US Postal Service logo

Some Businessy Updates

This is another one of those entries I’ve been meaning to write and post up ASAP as it was happening, but you know, life. It’s going to be a long and full of text. You were warned.

Tough Decisions

You may or may not have noticed that I am no longer shipping internationally. It was a hard decision to make, but it had to be done.

Here’s the how and why. It started with losing 3 consecutive international orders shipped at the end of Feb-early April with a retail value totaling almost $400. These problems came to light during tax time as I was going through my bookkeeping for the year and was quickly realizing that things were not going as well as I thought it was. So the loss was just the icing on the cake.

Contrary to popular belief, I am not living some glamorous life making crazy monies from miniatures. In the 2+ years having my mini-business, I have not once paid myself. Any money I make goes right back in to buy inventory, supplies, and equipment, à la bootstrapping as a form of capital building. At the end of the year, it breaks even (loss in 2010, tiny profit in 2011, possibly another tiny profit in 2012, but no thanks to the $400 loss). At this rate, I won’t be paying myself any time this decade and I am OK with it.

Now that you know of my lack of monetary gain from the business, you may wonder why I work an additional 25+ hours a week on top of my day job on miniatures for basically nothing. It is because of the intangible rewards like the satisfaction and joy of creating minis and being able to connect with and make friends with the lovely people in the mini community. So when things like this happen or when I start losing all sorts of packages (which translate into losing $$), that it makes it really hard for me to even care anymore.

There were a few times I was close to throwing in the towel and move to other less stressful interests, but it.. is.. so.. HARD to let go. This thing is like a child to me. I can’t abandon it. I want to keep caring about it, nurturing it, and growing it.

I realized that in order for me to keep it going, it needs to stress me out a whole lot less, and the easiest solution was to stop offering international shipping. There is just too much risk (more on this later) in shipping internationally. I know I have some fans in the rest of the world and I am sincerely very sorry for disappointing you.

On the plus side, this opens up opportunities for international retailers looking to carry Amazing Miniatures as there will be no competition from me. I will be expanding the wholesale section soon enough. If you are an international dollhouse miniature retailer interested, let me know.

Risky Business (with PayPal)

Did you know I used to work in a credit card processing company in a previous life? While I only worked in the marketing department, I still learned a whole lot about how the industry works. Without boring you to tears, let me give you a very simplified explanation of it.

Businesses need a merchant account in order to accept credit cards as payments. This merchant account is essentially a line of credit given to the business from the bank on behalf of the customer who is paying with a credit card. This line of credit is what takes the risk out of the seller’s hands and places it on the banks’. So if the buyer says they never received a package, but the seller is able to prove to the bank that the package was sent, guess who takes the hit? The bank does. That’s why they charge fees to businesses in case these things happen (and to make money, obviously). Again, this is a super simplified explanation.

Now enter PayPal. PayPal does not offer merchant accounts as a part of their regular services. I am assuming they work with an existing bank with their merchant accounts (it’s the law), so you have to go through an approval process in order to get one. This process means you can be denied a merchant account, because banks don’t want to give you one if your business is too risky (gambling sites, porn, etc.). So unless it explicitly says that it is a merchant account, the PayPal accounts are NOT merchant accounts and risks abound for everyone.

When a transaction happens on PayPal, what they do is essentially move the buyer’s money into the seller’s account. That’s it. There is no credit applied. They are just money movers. The risk is all on the buyer and seller and PayPal conveniently charge the seller similar fees as a credit card processor for not taking on any risk. Nice of them, eh?

Granted, they now have some modicum of buyer/seller protection based on the shipping/tracking thing, but there are stupidly easy ways to bypass that and totally screw the buy or seller (depending who you are in the transaction) and I’m not going to tell you how.

The whole point of this is that as a seller shipping internationally, the risk is all on me. Depending on certain variables (again, not telling you specifics), all a shady buyer has to do is say they never received their package and bam! I lose. But I’m quite certain my buyers aren’t shady (more on this later).

So why don’t I just get a merchant account? I did the math and based on my lower sales volume, it would cost me more to have a merchant account than it would to cover the costs of lost packages. Well, until the recent snafu, but only just.

Now after the fact, I’m still not going to go for a merchant account because my volume still does not justify the cost. It will only make sense once I start selling face to face as opposed to explicitly online, but who knows when that will be?

So the easiest solution to limit risk is to offer domestic shipping only.

Speaking of which..

Shipping Woes (with the USPS)

I mentioned above that I sincerely believe that my lost international packages are just that: lost. Maybe I’m just a gullible schmuck, but I refuse to believe that my buyers are intentionally dishonest people.

One of the big reasons that support my assertion is due to the recent news on the United States Postal Service (USPS).

There have been office closings, reconsolidation, layoffs, and otherwise general upheaval of our mail services. With all this confusion going on, some of my international packages are getting lost (2 arrived OK before I decided to stop shipping internationally) and my first class domestic packages are taking an extra 1-3 days to arrive to its destination. The same thing may be happening to your packages (feel free to join the discussion).

Warning: I’m going to get a bit political here. Go read something else if you are sensitive to such things.

Now the libertarians or the right wing conservatives would smugly point out that the USPS is a government institution and that it is too big, too mismanaged, too inefficient to work; that it is a waste of tax payer’s money; that FedEx or UPS might as well take over. But I tell them: You are wrong.

But the problems with the USPS are not about management or poor demand. It is a manufactured problem that began in 2006 when Representative Tom Davis (R – VA) introduced H.R. 6407, the Postal Accountability and Enhancement Act. This legislation forced the USPS to fund its pension program 75 years into the FUTURE within a 10 year period, something that up until that point was completely unheard of, and has put huge financial strains on the USPS as a result.

The legislation was an attempt to financially break the USPS and force it into privatization, brought to you by the lobbying efforts of FedEx and UPS and right wing ideologues who don’t believe in any form of public sector service. Without the ridiculous pension funding mandate, the USPS would have made a $611 million profit.

Source: 1, 2, 3
http://my.firedoglake.com/kaytillow/2011/09/26/whats-the-real-story-behind-the-postal-crisis/
http://unionsforsinglepayer.org/articles/2011-09-22/rally_to_save_us_postal_service_sept_27th
http://www.nalc.org/postal/reform/index.html

Other than lost or delayed packages, how does this legislation pertain to me? If you are a small seller, how does it pertain to you?

Last I checked, it cost twice as much as USPS to ship the same package with FedEx or UPS. Why? Because I’m not a huge company and I don’t have the economies of scale on my side so I am charged more by these private companies. They have to make a profit after all. You think my customers would be OK with a higher overall cost of my products? Most won’t. They may not be able to even afford it. You think the smaller sellers like me would survive if we had only FedEx or UPS to rely on? Not many will. We rely on the USPS.

For those politicians harping on about helping the small businesses, they do a pretty good job screwing the little guys when they need to suck up to the big companies.

I don’t know what’s going to happen to the USPS, but I have a pretty good idea of what would happen to me and most people trying to make a living on Etsy, Ebay, or as an independent online seller if USPS folds. It is not a good thing.

I don’t know if there’s anything being done to fix this. The only thing I can think of is to support the National Association of Letter Carriers. If you know of something going on, do chime in. As for now, I’ll just have to be happy with the fact that more people are aware.

And then

OK, I’m done complaining about shipping.

Related Posts:

No comments yet.

Leave a Reply

Copyright 2009 - 2015 Ann Nguyen & AmazingMiniatures.com