218: Mid Year Report: How My Online Store Performed In The First Half Of 2018

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218: The 2018 Mid Year Report For My Ecommerce Store

My wife just closed the mid year books so today I’m going to breakdown the numbers for the first half of 2018 for BumblebeeLinens.com.

I’m going to talk about our how online store performed in the first half of 2018 and why 2018 has been one of the toughest years for us so far.

I’ll also go over what’s been working well for us and how we’ve managed to maintain growth despite the adversity. It’s going to be a short but sweet episode. Enjoy!

What You’ll Learn

  • How a simple mistake has made it an extremely challenging year
  • The pros/cons of using an open source cart vs a fully hosted one
  • What’s worked so far this year and what has not
  • The one marketing platform that has been a home run

Other Resources And Books

Sponsors

Klaviyo.com – Klaviyo is the email marketing platform that I personally use for my ecommerce store. Created specifically for ecommerce, it is the best email marketing provider that I’ve used to date. Click here and try Klaviyo for FREE.
Klaviyo

Privy.com – Privy is my tool of choice when it comes to gathering email subscribers for my ecommerce store. They offer easy to use email capture, exit intent, and website targeting tools that turn more visitors into email subscribers and buyers. With both free and paid versions, Privy fits into any budget. Click here and get 15% OFF towards your account.
Privy

Pickfu.com – Pickfu is a service that I use to get instant feedback on my Amazon listings. By running a quick poll on your images, titles and bullet points, you can quickly optimize your Amazon listings for maximum conversions. Click here and get 50% OFF towards your first poll.

SellersSummit.com – The ultimate ecommerce learning conference! Unlike other events that focus on inspirational stories and high level BS, the Sellers Summit is a curriculum based conference where you will leave with practical and actionable strategies specifically for an ecommerce business. Click here and get your ticket now before it sells out.
Sellers Summit

Transcript

Steve: You’re listening to the My Wife Quit Her Job Podcast, the place where bring on successful bootstrapped business owners and dig deep into what strategies they use to grow their businesses. Now today, it’s just me on the podcast. And I’m going to talk about how our online store Bumblebee Linens performed in the first half of 2018, and why 2018 has been one of the toughest years for us so far. I’ll go over what’s been working well for us, and how we’ve managed to maintain growth despite the adversity, it’s going to be a short but sweet episode.

But before we begin, I want to give a quick shout out to Privy who is a sponsor of the show. Privy is the tool that I use to build my email list for both my blog and my online store. Now, what does Privy do? Well, Privy is an email list growth platform and they manage all of my email capture forms. And in fact I use Privy hand in hand with my email marketing provider.

There are a bunch of companies out there that will manage your email capture forms, but I like Privy because they specialize in e-commerce. Right now I’m using Privy to display a cool wheel of fortune pop-up. Basically a user gives their email for a chance to win valuable prizes in our store. And customers love the gamification aspect of this, and when I implemented this form email sign ups increased by 131%.

So, bottom line, Privy allows me to turn visitors into email subscribers, which I then feed to my email provider to close the sale. So, head on over to Privy.com/Steve, and try it for free. And if you decide you need some of the more advanced features, use coupon code MWQHJ For 15% off. Once again that’s P-R-I-V-Y.com/Steve.

I also want to give a shout out to Klaviyo who is also a sponsor of the show. Always blessed to have Klaviyo as a sponsor because they are my main email marketing platform that I personally use for my e-commerce store, and I depend on them for over 30% of my revenues. Klaviyo is the only email platform out there that is specifically built for ecommerce stores and here is why it’s so powerful.

Klaviyo can track every single customer who has shopped in your store and exactly what they bought. So let’s say I want to send an email to everyone who purchased a red handkerchief in the last week, easy. Let’s say I want to set up a special auto-responder sequence to my customers depending on what they bought, piece of cake, and there is full revenue tracking on every single email. Klaviyo is the most powerful email platform that I’ve ever used and you could try them for free at mywifequitherjob.com/K-L-A-V-I-Y-O. Once again that’s mywifequitherjob.com/K-L-A-V-I-Y-O, now on to the show.

