Corruption in Small Business

Reading Samuel Pepys, who kept a diary in the 1600s London, I was struck by his admission he took money from people with whom he did official government business.  His claim was he only took money from people with whom he decided to do business anyway, so it was not corruption.

Indeed.

Now here comes an article on getting media attention for your trade show booth:

 I once had a client offer reporters free car service from their hotels at CES and held interviews during the car ride. This was a great way to not only ensure an interview, but a memorable and unique way to building relationships with reporters.

Now note that.  Reporters are usually paid very poorly now, and have expense accounts that would disgrace a hobo.    Anything nice, even like a hired car ride from the Motel 666 to the show in the morning is a big deal to the reporter, but you were going that way anyway, right?

Except you would not have gone by hired car, out of your way, with coffee for two.

I read a story by a new government manager who had received a Holiday Ham from a business being regulated by his department.  He instantly sent it back with a terse note saying he could not have it.  Next year it happened again, and he served it at the office holiday party, why not?  The following year he took it home.  The next year when the ham did not arrive, the manager had his assistant call the business to ask where his ham was.

Back in the early 1980s we gave no charge our products to prop companies who created sets for movies and TV so our products showed up in them,  Not much for sales, but for bragging rights.

The fellow who built Patagonia clothing company prided himself on doing so with a zero advertising budget.  But what he did do, as I recall reading long ago, was anytime his products showed up on the people in the cover action photos of sports magazines, he would send the photographer a $500 bill in a note thanking the photographer.  (Yes, we used to have $1000 bills too).  Well, word gets around among photographers, and soon everyone was featuring Patagonia clothes in the cover shots they were creating.  Think of the cost of a photo shoot (tens of thousands at least) and the cost of advertising in major magazines (hundreds of thousands) and then reflect on what Yvon Chouinard got for $500.

Now this is not longer possible, since it is all pay to play now.  If you see products mentioned in copy or on covers, someone contractually paid to have in there.  A photographer taking $500 to place a product there would be crowding out the $50,000 the publisher would be earning.  Same with movies and TV.

The entire BigPharma is based on doctors finding their family vacations upgraded to first class and penthouse and all activities gratis mediated by sexy coeds recently graduated from college selling the products.  They hire doctors to give risible speeches at conferences for amazing fees. With 50% of drugs ineffective, and overprescription, the drug companies get their corruption's worth.

Or is it corruption?

I find it all distasteful, but then that means I experience it at the level of aesthetics, which is morally neutral.  I also have emotional reservations, which means it is tied up with my maturity level.  Maybe I am merely immature, and need to channel some Bill Clinton.

yeccchhh....

So.  When you are preparing for a trade show, take the advice in the article to which I linked, to key your 'story" in to the show theme, and write six different articles saying the same thing and put a printout in an envelope with a data stick with the article in RTF so the writer can quickly convert it to his own, and put his name on the article to turn in it to his employer as his work.  But wait, there is more.  Clip a $50 on the article in the envelope, with a note saying there is another if and when the article is published and you get a copy.

Pass those out to anyone who comes into the booth and shows you reporter credentials.  For $300 you get massive coverage.

Is that corruption?

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Online Food and Beverage Export Start-up Seminar

If you ever considered exporting food as a small business, there is a tool available that I am anxious about revealing.  (anx·ious  adj  experiencing worry, unease, or nervousness, typically about an imminent event or something with an uncertain outcome.)

The problem is it is so powerful it leads people away from success, and attracts the wrong kind of players.  The tool is a grant up to $300,000 per year for five years to promote USA food products overseas.   i teach the details in my online seminars.

In essence it is USA public policy to promote USA food exports by having Uncle Sam (the USA taxpayers) refund half of the advertising dollars spent by importers overseas to promote USA food and beverages in their market.  That’s right, you can offer to mach dollar ofr dollar for your overseas customers advertising, or put another way, pay for half, up to $300,000 per year.

You know the USA food policy is “get big or get out” but by law the program cannot discriminate, so it is open to you, the small and start-up.

Now, $300,000 per year for five years is “free money”, $1.5 million towards advertising, per market eg, Japan is one market, Hong Kong another, China another...)  That’s a lot of money, so you can see this is designed for big business, but as I said, small business has access as well.  Theoretically, you could be doing 100 markets at once, for $150 million in refunds.  Mind boggling.

Let me be frank about the problem: at the small business level such talk of “free money” will attract a criminal element that will defraud the program, and then you may end up in jail.  As I said, I get anxious mentioning this tool.  

I introduce this one small topic in the context of my entire online course as "The Sirens."  Just as Odysseus had to plug his ears to escape the Siren call to perdition, so must we at the small biz level, until we are strong enough to make it work.

In essence, we do not offer this opportunity until a buyer has proven a market, and proven advertising will grow the market.

Many newbies to small business international trade are delusional, and easy marks for criminals.   I can show people how to grow successful businesses, and I can show them how to avoid being scammed, but I cannot stop anyone from ignoring my advice.

There is much more to the program, as I detail in my seminars.  It is not necessary to engage in the program to be successful in small business international trade of food and beverages, but it is there if desired in your circumstances.

It is one of many tools, tactics and attitude I teach in my highly rated online seminar.  I have another live online session coming up October 11, and space is limited, and you can sign up now to be billed later.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Rules Reveal Weaknesses

Prof. Joseph Salerno is an Austrian scholar who made a donation to his school's athletic program and received a brochure on what he could not longer do, according to the NCAA.  His point is o lay out how the NCAA is quite marxist in structure, which is entertaining, to see communism actually working.

