allowing for lots of community interaction (ie forums etc).
A good example of how NOT TO DO THIS is http://www.fabaloo.com/
They basically take small snippets of 3dprinting news from here and there and post it in a blog-like format. This is a decent idea, but it won’t really go anywhere because it provides little (if any) value. The goal here is to become an online authority on 3D Printing information, and eventually tie in a 3D printing service.
An example of hosting 3D print files is:
Money Would Come From….
So the site would have a multifaceted stream of income:
- Regular contextual ads. Google, Yahoo yadda yadda…
- Corporate sponsorships. If you make a great comparison page, have good reviews and in general do a great job on the news/information side of the website, it will eventually rank highly on search engines. Prove you have a captive audience of 3Dprinting enthusiasts, including purchasing agents for companies interested in the technology, and the sponsorship deals will sell.
- Text links. You can probably command a high price for text links if you do a good job with the site because it’s such a niche (and profitable) subject.
- Reviews. Company XYZ comes out with new product, and if you’re a strong authority on the subject, they request you do a review of their new product.
- 3D Print Service. If you’re the authority on 3D printing, you can direct traffic to your own “Pay Per Print” service, or setup an affiliate sharing program with someone who already does it. This could easily be more profitable than all of the above combined.
I think this is a GREAT idea, and now is the perfect time since this technology is just breaking out of its infancy!
Since I was in college I’ve always enjoyed starting small online businesses. Somewhere along the way I created palm r e p o r t . com
This is a website that allows users to upload images of their palms (either photographed or scanned) and have a professional palm reader look over them. The palm reader then sends you back an mp3 audio file with the reading.
What’s funny is I don’t particularly believe in palm reading…so how did this get started?
1.) Someone one day looked at my palm and jokingly said, “You have a small money line.”
2.) Trying to disprove them, I Googled it. I noticed there were many websites on palm lines, but none of them were very professional at all.
3.) I know a lot of people still get their palms read all the time, but I noticed the places attempting to read palms over the internet required ink prints of the palms to be physically sent to an address.
4.) DING! Idea!
A little extra research on Google, Overture and some other keyword counters revealed the demand for online palm reading was high, but very underserved. It makes sense: Most people who do palm reading aren’t the most computer saavy people. Look up programming websites and you’ll find tons of professionally done sites, but palm reading websites…the opposite.
So I went ahead and built an eCommerce site suited for Palm R e p o r t with the help of a Romanian developing team I frequently use, and Palm R e p o r t was ready. The best part of Palm R e p o r t is that it was designed to sell palm readings, so the backend is very helpful for it:
The system allows customers to upload their palm pictures directly to the website database for easy viewing. This eliminates the need for emailing pictures back & forth etc. The front page of Palm R e p o r t has a very helpful Flash banner which describes the whole process very quickly and easily:
Once the site was done, someone would have to perform the palm readings, so knowing absolutely nothing about palm reading I decided to educate myself. I bought 3 different books from Amazon.com for a total of $38 and learned that actual palm reading had some pseudo-science to it. There were measurements to take, angles to analyze and lines to count. This wasn’t “scientific” but “pseudo-science.” I could work with this, however the sheer volume of information to be learned was more than I anticipated, so it was obvious I’d have to find someone who already knows it.
This was the most fun part. I vaguely recalled seeing those “Palm Reading Psychic” places on the side of the road. I always used to think, “Ha! What a load of crap those are.” I was very right.
I noticed there was one of those psychic place by my apartment at the time. Deciding to do a little “research” I went and got my palm read. I swear it was exactly what I thought of a stereotypical pyschic readers office. Cheesy beaded curtains and an Eastern European looking lady with a shiny cloth around her head.
She sat me down, I explained I wanted the lines on my palm read, she said it would cost $20. The readings starts, and I kid you not this is how it went:
- Psychic puts a fake, plastic crystal in my palm (which effectively blocks all the palm lines from sight). She then holds my palm like she’s receiving signals out of it.
- She closes her eyes, takes a deep breath and waits…..
- All of a sudden her eyes open REALLY wide and she starts speaking in a loud voice like she’s possessed. Says, “You have lots of concerrrrnnnsss…..”
- I struggle not to fall over and laugh.
- She says, “You go out of the way for your friends, but when you need help, they are nowhere to be found….”
- She says, “You’ve had a financial worry in the last year…..”
- She says, “You’ve had an argument with a family member in the last two years….”
- Says some other generic BS and I leave.