Intro: Welcome to the My Wife Quit Her Job Podcast. We will teach you how to create a business that suits your lifestyle, so you can spend more time with your family and focus on doing the things that you love. Here is your host, Steve Chou.

Steve: Welcome to the My Wife Quit Her Job Podcast. My wife just closed the midyear books. So, today what I’m going to do is I’m going to break down the numbers this past year for my e-commerce store BumblebeeLinens.com from the period of January 1st to July 1st of 2018. Now so far in 2018, it’s been a crazy challenging year. And in fact, I would say that it’s been one of the hardest years in recent memory, but not because of demand. Demand for Bumblebee Linens and our products has been great. But the reason why it’s been challenging is because we’ve hit some major snafus in the first part of the year that have greatly hindered our growth.

In any case, let’s just kind of start with the numbers first, and then I’ll go into more detail. So, so far, for the first half of the year, year over year profit and revenue is up only 3%. Traffic is up 6%, margins are relatively flat. All in all, it’s safe to say that things were mostly flat from the prior year. And to be quite honest with you, I was really ecstatic that we were even up at all given what happened in the first two quarters of the year. Now, why would I just be happy just to have a flat business that hasn’t grown from the prior year? Well, mainly, it’s because for the first half a year, we were out of inventory for most of our best selling products, out of inventory. I mean, you can’t make sales without inventory, right.

So, here’s what happened. First off, whenever we place an order for linens from our vendors, there’s actually a good three to four month lead time. Now that lead time might seem pretty long to you, but it’s something that we have to deal with because a lot of our stuff is handmade. There are literally women in rural China who are hand making our products. And what our vendor does is he actually drives around to all these little rural communities, goes to these houses for these ladies who make our products, pick them up, and then ship them to us. And so as a result for that, it takes forever to get it made and it takes forever to get some of our products.

And for the first half of the year, we were actually expecting a major shipment to arrive in the beginning of the year. And as usual, we paid for an inspection, which incidentally, even if you’ve been working with a vendor for a very long time, you should always get inspection no matter what. And what happened was, this time when we got the inspection, the samples that we got back from the inspection had a slight tinge of blue instead of pure white. Now for our store Bumblebee Linens, in case you guys aren’t familiar, we primarily sell white products. And the samples that were getting back had a slight off white aspect to it that was a tinge of blue.

And normally it wouldn’t be a big deal if it was slightly blue. Like if you looked at this thing by itself, it actually looked pure white. But the problem is we often sell our products and we cross sell our products if they match with other ones. And this particular white which had a tinge of blue didn’t match the other linens that we sell, and this would have been a huge problem. So for example, we’ll sell dinner napkins of a certain color, and oftentimes that same vendor will buy cocktail napkins to match those dinner napkins. And if the colors don’t match, that’s simply not going to work. And as a result, we couldn’t really accept that order.

Now, here’s the thing about all this. We’ve actually used this vendor for over five years, I would say even longer than that, maybe six or seven years and they’ve been rock solid, same quality product every time, same color product every single time. But this one time, for some reason in the first half of 2018, the linen color was completely off. And even though we caught the problem before this whole big shipment was shipped, they actually informed us that they could not dye the fabric to the usual white color without degrading the fabric. And as a result, they had to start all over which essentially meant another four months that we had to wait for product.

We actually ended up not having to pay for the shipment because they could sell that exact same inventory to someone else. But heck, we were expecting this order to come in January, and now we had to wait another four months. And what’s even worse is this started a huge cascade. Our number two and number three vendors, they all of a sudden started shipping us product with the exact same blue color tinge in the fabric. So, it wasn’t just our best vendor. It was our number two and number three vendors as well, and this couldn’t just be a coincidence. And so we asked, what was up with this? We asked all three vendors what was going on, why is there this tinge of blue in our white linens that we’ve been buying from you guys for years.