But I was struck about the rules that now apply to him.  They say our rules reveal our weakness.  And what is forbidden below is precisely what happens in such fields a big Pharm when they want to influence say doctors:

To my surprise, the brochure informed me that I am a “representative of athletics interest” for the university. One comes by such a clumsy designation by making a donation to any of BC’s athletic programs, holding membership in any donor, booster, or alumni group, employing or helping to arrange employment of student-athletes, being either the parent of an enrolled student-athlete or a former varsity athlete, or helping to promote BC athletics in any way. As a “representative,” I am “prohibited” from providing “extra benefits” to any “enrolled student-athlete.” These benefits include cash, loans, and co-signing for loans in any amount. Also prohibited are gifts of any kind to student-athletes or their families including holiday gifts, clothing, and even birthday cards. I am also barred from providing special discounts for goods and services or rent-reduced or free housing to student-athletes or their relatives; nor am I permitted to pay a student-athlete an honorarium for a speaking engagement or allow him or her to use my cell phone to make a call without charging a fee.

Big Pharm does all these things with doctors.  It's how they bribe doctors without getting caught.  it's expensive, and so medicine has to carry all these costs to create a market that would otherwise not exist, that is to say, we'd have a different array of medicines if we did not have this corruption.

And that last one, i's illegal to let a kid use a cell phone without charging him...  In Islam, it is forbidden to stand in shade of a wall of someone to whom you lent money, for it might be taken as interest on a loan.

Our rules reveal our weaknesses.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

How To Play Retail Downturn

Now these must always be read in terms of big business, since that is what the government and media and academia care about.  But the news about them is useful to us.

Nearly 60 percent of the decrease in prices for final demand services is attributable to
margins for apparel, jewelry, footwear, and accessories retailing, which fell 6.0 percent. The indexes
for machinery and equipment wholesaling; health, beauty, and optical goods retailing; food retailing;
loan services (partial); and automotive fuels and lubricants retailing also declined.

So at WalMart, Kohls, Footlocker, Macy's, etc... the prices you pay are falling. 6% is a huge drop.  That's tar pits for the dinosaurs grew on mal-credit.  And dinosaurs cannot adjust to an organically growing market:

From the rise of the casual camper to the boutique fitness boom, it can feel like there have never been more people in the market for sports apparel. As of 2015, sporting goods stores in the US were bringing in as much as $48 billion in annual revenue, according to IBISWorld, up from $39.8 billion in 2012. Sports participation is up, too. According to Euromonitor, participation in high school sports has increased from 25 percent to 35 percent over the last 35 years, with nearly double the number of female students playing sports as compared to the 1980s.
"My needs evolved, but in many ways, Sports Authority hasn't."
But there's a stark gap between an increasing customer base and many sports retailers — a gap that only continues to widen, no matter how many times companies see new ownership or rethink their businesses. As Hermina puts it, "My needs evolved, but in many ways, Sports Authority hasn't."

It's not as though Sports Authority has no idea of the trends in the marketplace, they buy the $50,000 Euromonitor reports that tell them so.  It's just that Sports Authority has a hired and trained personnel, infrastructure, logistics and relationships that cannot be repurposed to meet the changes in a world where borrowing malcredit and get-big-or-get-out is over.  Any more than Jeb Bush could repurpose himself in a Republican party base that wants a Donald Trump.

There are an incredible number of national and regional multi-brand sports retailers in America: Dick's Sporting Goods, Cabela's, Champs Sports, Bass Pro Shops, REI, Academy Sports, Modell's, and Big 5 Sporting Goods Corporation, to name a few — and these are just the ones that still exist today.

The least savvy, like Sports Authority, was no authority on what sportsfolk buy.  Gone. Now Big 5 will see a temporary bump-up in sales as people who thought "Sports Authority" as the solution, a dwindling group to be sure, googles the nearest Big 5 and buys the soccer shoes or Nike Spandex.  That is a mixed list.  Within that list is REI, a co-op.  It will thrive regardless of the economy.

As with all crowded markets, the sporting goods industry eventually hit a saturation point, and competition forced many stores to either close or be bought by bigger companies. The '70s and '80s saw many mergers and acquisitions in the space, and they just kept coming. Eastern Mountain Sports, for example, was founded by rock climbers Alan McDonough and Roger Furst in 1967. It was first sold to The Franklin Mint in 1979, which was subsequently bought by Warner Communications, and then sold to private firm American Retail Group. With financial backing from investors J.H. Whitney & Co., EMS chief executive Will Manzer bought control of the company in 2004, and then sold it to Vestis Retail Group in 2012, after Vestis had already acquired Sports Chalet and Bob's Stores. (Vestis was formed by Versa Capital Management, a firm best known for turning around sinking brands.)

There was no saturation.  The amount of local sporting goods stores was pitch-perfect to the market.  What happened is what you see above, roll-up artists borrowing malcredit to buy up all of the players.  by the late 1980s, after the S&L bailout, it was clear "who who borrowed the most wins."  So start up a pure play:

In the case of Sports Authority, it was founded in Florida in 1987, and was briefly owned by KMart in the the early '90s before it merged in 2003 with Gart Sports, a Denver, Colorado business that was founded in 1928. Gart had been through several mergers of its own, including with Hagan's Sports and Stevens Brown in 1987, as well as with Chicago-based Sportmart in 1997 and Houston-based Oshman's in 2001. In 2006, Sports Authority also bought Copeland's Sports, a California business in bankruptcy — the same year it was eventually bought by private equity investment firm Leonard Green & Partners.

Well, these false economy monsters are now dying, since the false economy os going down.  This brings up a thought, is there a LIFO rule here, last in first out?  Someone should do a review of the dinosaur bankruptcies and see if there is a pattern.

Now here are a couple of quotes, surprisingly juxtaposed:

"The lines between wholesale and retail faded from black and white to gray to nonexistent," Greg Baldwin, vice president of merchandising at sporting goods chain Schuylkill Valley Sports, told the Philadelphia Inquirer. "I now compete with 90 percent of my suppliers via e-commerce, physical stores, or a combination of the two. The importance of the retailer as a pipeline to the consumer has been greatly diminished."