I knew this would be somewhat of a rip off…but seriously, THIS MUCH? I thought maybe it was a fluke, so I went to three more places. I was disappointed to find each place pulled almost the exact same routine. I would even specifically say I wanted ONLY my palms read, and they would proceed with the same routine. One lady told me I had a curse and that she could remove it….for $200. How convenient. The palm readers all looked the same too: Eastern European, gypsy-looking women.
So anyways, I spent some time posting Craigslist ads looking for palm readers with little luck, but then I randomly came across a list of “Hand Analysts” and noticed one right here in Austin. I met up with her, immediately noticed she was much more professional than the side-of-the-road gypsies, she liked the idea of Palm R e p o r t and we were in business. It was a relatively easy sell since I already had Palm R e p o r t .com up and fully running.
This lady did palm readings based on methods outlined by Aristotle and others. What I liked was that she didn’t tell the “future” like the other palm readers. Her approach was more psychologist-like than palm reader. This was good, because I didn’t want to be involved with someone who was blatantly misleading people like the side-of-the-road people.
I set the palm reader up with an open-source recording program on her computer called Audacity and a headset microphone for hands-free recording of the readings. This way she could look at the hands on her computer and record the reading. I would then upload the hands & reading to a page for the customer once the reading was done.
On a live version, the customer would be able to download the .mp3 file.
So Palm R e p o r t was launched and started making orders, but two years later I really have no interest in running this business any longer. I haven’t updated it in who-knows-when, but the site has garnered a lot of great SEO traffic over that time. This is what keeps orders coming in.
The site gets between 100 and 200 unique visits per day, and hundreds of quality search results landing at the site per month. You can see the stats here:
(UPDATE: stats removed)
You can view the auction here. (UPDATE: auction removed)
With the sale you don’t get the palm readers personality (Kianna Smith), so it must be re-branded. So the new owner will get the custom built system and corresponding WordPress blog template for the Buy It Now price of $4,000.
I always thought this business could blow up really big because of the demand for the service and the lack of competition, unfortunately this was never a passionate thing for me. It was unfortunate because once properly established, this business can rake in orders day after day with relatively little work compared to other sites. In an effort to start concentrating on a core group of things, I must let Palm R e p o r t go. However if it doesn’t sell for an acceptable price, I’ll still keep it since it still makes money.
No one has a done a good job at branding themselves as an expert palm reader online, so this is a great opportunity. Much like Erin Pavlina has created a brand for herself doing intuitive readings….I’m not really sure what they entail, but they cost $195 for 30 minutes and she’s book up for weeks at a time.
Anyhow, it was interesting to see this business start then grow. Now it’ll be interesting to see how it evolves to a new owner!
Oggz are egg-shaped lights that slowly change color. That’s it.
This surprisingly simple invention is now selling in Wal-Mart which means its been proven at every level of retail up to the highest.
Since I own an online rave store that focuses on light-up stuff, I was one of the early people to start carrying this obscure product several years ago. It was manufactured by Can You Imagine, and the single Oggz unit retailed at $19.99 and the 3-Pack retailed at $49.99. Till this day the price is pretty much the same. The kicker is now you can buy the triple pack Wal-Mart for $28.00 (a full $22.00 cheaper than standard retail price). Wal-Mart’s retail price is even lower than my wholesale price!! Definitely shows the massive purchasing power Wal-Mart has!
I don’t usually see most of the products I sell online since everything is dropshipped, so I was always flabbergasted by the volume at which these Oggz sold at. This product was definitely a large staple for HouseOfRave and most definitely a large income earner. Another plus was people never complained about the product breaking, malfunctioning or not working. Customers loved them. I loved them too because they sold well, had a high margin and no one ever returned them.
I was in college when Oggz came out, so the extra income from this single product was greatly appreciated.
I eventually ordered some Oggz to see why so many people of different backgrounds kept ordering this product, and then I finally saw why people like them….they’re just neat. They slowly morph into different colors as you watch them. They don’t JUMP to different colors…they gently move through the spectrum of light creating a mesmerizing or soothing effect. They’re quite a nice nightlight, play toy or decoration. Lots of spa’s and masseuses would order Oggz to create a nice ambiance around their offices. They have a sleek looking and compact charging base, and when you remove them from the base they stay lit for 24 hours or more without charging.
I ended up liking the product a lot, but noticed the standard manufacturer photos of the Oggz didn’t really fully describe the product effect:
I also did my very first product video with a triple pack of Oggz and a bottle of flammable Everclear. You can check it out, but be prepared to laugh!
