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Inferences from a wooden handle

A customer pointed out this listing for a vintage Revere Ware skillet with a wooden handle

It’s a beautiful handle, which gives the skillet a very pleasing and unique appearance.

You can see from the handle detail that this is a very old skillet, made within the first few years of Revere Ware production.

The spline, rather than being a straight piece on those handles, was the same shape as the actual handle.  This was the style that had two screws close to the pot, and a third screw in the center of the end, where the hook went through.  It appears as if this customization used the two screws for near the pot end, to hold the handle, forgoing the hook.  Here is a blurb on adapting our newer style handles to that older style spline.

Everything about this handle, including the workmanship, tells me this is something that would not have been offered by Revere Ware, but was custom made by someone who probably could not get a replacement handle.

Before we started selling our parts, we saw a lot of funky attempts to continue using Revere Ware pots despite handle issues.

  • At least one other home made wooden handle
  • People attempting to epoxy broken handles together using high temperature epoxy
  • Holding the metal spline on a pot that has lost its handle with pliers or oven mitts
  • A complex polishing and restoration process that involved 5 different grits of sandpaper

Because of this, when we first opened our shop for replacement Revere Ware parts, we got a lot of appreciation emails from customers.  While we still get one now and again, dealing with customers on Amazon.com has turned into a very different experience.  People are quick to pull the trigger on negative feedback over any issue, no matter how small, without even contacting us first for assistance, and then rarely respond when we follow with an offer to help after seeing their feedback.

We sell somewhere in the neighborhood of 10,000 parts a year these days across about 6,500 customers.  In our mind, that is 6,500 people we’ve had the opportunity to help continue to use their cherished piece of cookware.  We also answer somewhere between 500 and 1000 questions each year for people, whether they are customers or not.  The nature of a business like ours is service more than product.  Service to help people find the right part, service to answer questions and sometimes solve a historical mystery, and service to solve problems when they arise.

Retailing used to be about service.  Consider this bit from an article today in the Wall Street Journal:

Long before internet shopping, when a personal touch and pride of proprietorship were essential to successful local merchandising, Robert Lazarus Sr. was the president of the largest department store in Columbus, Ohio, my hometown. His name was on the building: the F&R Lazarus Co., among the most prestigious stores in the Midwest.

A dignified, respected man, he lived in a grand and tastefully decorated house. He kept his home number listed in the phone book.

Here is something his son told me, years after Robert Lazarus had died, and the store had disappeared.

One evening when the son was growing up, the telephone in their home rang. The caller, with nervousness in his voice, asked for Robert Lazarus, who came to the phone.

The man, almost apologetically, said he and his wife had purchased a tea set at Lazarus. They had never owned one before, but saw it on display and decided it was something they would like to have in their home.

Robert Lazarus waited to hear what was coming next. Was there a flaw? Was a cup or saucer broken?

That wasn’t it. The man said he and his wife did not know the proper way to serve tea—how to make use of the tea set when company came over. They sensed there was an etiquette to it, but no one had ever told them what it was.

Some of Lazarus’s customers had very modest incomes; to them, that downtown store was almost a palace, a place of aspiration, even if they were only looking. The tea set had represented a step up, a significant expenditure for this man and his wife. And they weren’t quite sure how it was intended to be used.

So the husband called the man whose name was on the store—at home, at night—for advice.

Robert Lazarus, his son said, stayed on the phone with his customer and, with great care, walked him through the steps of having a tea party, of using an elegant tea set. He told the man stories about tea receptions he and his own wife had given; he answered every question.

Then, before hanging up, he thanked the man profusely for having shopped at Lazarus.

I asked the son—by then an elderly man himself—if his dad had seemed at all bothered to have received the call in the middle of an evening with his family.

“Bothered?” the son said. “He couldn’t have been more pleased. He talked about it with great fondness for the rest of the night.”

I imagine the man who had placed the call did, too: The man who, in a time before customer service meant algorithm-generated email responses and endless waits for offshore call centers to answer, had taken a deep breath and dialed the phone, not knowing if he was making a mistake by imposing.

And who had been greeted, by the president of the F&R Lazarus Co., like an old friend.

Sometimes, dealing with customers on Amazon.com almost makes me want to quite the business.  I got in this business because I wanted to help people in a way that I wanted help myself years ago when I was looking for replacement parts for my Revere Ware.  With less business going to our website, where we have very few returns, almost no complaints, and the occasional praise, and more business going to Amazon.com, where we constantly struggle against abrupt and inconsiderate negative feedback and rarely a kind word, it is more of a burden and less of a joy these days.