And then

Today's consumers are looking for specificity, both in terms of function and also aesthetic. The everything-to-everybody nature of huge multi-brand retailers no longer appeals; department stores across America are struggling with this new reality as well.

People looking for specificity in function and aesthetic default-buy mass produced Nike for lack of a better product (as I default buy Apple, the least bad.)  That he has to compete with Nike stores and Nike online is no surprise.  The real question is the goods represented by the 10% of his suppliers with whom he does not compete online or otherwise, what is his volume, profit margin and turnover.  I can pretty much guarantee this is his best performing segment.

That 10%, obviously small specialty suppliers, figured out how to reach Schuylkill Valley Sports, as well as enough other small retailers to thrive.  In every industry we have countless examples of this, and at the same time we have so many more people who could be producing goods and services for the domestic market, except for the sales networks that atrophied under the malcredit regime.

But they are coming back, representing a means for the design creative to connect with the retail creative, an organic market.

If Jobs had to open Apple stores because as late as 2002 there were no computer stores that felt like Saks 5th Avenue, and Nike had to open stores for the same reason, then that was a failure of the retailers.

Elsewhere here I have advised startups to sublease space in retailers to get started.  Here is another example:

Dick's has taken this to heart by developing stronger partnerships with big brands and rolling out shop-in-shops like a trend-focused "Nike Field House" and a dedicated "Under Armour All-American" section in its stores. As a result, the selection at Dick's has became more enticing, and also more expensive.

Yes, if you sell what people want, they will pay more for it.  if it is not quite right, they need a discount to buy.  In any event, make your agreement very short term, month to month, because as the article notes, Dick's chances of succeeding are slim.

The problem to solve is to rebuild the link between the design creative and the retail creative.  We lsot two generations of entrepreneurs to F I R E.   Many o these natural salesfolk went into false economy Finance, Investment and Real Estate sales.  Sure, they carved out a portion of the malcredit for themselves, but their investments are now tallied in credit in the very bubbles in which they were instrumental in inflating: stocks, real estate, etc.  When that goes pffffft, it will be good to have them back.

When more small biz retail-creativ are offering more of that 10% unique, there will be more design-creative folk drawn into the remunerating work.

The article predictably assumes the false premise that online sales are a threat to brick and mortar.  We've eliminated that false premise on this blog, so people can proceed from factual bases.  Although this comment is tainted, it is otherwise sound:

"Retailers in general have a huge advantage over Amazon in that they have physical stores and they are able to actually raise an emotional response," says Sam Cinquegrani, the founder and CEO of digital marketing firm ObjectWave. "These stores need to understand the opportunity and leverage that because they have way more to offer. Once they think in those terms, competing with Amazon becomes a different type of exercise."

The taint "digital marketing firm" is a false economy exercise if ever there was one.  But the point is spot-on.  Amazon is simply a massive, unprofitable, mail order catalog and online self-serve check-out system.   If retailers simply do what they have always done, 20% new, 80% mainstream, they do fine.  Malcredit disrupted that by shifting the "new" from design to price.  Now the dinosaurs are stuck with a infrastructure that offers little of interest at any price.  There is no way they can cash in on what is coming back: personal relationships, that which atrophied as malcredit grew.

For a startup, a few points:

1. Stay away form the biggies, don't you supply them.  Sure, give Dick's 6% of the gross for a month long trunk show in their stores, so you can make money testing your new ideas.  This is no different than those people with folding tables in Costco for three days selling some local products.

2. There is a vacuum being created by a death like Sports Authority, but Big 5 gets most of the temporary benefit.  A tiny sliver of permanent benefit go to specialty retailers.  The tiny sliver is huge when given the base size of the specialty retailer.

3. The dead inventory in the pipeline, plus the excess in peoples storage lockers, is all inventory that must be disposed.  Two things, prices will fall and used needs to be moved with new, causing more downward pressure.  (Walmart is testing upscale used stores!)  Specialty retailers need to keep a section for used, like Powell's books.

4. Compete on design.  Give the specialty, small retailers a supply of what they need.  Trade on the smallest quantities rational, not the largest order possible.  The trick is frequency and iteration, not volume.

In any event, get your business going.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

More On Advertising

I've cited this guy before and subscribed to his youtube channel.  He is very good, although I sometimes disagree.  I am delighted he makes clear he is often wrong.

Two themes he has that I disagree with...

1. He implies search engine rankings matter, noting who and how gets to the top.  So what?  Rankings do not equal sales.  Don't tell me l'Oreal is #1, tell me what it cost l'Oreal to get there, and what sales l'Oreal gained from being there.  No one provides this metric because it reveals a net deficit.

2. OK, digital marketing drives digital sales.  How about that!  Now tell me, what does it cost and what revenue does it yield?  Even if it did yield net profit, why put all of that effort into what is no more than 6% of the economy, why not put the effort into what is the other 94%, brick and mortar?  Would the same money yield better results?

But mostly his info is great/useful.  He expressly condemns ignoring brick and mortar. Check him out:





Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Internet Delusions Exploded

"3500 digital media firms fighting over 10 cent on the dollar of online marketing growth."

If your income or future is in any way WWW-dependent, escape now.  It is hyper-delusionary.

This is a pretty goods, but potty-mouthed, presentation.



The internet has replaced the messenger boy, DHL, the yellow pages, and to an insignificant degree, the paper catalog of offerings and largely the telex and telephone. Know that and you'll deploy it well. It is a waste of time and money as far as a marketing venue.  Know that and you will not waste money. Go get a real job, start your own company.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

I Tried To Shake 'Em

About 3 years ago or so, any blog that did not tow the party line found its hits drop by about 2/3rds, as reportedly google changed its algorithm which directed people to what sites they may prefer.  It was well noted at the time. Now it does not matter much to me how many hits I get, since this is where I rough draft what I may be using in a book someday.  Few readers, lotsa readers, who cares?