And it turns out that a lot of Chinese linen manufacturers decided to switch over to this color, because customers in Europe and Japan prefer a more bluish white. And as a result, all the factories started following suit and dyeing their white fabric this way. So, bottom line, we basically went through the first half of the year without a whole lot of inventory. And as a result, our Amazon listings were sold out, we didn’t have a whole lot of product to blind our event planners, and it ended up just being one huge mess. Hopefully, some of our event planners didn’t find other vendors to supply their linens for them in the meantime. And hopefully we’ll be able to get their business back once we get our inventory situation sorted out.

Anyways, as of right now, the recording of this podcast, we just received a partial shipment last week, but the rest isn’t going to come until the beginning of August. And hopefully we can make up for this shortcoming during the holiday season. The second major low light is also something that was completely unfortunate that occurred, but it had to do with technical dent. Now, it’s been a very long time since I upgraded Bumblebee Linens, the software and the server. And what happened was sometime in January, something auto updated on my server, which caused our website to start behaving erratically.

And normally, I have auto updates turned off on my server. But I must have missed something because something auto updated in January, which ended up breaking a few things. And so what ended up happening was that on random orders — so we sell personalized items where people can actually write a message of their choice on our linens. And on random orders, every now and then the personalization would get completely lost. So let’s say someone ordered 10 hankies with personal messages, every now and then all the messages for all the hankies would be completely lost in our database. And as a result, when this happened, we’d have to reach out to the customer and ask them for their personalization all over again.

And it was a huge pain in the butt. And my wife was telling me that this was happening multiple times per week. And as a result, during this duration, I ended up dialing down the ads so we wouldn’t sell as many of these personalized items. And pretty much I dropped everything that I was working on to try to fix this issue when it started happening. And it turns out that the problem had to do with our database software version changing automatically. So I spent a lot of time trying to fix this stuff. And while I was under the hood already, I decided to upgrade everything to the latest and greatest, which actually involved a pretty major code rewrite of our software.

Remember, I’m on an open source platform where I control the code. And just to give you guys an example, we had to migrate the code from PHP 5.3 all the way to the lacing grace, which is PHP seven, and PHP 5.3, which is what we were on was no longer supported. And going from that one language version to the next language version, they decided to remove certain functions in the language and I had to do the conversion with my code. And that was a major pain in the butt to say the least. I also ended up upgrading the operating system on my server to the latest and greatest Linux because my old version was getting deprecated as well. I also ended up upgrading my SQL database to the latest. I updated a bunch of plug-ins.

All in all, the process was a major pain in the butt and it took me about four days of uninterrupted work. And by uninterrupted for me that means I basically locked myself in a room for eight hours a day only leaving for food and bathroom breaks until this whole migration was done. It was an extended project. I actually, I’m kind of sadistic, I actually kind of enjoyed the upgrade, but it was a pain in the butt mainly because I didn’t know what I was doing. And I basically had to browse a bunch of forums and facts in order to just kind of get through the migration. I learned a hell of a lot, and I actually don’t regret doing the upgrade. I rather enjoyed it.

But it was a little bit stressful because we were running the store at the same time, and things were broken in the process. Anyways, this whole snafu with the migration, it actually prompted me to write a blog post on the merits of going with an open source platform, versus a fully hosted solution like Shopify, or BigCommerce, where they basically do all the upgrades and the work for you. Anyways, here’s what I had to say in that article. After all, upgrading my shopping cart to the latest and greatest was pretty hellish. Not only did I have to make the appropriate fixes, but I actually had to test them as well after I made the changes.

So, when it comes to choosing between an open source cart and a fully hosted cart, if any of the stuff that I just kind of described terrifies you, you should probably just go with a fully hosted platform like Shopify, or BigCommerce, and just be done with it. But here’s the thing, I haven’t actually had to do a major update of my shopping cart or my server in almost 10 years, I would say. And I’ve probably saved nearly six figures of money versus a fully hosted platform, if you take into account transaction fees, plug-ins, and all the extra expenses of going with a fully hosted platform.