Keep in mind it was my first product video. I’m not sure what I was thinking with the Journey song in the background or the overly dramatic intro with the fire, but it was fun at the time, and you have to start somewhere! I’m still too embarrassed to watch it the whole way through! I ended up taking this product video down from the Oggz description page because of the extremely high cheesy-ness level, but it still resides on YouTube.
The Oggz seem relatively easy to manufacture. The Ogg itself is simply a white, slightly-bendable poly-urethane case shaped like an egg:
Inside the casing resides a simple yet sturdy mechanism with an on/off swith and three led lights that sequentially change color to create a full-spectrum light show that blends together:
This is now a pretty common effect, you can see many products on HouseOfRave that use this same lighting effect.
Anyways, I’ve always been curious how this obscure and relatively useless product went from mom & pop sales to the big time. Reading a lot about product licensing from Stephen Key also fueled my curiosity of how the Oggz got started.
I decided to call the always helpful folks at Can You Imagine, Inc. to get the full story:
- An inventor in Europe first made them, but they were a very, very expensive item.
- The inventor licensed the Oggz to Can You Imagine.
- Can You Imagine re-engineered them to make them cheaper and easier to manufacture.
- Started production of Oggz and sold to small distributors to test the product.
- Oggz sold well and started selling to larger distributors.
- Oggz sold really well and eventually got into Wal-Mart.
So whenever a set of Oggz is sold, the original inventor gets a cut of the sale. Considering these things sell so well PLUS they’re sold in the largest store on the planet…I’d say this guy is sitting pretty! Cool thing is the original inventor hardly does a thing now. Shows the possible money making power of licensing a product!
While I’ll never make as much as the inventor off these, the Oggz still made enough money to help me pay my tuition!
So after finally getting HouseOfRave.com off the ground, this is how it works:
I will show what happens from the time I get an order, till the customer receives their order. Everything is done in 5 steps. I can accept, process, account for and send off 2 orders in around 2 minutes with this system. 10 orders will take me about 10 minutes with this system:
1.) Check, View and Review Orders.
I login to the backend of my Shopsite software to see how many new orders I have waiting. I click to view all the orders and do a quick skim of the order information. I am looking for any subtle signs of fraud at this point. After 5 years, I’ve become pretty good.
I can view individual orders or all the orders at the same time:
2.) Charge Orders.
This is the most inefficient step, as I choose to process cards manually to become more familiar with the customer names, locations and spot fraud. I login to my merchant account digital gateway and copy/paste from Shopsite the needed customer information. This step goes quicker than imagined because I use my tablet PC pen. During busy times I turn on automatic charging, so this step sometimes takes only one click to charge all the orders.
Here I find out if each order is legit. If the order is declined, I make a note of it and move on. If the order was paid for using PayPal I already know it was charged. If the order looks suspicious or comes back with negative address verification, I will often call the person on the spot to verify the order.
3.) Enter Into Accounting System.
This step is very quick and allows me to see my estimated current profit, my expenses, what I owe etc.. I’ve used some pre-made accounting modules for Shopsite in the past, but I like my Excel sheet better. Over the years I have honed it to help predict my profit at the end of each month. I don’t know my exact profit until I get the monthly bill from my supplier, but this Excel sheet gets me pretty damn close.
4.) Create with Word & Send.
This step is the way THIS particular business of mine works. Once an order is ready to go, I copy/paste the information into a Word document and send it via email to my supplier. From there, they print it as an invoice and send the order. This is the way my particular supplier chooses to do business, others may have different methods.
My supplier will send me a tracking number once the order is sent. These go into my tracking system where customers can check the status of their order. The tracking module also sends customers their tracking numbers via email automatically.
How I make Money:
I pay wholesale price for the products I send out from my supplier. They send me a bill for the products & shipping each month. I charge retail price on the website and bring in all the money myself. At the end of the month, I cut a check to my supplier and the difference is my income after product expenses. I then subtract my server costs, merchant account costs, PayPal costs and phone bill costs to get my total profit amount.
Hopefully this mini-series helps someone further understand the inner workings of a small drop shipping business!
The House Of Rave .com Story
Part 1: The Beginning
Part 2: Finding Something to Sell
Part 3: Finding A Drop Shipper
Part 4: Getting A Site Setup
Part 5: Pros and Cons of Drop Shipping
Part 6: How It All Works