About six months ago I wrote blog post on a Hebrew scholar who could find no support for intellectual property rights in the Bible.  The title was "IPR is not for Jews."  The post to over 50 times the normal hits.  I assumed these were Jews interested in the topic.  A daughter of mine, who produces media at a high level and is familiar with all things internet, laughed and said "No, that spurt was neo-nazis, not Jews."

Oh.

Indeed, in the coming weeks, the comments section got busy with all manner of sympathetic defenses of the nazis, and arguments as to where the nazis were quite good, or misunderstood.  Perplexing, since if I don't like democrats or republicans, how does anyone think I might begin to see the nazi point of view?

Anyway, at the same time my daily hit counter rose 10 times and stayed there.  Forensically it is nonsense, about 145 hits per hour, every hour for eight hour stretches per day.  From all over the world, but mostly USA.  That is programmed intervention.  Who and why?  Haven't a clue.

I don't like manipulation, so I decided I would try to shake them, just post nothing for a week, ignore my blog for a week.  Give them no new fresh meat to work with.  So today I returned to the blog, and guess what?  They have just been hitting the last posts I put up, a week ago.

I guess there is no shaking them, the few who do read my blog, well, I am back, and as to those who are pushing my numbers up, I hope you enjoy some new content.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

And Now They Rebrand Bud "America"

"Why would anyone want to..?*

That was the reply from a VP for sales at Brown Forman, the big booze maker when I asked if it was viable to clear $5 a case on sales of 10,000 cases per year, given regulations etc...

Why would anyone want to make only $50,000 in the beer business?  Well, when your business is your lifestyle, and after paying for your lifestyle, you had $50,000 left over, wouldn't be worth it to anyone?

I can think of plenty of people who would take that gig.  In the meantime, we may need them soon enough.  Stockman again, like a High School auto shop teacher, explains how everything works in this economy, their economy:

As a case in point, the $46 billion of bonds sold by the owners of Budweiser last night where priced at a ten-year yield of 3.67%, which means that after taxes and inflation, the company’s borrowing cost was hardly 1%. Yet, as explained more fully below, the only point of this massive offering was to fund with nearly free long-term capital the huge payday for speculators in SABMiller stock that will result from the $120 billion Anheuser-Busch InBev (BUD) takeover transaction.

Keep that in mind… it is not about the companies and long term goal, it all about the upfront payday to the dealmakers.  These are the patterns and practices of capitalism as enshrined in our laws. We need free markets.  Deregulate banks first, everything else false economy will wither. Another great textbook chapter.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Another Amazon Fail at Web Marketing

If you are putting a dime into web marketing, you are betting you are smarter than Apple, Victoria Secret, Safeway and Amazon.  Amazon tried and ended their version of Groupon (from $26 to $3, laying off people, gets a stick bump by suing IBM over patents) and now ending its version of Eulily.com, MyHabit:

As many of you may already know, MyHabit is closing on May 20, 2016 and as of May 15, 2016 we will no longer pay any advertising fees for sales referred to MyHabit. However, your visitors have unrestricted access to shop similar brands from Amazon Fashion [http://www.amazon.com/b?node=10445813011]—backed by Amazon's award-winning service, free shipping and returns, and exclusive benefits for Prime members.

So at what point will people begin to at least test the premise online marketing pays?  Anyone who is training in that field, or works in that field, needs to understand massive unemployment ahead if all of the leaders cannot make it pay.  Any belief that online marketing pays is pure social conditioning.

Now you have a choice: go back to school and take on another $50,000 in student loan debt to get a false economy job, or start your own business.  You'll have to forget everything you paid for in school,  and there the people who fooled around and never learned a thing have an advantage over you, but take your losses and move onward and upward.

The reason in my book in 2001 and one I could an online based business was a doubtful prospect is because I had read Ogilvy.  If you plan to work in business, or for a business, and certainly if you plan to be customer-employed, step one is read Ogilvy.



Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Over half of All Online Ad Spening is Selling Cars

Someone I know who worked at a leading, famous web news org told me she had to wait to get paid once because General Motors had not paid for its big Camaro ad campaign.  Such were the finances of both the news org and General Motors.

According to a relentlessly contradictory article, a quarter of all ad dollars in USA is spent online, and over half of the auto industry ad budget, $7.3 billion, is spent online.

Most of that spending—60% this year, eMarketer estimates—will be on direct-response efforts. 

So not brand building, but "act now"! or the suckers' pitch.  The auto industry is in a massive balloon, and what happens online ads for cars when tha bubble bursts.

Talk about false economy.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Mail Order Catalogs Outperform eMarketing by Far

Marketing online costs about 4 times as much (and likely far more) to gain sales than mail order catalog. Here are the numbers:

Total USA retail sales for 2014 about $4.5 trillion.  (Retail flat for 2014)

About 6 billion dollars spent on mail order catalogs in USA in 2014.

Mail order sales total 2014.  $125 billion

About 57 billion dollars spent on online advertising in 2014.

Online sales total 2014,  $300 billion.

So, at first glance, it looks like it takes nearly ten times as much money to generate about 2.5 times the sales.  But actually it costs far more...

According to USCensus, that is about 7.4% of all USA sales.  According to pro-online marketing emarketer.com,  5.8%.

While brick-and-mortar sales still command a vast majority of the retail market—nearly $4.27 trillion in 2013—ecommerce sales are increasing much faster, contributing significantly to retail’s overall growth throughout our forecast period. eMarketer estimates that US retail ecommerce sales will increase 15.5% in 2014 to reach $304.1 billion, up from $263.3 billion in 2013. That growth will represent more than 20% of this year’s $199.4 billion increase in total retail sales.
Ecommerce still represents a small portion of overall retail sales—a mere 5.8% last year.