The other thing I also want to say is that under normal circumstances, upgrading a free open source shopping cart should pretty much usually be seamless. And my situation with my cart was kind of unique in that my shopping cart pretty much stopped getting supported several years ago. There haven’t been that many updates and I’ve pretty much been on my own in maintaining my own shopping cart for quite some time now. Now, on the other hand, if you choose a well supported open source shopping cart, this will not happen to you. And I’ll just give you a quick example of this.

I use one WordPress on my blog. And I’ve used them for the last nine years, and I haven’t had to do much work at all in maintaining the core. And why is this? The main reason is because WordPress, even though it’s free and open source, it is well maintained, and extremely seamless to upgrade. Oftentimes upgrading WordPress just involves pushing a button. And because there’s a lot of third party developer support, even if you do run into some hiccups, you can usually find someone who can help you with your problem and your upgrade.

That wasn’t the case with my current shopping cart, because it’s not really supported well anymore. There aren’t a whole lot of people on it anymore, and they’re not a whole lot of people developing software supporting anymore. And so that’s why I’ve had to do this maintenance on my own. And I do want to actually emphasize, like if you guys are trying to decide between using the open source shopping cart really versus a fully hosted one, the exact same thing can actually happen to you with a fully hosted platform as well.

So for example, if Shopify or BigCommerce would ever run out of money, or become less popular, you could be stuck on a dead end platform as well, even though you’re paying them to maintain it for you. And in fact, this has already happened with a bunch of fully hosted carts, which I don’t really want to mention by name. But let’s just say that I used to be an affiliate for one of these platforms. But I stopped promoting them because they basically let their cart go to crap.

Anyways, the moral of the story here is that you want to go with a cart that has the features that you need, and the one that’s the most popular and well supported by third party developers. And of course, it’s impossible to predict the future. At the time, when I chose my shopping cart, it was actually the most popular one, and it was the one that a whole bunch of people were using. But over the years, what happens is competitors pop up, and there’s a new, most popular shopping cart over the year.

So it’s impossible to predict the future. But I would say that if you had the technical chops, and you want full control over your software, go open source. Otherwise stick with a fully was a platform like Shopify, or BigCommerce. Now, looking back, I actually don’t regret my decision at all. And the hope at least is that I won’t have to perform major surgery on my shopping cart or my server for at least another decade based on my track record.

Steve: I just want to take a moment to thank Pickfu for being a sponsor of the show. If you currently sell on Amazon like I do, then you know how crucial the quality of your Amazon listing is to the success of your e-commerce business. So for example, I’ve run experiments on my Amazon listings, well simply replacing the main image with a different photo resulted in a 2x increase in conversions. But how do you choose the best and highest converting photos for your listings? How do you know that you’re using the most profitable images for your products? And how do you know that your bullet points are convincing. This is where Pickfu comes in.

Pickfu allows you to solicit real human feedback about your Amazon listings in 10 minutes or less. And you can target the exact demographic of your end customer. So for example, let’s say you sell napkins and you have two main product images that you want to test. You would simply go to Pickfu, list the images, target female Amazon Prime members over the age of 35 and hit go. Within 10 minutes you’ll get feedback of which image people are more likely to buy along with specific feedback on why they made their decision.

In fact, I’ve used Pickfu to almost double the conversion rate on several of my Amazon listings by testing my images, bullet points, and product titles. And what I like about Pickfu is that you get results quickly unlike traditional split testing, and you can use this to test book covers, landing pages, basically anything. Not only that, but it’s super cheap to run a poll and right now you can get 50% off your first poll by going to Pickfu.com/Steve, once again, that’s P-I-C-K-F-U.com/Steve. Now back to the show.

Now the final thing, the final bad thing I should say that hit us is that we had two employees out of four leave our company this year. Two out of four, that’s 50%. And we’re not used to having turnover at Bumblebee Linens. These employees have been with us for a very long time. One employee was with us for five years and the other was here with us for two. And quite frankly, we treat our employees very well. And by well, just to give an example, we actually have given two cars away to our employees just kind of as thank yous.

And the upshot is they left for other better opportunities, or because they had other circumstances where they couldn’t work for us any longer. And we were really sad to see them leave. And we, over the years, we train them up, and so they actually knew our business inside and out. Anyways, because of these departures, I’ve had to actually personally go in and pack linens as well while recruiting new employees. And as a result of this during this period, I had to actually purposely dial down our ads, just so that we wouldn’t get overwhelmed with orders that we couldn’t fulfill. Remember, we run our own warehouse, and we do our own fulfillment, primarily because we sell personalized products.

And the entire hiring process has been extremely tough. And I don’t want to go off on a rant here, but I will say a couple of things. Hiring is tough. As part of our application process, we have everyone who applies, find our website, and then send us an email with a special subject line kind of as a test. And you would not believe how many people simply can’t follow directions, and it’s really frustrating. And the other thing that’s been hard about hiring for kind of warehouse related employees is that overall I think the talent pool has been greatly diminished by services like Uber, Lift, DoorDash, and other on demand delivery services.

Having a nine to five warehouse job just doesn’t seem as attractive when you can drive for Uber and Lift and work basically whenever you feel like it. So, this whole on demand sort of employment has made nine to five warehouse jobs a little bit less than attractive, at least in the Bay Area. In any case, I’ll keep you guys posted on the entire hiring process. We are not done recruiting just yet.

All right enough with the bad stuff. As you can probably tell, with all the bad luck in the first part of the year, we were actually lucky to have any growth at all. So, how do we manage to eke out growth without any inventory? Now, if you recall a prior episode that I did on the podcast with my wife, my wife and I actually purposely limit our growth so that we don’t let our business rule our lives. After all, we started our business to spend more time with the kiddos. And as a result, we have a couple of levers that we can pull to increase growth when necessary. But our goal is to not get stressed out about our business.

So we don’t want to grow too fast. And we’ve been controlling growth over the years. So for example, to account for the lack of inventory of certain linen products, we simply upped the ad spend for the products that we did have. And as a result, some of our shortcomings were offset by other the products that we don’t normally push as hard with Facebook ads. The other thing that we started doing is we started sending out more email campaigns to kind of offset the losses as well promoting the products that we actually did have in stock.

And here is one thing that I will say about email. Most people don’t send enough of it. And it works every single time. Every time we send out an email, we make money. Now, most people that I talk to rarely email their list because they’re afraid of burning out their list or pissing off their customers. And for those people who do this, they’re leaving money on the table. Your subscribers are surprisingly resilient, and you should be able to email them more than you think. And if you’re only sending emails once per month, or every other week, I’d say the minimum frequency should be once per week. And then when you decide to run a sale, you really need to up the sends.

So in our case, for any given sale, we usually email our folks six times or more to talk about the promotion and every single email makes money and our spam rate is 0%. It’s under like 0.01%. Anyway, email frequency is just another way that we control sales. So when we need some sales, we’ll send out some more emails, when we want to control sales, we send out less emails. But outside of dialing up and down the ads and sending more emails, the one major win for the first half of the year has been Facebook Messenger marketing. Right now our Facebook Messenger open rates are 6X greater than that of email. And the click through rates are over 10X better than email.

And I wrote a post about my Messenger exploits a while back, which I’ll link to in the show notes if you guys want to check it out. But my numbers are actually continuing to improve. And I would say at this point that Facebook Messenger is the future of marketing. As email gets more and more saturated, Facebook Messenger marketing has been a breath of fresh air, and not a whole lot of people are using it right now. So this is the right time to get in. And in fact, I’ve moved a lot of my Facebook ads and strategies over to Messenger, and I might do another podcast episode just to talk about it.