First note the varying figures or percents, whichever one you accept, rather proves online marketing is a fools' paradise. Why market where only say 8% of your market exists?  Why not market where 92% of your market shops?  Why market where and when is costs so much more to gain a customer? But as to the uncertain numbers, here is one reason why people have such a disastrously misinformed view of online marketing:

The past year online was another good one for Nordstrom Inc. as the web now accounts for 19% of total sales.

Not a single mention of the fact that Nordstrom sends millions of catalogs a year driving people to purchase, who then elect to use the self-service check out online.  It was not the web marketing that got the sale, it was the mail order catalog.  The article makes "lemonade out of lemons" by saying the high return rate due to EZ ordering brings people into the stores where they make returns.  Well if the return is for the right size of what they ordered online, that is hardly worth the added cost of online sales maintenance.  This is just one article of millions in which people not trained to test claims become socially conditioned to accept sheer nonsense.

Victoria Secret does $1.5 billion online and sends out 400 million catalogs per year.  Yet that gets counted for "internet sales."  it would not happen without the catalog, yet people assume it is just a website and google ads.  Pure socially conditioned nonsense.

Here is an article with some insights on retail and online:

In today's edition of the print-isn't-dead argument, global and online-only retailers are reporting that mailed catalogs still drive sales like crazy. WSJ reports that 2013 witnessed the first upward trend in number of catalogs mailed since 2007, and retailers show no signs of slowing down.
While email marketing gives retailers just the space of a subject line to attract potential customers, stylized lifestyle catalogs that could nearly double as fashion magazines have proved to be wildly popular in an internet-driven culture. Pat Connolly, the chief marketing officer at Williams-Sonoma, admitted that the catalog was still an extremely important part of Williams-Sonoma's overall marketing plan. According to WSJ, the retailer has a database of 2,000 privately owned houses that it uses for catalog photo shoots and over half of Williams-Sonoma's marketing budget is spent on catalog production and mailing.

Do you think Williams Sonoma minds is internet pure-play customers struggle to survive and do not represent demand for catalog creation houses? And this from the same article, regarding pure play internet ecommerce sites:

Online-only menswear retailer Bonobos has also witnessed the ability of the mailed catalog to drive sales. Craig Elbert, the VP of marketing for Bonobos, said that 20% of first-time customers placed an order after receiving a catalog and they spend 1.5x more than customers who didn't receive a catalog first. Bonobos tested the concept over a year ago and has been putting out catalogs ever since, increasing the circulation each time.
British retailer Boden has calculated the power that the catalog has to keep a customer's attention much longer then an email blast or iPad app. Shanie Cunningham, head of U.S. marketing for Boden, told WSJ that shoppers spend up to 15 to 20 minutes with the catalog, while only spending around eight seconds with a Boden email and five minutes with the Boden app.
Plus, the catalog is cost-effective to produce. The article reported that the average catalog costs less than a dollar to make, while typically resulting in about $4 in sales for every catalog mailed. The moral of the story: even with the internet, we still really like to look at pretty pictures for prolonged periods of time and then try our best to cop the look. Who knew.

Who knew?  Well anyone with an organic true economy business, and not one where you just borrow massive malcredit and play at business.  These guys are making it because they took the time to see online marketing is not effective.  They want to stay in business.

The claims of efficacy of online advertising are always the most tortured circumlocutions.  Here are random findings from studies.  Note no one asks or answers the basic question above.

In the 1980s the big fear was mail order catalogs were going to wipe out brick and mortar:

The effect of these and other advances was a 300 percent increase in nonstore retail sales between 1980 and 1990. Indeed, from just $72 billion in 1980, sales in mail-order houses skyrocketed to $211 billion by 1990, representing average annual growth rate of more than 11 percent. By the end of the decade, catalog and mail-order shipments were responsible for about 10 percent of all merchandise sales, more than 3 percent of retail sales, and 1 percent of consumer services sales. Furthermore, trade in the industry represented nearly 2 percent of U.S. gross domestic product.

The wipe out of brick and mortar by mail order catalogs in the 1980s never happened.  And if online sales were ever going to grow above 8% it would have by now.  It will never happen.  And if and when people properly define terms and categories, and not ascribing to ecommerce what is really mail order catalog sales, then online marketing will look even more doubtful. If ecommerce marketing worked, wouldn't Apple be doing it?

Nothing has changed with the internet, except massive expansion of false economy, FIRE.  A rather expensive self-checkout option is available, and gee-whiz!  Reflecting sanity among small business owners, most USA businesses have no web presence at all.

I do, mostly to test claims and try out my own ideas.  I wish it were true that eMarketing worked.  And I would never say just because I cannot get it to work, neither can you.  I quote those actually trying the work says it does not work, they say so themselves. I provide the facts from the hard numbers. If you plan to have an "internet only" business, say buy on alibaba and sell on Amazon or any other combo, it won't work.  You'll need a paper ad mailed out to your customer base to reach absolute minimal performance.  Selling to brick and mortar remains the only viable means to thrive in business, to reach your potential.

If you want the absolute most cost effective means of mail order marketing (with a website check out?) the USPO has a new service.  You can mail cheap to exactly your demographics at the carrir route level.  Check it out, and nose around.  The USPO sent me a catalog on this and I spoke to a salesperson on the phone.  1975 all over again.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Getting Started with Sponsored Products

If you will join me at this free online seminar put on by Amazon.com, we’ll prove that online marketing is a nonstarter...

Getting Started with Sponsored Products

Date: November 17 | Time: 11:00 AM, PT | Duration: 30 Minutes

In this 30 minute webinar, you will learn how to:

•

Drive traffic to your products at Amazon.com

•

Get started with a daily budget as little as $1

•

Target ads in search results and on product detail pages

•

Effectively measure ROI with sales reporting

Let’s each then invest $100, and then study the ROI, and see if any of us do better in our marketing, or even generate any sales.  It's free, so register here now, and let me know if you did...  we'll study this closely.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Did Facebook Actually Help Build a Business?