But overall, the combination of increased email sends, increased Facebook ad spend, and Facebook Messenger marketing have allowed us to eke some sort of growth for the first half of the year, despite missing some of our best selling products, despite all the server snafus, and despite the fact that a couple of our employees left. And as of right now, we should have inventory soon in the beginning of August, and hope to make up for the poor first half of the year, and putting the pedal down for the second half of the year. Anyway, I hope you guys enjoyed this episode.

I just want to give you all a quick update on Bumblebee Linens. And one thing I actually did want to end this episode with, our key lessons that I learned for the first half of the year. So, lesson number one, even if you’ve worked with a vendor for many, many years with a rock solid track record, do not take product quality for granted. Things can change at anytime; always get an inspection no matter what.

So, one major mistake that we made is that we opted to only get an inspection at the end of the production run. And this entire inventory fiasco could have been prevented much earlier on had we done an inspection at the start of production, which is actually something that we do for brand new vendors. But because we never had any problems with this vendor for five plus years, we decided to skip the start of production inspection and we paid the price.

Lesson number two, choose your shopping cart wisely, and keep backups of everything. Back in 2007 when we first got started, there was no Shopify and there was no BigCommerce and open source shopping carts were all the rage. And I think at the time the best fully hosted solution was Yahoo Merchant Solutions, and there were a whole bunch of people that went on Yahoo. And well, guess what, today they are a non factor. And I still know a couple of people who are still on Yahoo Merchant Solutions, because it’s so painful to switch.

Now, when it comes to carts, there are no guarantees at all. And arguably, I think you’re actually in a worse situation if a fully hosted shopping cart decides to go out of business or stop maintaining their cart than it is to have your own open source cart go unsupported. But nonetheless, when in doubt, go with the shopping cart that has the most third party developer support and the one that is the most popular, because that way you always have someone that you can call for help or pay for help whenever you have problems with your tech.

Now, my situation with my shopping cart is definitely not ideal for most of you out there listening. But I actually love having full control over my source code, which allows me to program in whatever feature I want. And who knows, I may migrate to another open source shopping cart someday, but for now, I bought myself at least another five years I would say with the last upgrade that I just performed.

Lesson number three, treat your employees like family. One thing that I forgot to mention is that even though our employees left, they gave us plenty of notice. And in fact, they even volunteered to try to stay as long as possible to help ease the transition to our new employees. And one thing that I’ve just learned is that if you treat your employees right, they will take care of you as well. Anyway, that’s it for today. For more information about this episode, go to mywifequitherjob.com/episode218.

And once again I want to thank Klaviyo for sponsoring this episode. Klaviyo is my email marketing platform of choice for ecommerce merchants, and you can easily put together automated flows like an abandoned cart sequence, a post purchase flow, a win back campaign, basically all these sequences that will make you money on auto pilot. So head on over to mywifequitherjob.com/K-L-A-V-I-Y-O, once again that’s mywifequitherjob.com/K-L-A-V-I-Y-O.

I also want to thank Privy for sponsoring this episode. Privy is the email capture provider that I personally use to turn visitors into email subscribers. They offer email capture, exit intent, and site targeting tools to make it super simple as well. And I like them because they’re so powerful and you can basically trigger custom pop ups for any primer that is tied to your e-commerce store. If you want to give it a try, it is free. So head on over to Privy.com/Steve, once again that’s P-R-I-V-Y.com/Steve.

And I talk about how I use these tools on my blog, and if you’re interested in starting your own ecommerce store, head on over to mywifequitherjob.com and sign up for my free six-day mini course. Just type in your email, and I’ll send you the course right away, thanks for listening.

Outro: Thanks for listening to the My Wife Quit Her Job Podcast, where we are giving the courage people need to start their own online business. For more information, visit Steve’s blog at www.mywifequitherjob.com.

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