When I note something contrary to what I teach, I jump on it.  Here someone got through the passion to the joy, and found anew market, horse bling (which someone ought to have thought of, knowing the horse set)::

Q: How did Heritage Brand fare during the Great Recession?A: Jessica Crouch: Interestingly enough, our business grew at its most rapid rate between 2009 and 2014, roughly. A lot of it has to do with the fact that our market is down south and overseas. Although the economy wasn’t doing well in the U.S., the oil industry was booming, and there are a lot of our customers in that industry.
Q: You attribute a large part of the company growth to being able to put your image out there on social media.
A: Jessica Crouch: I would absolutely say that. As soon as Facebook became common, (the business) just exponentially exploded. Suddenly people knew about us.

Earlier in the market she talks about success at trade shows. All sounds good except that "Facebook" or social media comment. You don't develop export markets by Facebook, and I'd like to see if Facebook was not just concurrent, correlation is not cause.  If it did help, show me time spent and benefit gained, measure it. Maybe I am wrong and in this case Facebook was valid.  But the problem then would be, is it reliable?

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Amazon Opening Brick and Mortar Stores

Today Amazon is opening a brick and mortar store, across the street from what I believe is Apple's #1 sales per quare foot store, and across form where Microsoft opened their failed effort at copying Apple retail.  (The Sony store copy of Apple split last year.)

Tuesday morning at 9:30, Amazon Books will open its doors. These aren't metaphorical doors:  these real, wooden doors are the entrance to our new store in Seattle's University Village. 
Amazon Books is a physical extension of Amazon.com. We've applied 20 years of online bookselling experience to build a store that integrates the benefits of offline and online book shopping.  The books in our store are selected based on Amazon.com customer ratings, pre-orders, sales, popularity on Goodreads, and our curators' assessments. These are fantastic books! Most have been rated 4 stars or above, and many are award winners.
To give you more information as you browse, our books are face-out, and under each one is a review card with the Amazon.com customer rating and a review. You can read the opinions and assessments of Amazon.com's book-loving customers to help you find great books.
Prices at Amazon Books are the same as prices offered by Amazon.com, so you'll never need to compare our online and in-store prices. Nevertheless, our mobile app is a great way to read additional customer reviews, get more detailed information about a product, or even to buy products online.

Note sent out by email...

Amazon will tell you online marketing is not viable.  Amazon is opening brick and mortar stores.  At what point will people begin to believe that online marketing is not a viable means of marketing?

Well, I am not the only one who says so.  Apple, Amazon, who else?  Victoria Secret...  everyone, except a few people starting up businesses.  O well, you can explain to people, but they believe what they want to believe...

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Reality Happened to Amazon and Groupon

Groupon has gone in its short history from about $25 down to under $4...

Shares of consumer deals company Groupon (GRPN - Get Report) have plummeted some 55% in 2015, including a 48% plunge in the past six months. And Groupon stock has been under pressure for quite some time. Investors who have held Groupon in the past one-year or three-year periods have seen, respectively, 36% and 21% of their investment disappear.

Today I see a notice from Amazon's version of Groupon, the daily coupon deal:

On December 18, 2015, Amazon Local will stop selling daily deals at local.amazon.com and on the Amazon Local app.
All purchased vouchers will not be affected by this change and remain valid according to their terms. Learn more.
From October 30, 2015 until December 18, 2015 you can continue to purchase deals at Amazon Local as usual.

So they are admitting online marketing is not a viable way of promoting coupon deals.  How long will it take the hundreds of millions who believe online marketing is a viable means of business promotion to learn it is not true?  Since they all point to Amazon as the big success story in the field, when will Amazon's consistent contradiction convince them?  Malcredit creates such malinvestment and misallocation.

Now I should say I have two books that earn me a tidy sum each month, which are largely marketed online.  But only because I refuse to waste a dime on online marketing am I able to make money due to online marketing.  This is not a contradiction.

Because I know intellectual property rights is a moral evil, I can allow my book to be available at googlebooks 100% free of charge.  Since it is there free of charge to readers, it ends up the destination of many a google search into "small business international trade."  Since the entire books is opena nd free, people tend to land on precisely the part of the book that answers their interest.  And after a few pages of reading online, and seeing it pitched on the same page by Amazon in hardback and kindle version, people often click through and buy on Amazon.com.  Since I am the publisher, and I sell to amazon, I get teh wholesale markup and profit, and amazon earns a retail profit, and google gets a referral fee.  We all make money.  But I do not put a dime into this, your pension plan is losing value to keep this malinvestment operating as I make money from the very system.

Is it wrong for me to do so if I understand how it all works?  Your pension plan financed the destruction of the small retailers who would have sold my book.  Your pension plan is now defunct for those investments.  I am riding down what your money has wrought.

Yes, the world can be a wicked place, and that is good o know.  Just unload the delusions, look at the facts, admit it is awful, then see how you can make enough to live whatever your lifestyle.

If you have a $30,000 student loan for a "website development" degree, yikes!  If you are contemplating one, better you dig ditches now than go get such a degree.  You'll have better prospects.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

The Right Interest Rate, Jews and Small Business Start-up

As a sideline I began teaching small business international trade in 1984, after a decade of working for others in the field.  My goal was actually to write a book, for two reasons; 1. To get down the essence of the work, 2. To make a record of what was important as we moved into (as anyone could see) big changes in the world.

Thirty years later, principles haven't changed, but we are now an impoverished nation, and no more aware of it than the Soviet Union was in 1989.  The biggest challenge for the USA, as it has been for the Russians, is too few know how to run a real business.  Anyone can get get loans and pretend to be in business for years if need be (serial "entrepreneurs") and our biggest companies have all been on life support for 40 years.  There has been no apprenticeship program that led to new masters in each field. We've lost three generations of entrepreneurs to F I R E.

Let me define terms again, first, there is mal-credit and bene-credit.  I recall bene-credit, when the vast majority of commerce worked neither on money nor credit-at-interest (usury) but at on credit at no interest.  Sure there has always been loan-sharking, but what was new starting in the mid-seventies was the fraud of lending credit with no assets backing the loan.  Loan sharks actually lent something and took a risk of loss.  But not banks, starting in the very early 1970s.

With no rational limit to what might be financed, astonishing misallocation and malinvestment followed.  Anything goes!  There has been no rational limit to what we can finance, so instead of alabaster cities we got wars, more wars, poverty, crumbling infrastructure, sports stadiums for billionaires, privatized profits and socialized losses.

What astonishes me is how all commentators look to interest rates as the nexus of the problem.  They agree the problem is to the degree the interest rate distorts the economy, we have problems.  They only argument is what is the correct interest rate, and in this case each specially pleads that someone else's ox  be gored, not their own.

So there is near 100% agreement the problem is interest rates, but the sturm-und-drang is over the right rate and how to achieve it.  What do we know?

1. For most of history, most commerce has been on asset-backed, interest-free credit as the basis for an economy.  Money (properly defined) is for special deals in which relational obligations are extinguished.  There is simply no need for and interest-based loan in commerce.  All needs can be met by other means.

2.  In this forty-five year experiment in asset-less credit lending, at interest, we have seen interest rates go from a few percent to 21% and now down to zero (and even negative, effectively.)  That range pretty much gives every interest advocate an empirical basis to stake a claim on the benefits of charging interest. Care to point out when, since 1970, the economy has been fruitful, prosperous, just, (name your standard)?  Show us your ox.

3. You might argue, well, at the current zero (effective) interest rate, is not the usury-free argument destroyed by the present dreadful economy?  Not at all, for the overwhelming factor is that presently the zero interest is with asset-free backing.  Even if you are not charging interest on cars, you've misallocated resources to make cars the "buyers" will not pay for, and you've "educated" students with content they will not use and student loans they will not repay.  Java coders re-educated to be roofers, roofers re-educated to be java-coders.

4. And finally we know the solution to the problem, de-legitimize (not criminalize) the charging of interest on loans.  If and when no judge will enforce the interest portion of a contract (like no judge will enforce a gambling debt) then the practice will dwindle and drift away, losing the force needed to maintain the fraud of any loan at interest at any amount for any duration.

There is no rational limit to how far this might go, the bankers simply keep probing further and deeper, without a clue, but always with a jet ready to flee to a paradise prepared elsewhere.  There is no rational limit to how far this can go, so when it comes crashing down, it will also be for some irrational reason.

(And as an aside, when I say "bankers" I don't mean Jews, I am not persuaded by the delusional argument "it's the Jews."  It's us, the Rockefellers, Morgans, Mellons and their protestant work ethic devotees. It's no coincidence that before this experiment in massive fraud the Chairmen of the Fed Reserve were WASPs, and starting in 1970 (that year again!) the Fed Chairmen have been Jews.  If you are going to risk your country's economic health for personal gain, make sure you have some Jews out front to take the blame. It always works. Jimmy Carter, my favorite president, appointed a goy in '79, in an attempt to get us back on track.  The guy lasted a couple of months.)

Stockman is doing a good job collecting and distributing commentary...  Buchanan on the Bush/Cheney/Rumsfeld criminal wars, how mal-credit made China a commodity giant, and now it has a giant usury problem.  Global Stock markets have lost ten trillion in the last three months.  Lost?  No, the valuations are just be adjusted and saps paying into pension plans are being gored.  One specific loser is a Chinese billionaire who made a bid to create a second Panama canal.  Oooops, he is down 90% on his tally, for no billionaire actually has any money, they have nominal tallies of what they have accumulated.  No one objected when they were told in 1998 their $200,000 house was worth $300,000 as interest rates (there it goes again, the heart of all of these problems, usury, charging money on loans) dropped from 9% to 6%.  But now that interest rates are near zero, and the house is nominally worth a million, and the household income has not gone up, but taxes are still a flat .006 on a million instead of $200k, and the debt on the house cannot be paid... oh ouch, once a millionaire and house rich, now a slave tied to a bank loan.

What is the policy answer?  More funny money, until it breaks.  if and when, watch out below!

A big unseen monster is global dollar fund shortage.  Well, yes and no. Yes, it is a symptom of a terrible  disintegration, but a disintegration of the false economy.  It has nothing to do with money, everything to do with currency as tallies and nominal valuations.  If you see syphilis dying out, you can relax.  Watching these problems, I am relaxing.  It's an economy dying, their economy, not mine.

Chinese containerized freight is down 30%...  bad for the big boys.  Good for me and my customers, my economy.  In their economy it is all lay-offs and cooking books.

USA Ag exports collapsing,  which is disastrous for the big boys, like Monsanto whose unnatural practices are catching up with them, stock down 25% this year.  At the same time, the food in my economy is enjoying growing exports.

None of this is secret, but what else can people do?  They just await the news, or play on facebook, a drug designed expressly for this time and place.

There is a solution, it is well known, but there is a problem with that.  A great idea can be had, but does anyone know how to market a product and develop a business?

Well, not enough people, and certainly no one learns "how to" in school.

They all learned false economy methods in which results do not count.

Let me give you one tiny insight that astonishes any student I teach under 40 years old (for they know no better.)  I deliver noncredit courses through colleges on small business international around the USA and Canada both online and in person.  The schools have learned online marketing is delusional.  To get enrollments, they must still mail out a catalog of course offerings, that is the offerings printed on paper and sent through the USMails.  Cost of acquisition of enrollments is about $7 each.  With online marketing, cost of acquisition is about $90 each.  (Divide the money spent by enrollments gained, learn the cost of acquisition by method.) Since most course fees are less than $90, schools avoid online marketing.  This is the problem for all online marketing, whatever the product, the cost of customer acquisition is more than the cost of what you are selling.  Yet, try to hire a marketer who is not trained to drain your company of all profitability, sooner or later.  (In 22 years of asking, I ask again, someone prove me wrong with evidence of online marketing working.)

On the other hand like paper catalogs of course mailed to homes, there are still principles and practices that actually work, although as perplexing as a slide rule to an engineer who is used to the TI-90.

But access to that cutting edge info is fast becoming lost. How come?  Usury again, charging anything on any loan at any amount for any length of time.  Student loans, crossing a trillion and a half, have nearly killed the market for continuing ed.  Burdened with useless information (as Drucker said, you can tell when info is obsolute, universities make it core curriculum) and crushing loan debt, people who would have gladly taken an improving noncredit course are wondering where the next meal is coming from.

This will come back to haunt university administrators, for it is well-established that continuing education is a prime recruiter for credit programs (degrees).

I've had two seminars cancelled for low enrollments, a first in 30 years of lecturing.  The time not lecturing will be spent on considering this development.  Often when I see something unexpected of perplexing in business, I look to the music industry as a model.  The seminars sell the books?  How about the books sell the seminar?  Back to correspondence school model?  hard to say, but I'll for a hypothesis and test it. I'll keep you updated...

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Ogilvy on Advertising

Advertising and promotion are so critical to a business, and never before has there been so much waste and nonsense in advertising, especially all of this "online, web and social media" hype.  Read what a fellow wrote in the early 1960s, and it will be your guide today.  This book will save you much, much time and money.




 Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Get Your Product on QVC

And go out of business.

Take your product on a home shopping channel and sell out in a matter of minutes — it’s the dream of many entrepreneurs.
...
A home shopping appearance is also a way to advertise to a large audience. QVC says it reaches nearly 100 million households in the U.S. and 300 million worldwide through broadcast, cable and satellite programming. QVC rival Home Shopping Network says it reaches 95 million U.S. households, and Evine reaches 88 million.
About 850 to 900 products appear on air on QVC weekly. The company’s website, qvc.com, also sells tens of thousands of products.

A small business will be trying to finance, manage and maintain a outsized sales run, a pig through a garden hose.  Your margins will be nil and the only people making money will be QVC.  Stay away.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Start-up Trade Show Advice

Finally a trade show advice article that is spot on!  I'll expand on two points:

“The main trick is to be able to judge body language and to listen,” Kate stresses. “If a customer says no verbally, or their body language says no, then thank them for their time and move on to the next potential customer or client.”

No to what?  The sales process is approach, qualification, agreement on need...  body language is fine, but you can elicit specific responses to find out if this is a buyer (ready willing and able) and if not, get rid of them.  If so, then they either place the order, or if not, for what valid reason?  Anything less than this is a waste.

To get the most out of your time at trade shows, always set targets that you and your staff can work towards, whether that’s data collection, PR, sales, or sampling targets.

The point of a trade show is trade, sales.  Your targets should be sales, and if not why not.  Sales and market feedback.

Incentivize the press?

“We offered VIPs and press members free spa treatments and VIP goody bags at the show. If your company does not have physical products to give to VIPs, you could always consider buying in gifts from third parties that fit with your brand,” Kate recommends. “For example, if you are a travel agent you could put together a beach bag gift with travel essentials in it, like a branded beach ball and sun cream.”

Write a half dozen articles, unsigned, about your company and line.  The news is your LCL MOQ FOB.  Put a $50 bill in the envelope with the article.  Hand the 9x12 envelope to the writer visiting your booth and say there is another one of these if this gets published.

The writer will figure it out, put his name on your article, and you get invaluable press for $100.

Who wants swag? People need money.  Writers aren't paid much at all.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

A&P Goes All Hostess Twinkie

Even in Seattle as a kid  I shopped at A&P, the first supermarket chain in the USA which began to go downhill in the 1970s.  Now it is going into bankruptcy for the second time, following the steps of hostess twinkie,  including blaming the unions.

A regular reader will know this blog honors labor, as any self-employed free-marketer would do, and in fact I've been a teamster and am a B Longshoreman.  (I also busted a longshore local house, so I am not above a bit of mercenary hire).

Blaming the unions for management failure is typical, and useful in liquidating assets while burning the unions.  To be sure when A&P is liquidated almost none of the workers will find similarly paying jobs. This is deflation now.  That is life, but when Burkle bought A&P, the malcredit he used to acquire also covered any A&P pension obligations to the workers.  So the first question is, what is the size and nature of A&P obligations to the employees and retirees.  It goes away, in a bankruptcy, and the liquidation price can go a lot lower.  See Twinkie.

Now Bravo to Stockman for rejecting the "union problem" as the problem leading to bankruptcy.  he demonstrates how poor management and financial shenanigans have led to yet another pension plan being busted.  But in his piece he mentions legacy "vendor agreements" that could not be changed to save A&P.

I wonder: what products, what vendors, what agreements?  Wild guess: the vendors are the "get big or get out" welfare beneficiaries like General Foods, General Mills, Kraft, etc. The products are the 80% of the revenue, 20% of the profits type velveeta cheese and other frankenfoods that one necessarily must be big in which to trade.  The agreements are fine tuned already, and assume ever-inflation, something not the case any more.

If so, are those vendors allowing a customer to go under so they can better serve the stronger few?  For a time?

This would be a good MBA masters thesis.

As an aside, an advertising campaign failed to bring in teh customers.  I wonder how much of that advertising was done online, and what was learned form that component.   Another thesis.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post