While I love the convenience of ordering online and the benefit of being able to find things that used to be impossible to find, I had the impersonality of it all.  Perhaps this is what can save the malls and local businesses against the onslaught of  online shopping, good customer service and a very personal experience.

I’m trying to do my little part to keep business more personal.  While you can’t call me at home, I do answer every question, no matter how stupid you might think it is, frequently even during evenings and on weekends, and I try to make every customer happy if I can.

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The economics of big boxes and small items

Years ago, the little rubber feet on my Dell computer fell off, and I got the company to send me a set of replacements.

When they arrived, I was struck by the inefficiency of what I was looking at, a small item in a box that was about 1,000 times too big for it.  How inefficient, I thought, and what a great example of our wasteful society.  It looked similar to this, but worse.

Perhaps 5 years later I took a crack at optimizing the supply chain for boxes for my day job.  We had about 1,500 part numbers and did a poor job at keeping some 120 different box part numbers in stock to ship them.

Part of our problem was that we had no stocking program for boxes, they basically rush ordered them when they went to get one and we were out.

The other part of the problem was that we had far too many boxes, some of which we rarely used.  This took up quite a bit of warehouse space, captured unnecessary working capital tied up in inventory, and made it harder for the shipping & receiving personnel to find the correct box.

I started by going through the drawings for all 1,500 parts and capturing the outside dimensions.  Then I captured the number of  each part number we sold per year in the last few years. With that as my input data set, combined with a current list of boxes we had had ordered any of in the last several years, I wrote a software program that progressively tried out different combinations of boxes to both minimize how many we needed and the space wasted, giving priority to the most frequently shipped parts (meaning, we should have boxes that fit them the best.

The result was that I was able to go from 120 box part numbers down to 45, a much more manageable number.

However, this necessitated the case that occasionally, we would ship a one-off item that we did not have a good fit box for.  Occasionally, we would ship an item in a box that was way too big for it.

While this might seem a waste, overall, we probably wasted much less cardboard because the majority of items we shipped were in boxes that were the correct size.

So, the answer to why sometimes you get an item in a box that is WAY too big is that. overall, it leads to better resource and cost efficiency if in some cases you are willing to be inefficient.

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The economics of small business – running an eCommerce site

Our website provides a wealth of information for Revere Ware enthusiasts, and we also sell our parts through it.  But operating a small-business eCommerce site continues to be more and more challenging.

For starters, it costs the customer more because of shipping.  With many retailers offering free shipping these days (most notably Amazon.com) customers sometimes are outraged that we charge around $4.50 per order to ship, which can look pretty unreasonable if you order a part that costs $4.00.  But the economics are such that, if we charge $4.50 for shipping (the bulk of which goes to the USPS and a little goes against our fulfillment service) we actually lose money on shipping; on average, it costs us $6-$7 to fulfill an order.

When we first started out, and most of our sales were through our website, it was less, and the shipping charges roughly offset the fulfillment cost.  But as more of our sales moved to Amazon.com, and our volume through our website dropped, the fixed part of our fulfillment service started to drive the cost per shipment up.  The fixed cost is what they charge just to have the service, hold the inventory, etc.  With high volumes, this is very little per order, but as the volume drops, it starts to be a significant cost for each order.

Our sales are shifting away from our own website to Amazon.com for a couple of reasons. The first, of course is that people enjoy the convenience of buying from Amazon – the 1-click ordering (not having to enter all that information) and the free shipping are great.  The second is, given the alternative, some people have a lack of trust for a website they don’t know from Adam.  Lastly, we discovered last year that Amazon.com actually advertises using Google Adwords to capture the business that might actually have been destined for our website.  Yes, they compete with us to drive our sales to their website, even though it is us selling in both places.

But there are a lot of good reasons for us to continue to sell through our own website.  The first is insured availability.  Amazon.com Marketplace is pretty one-sided against the merchant.  Often times, Amazon.com will suspend one of our listings because of high return rates.  This happens because, as a third party selling on Amazon.com Marketplace, we have no ability to set rules about returns; people often buy our parts, without bothering to read the description, and then return them when they don’t fit, providing some lame excuse that makes it seem like the part is defective, so they don’t have to pay a return shipping fee.  This makes it looks like we have an abnormally high return rate at times, which causes Amazon.com to periodically suspend a part listing here and there.

Second, Amazon.com can for no good reason suspend a sellers account, and often does according to this article.  If that were to happen to us, at this point, the economics of our business (we work hard to provide parts you can’t get anywhere else, because we care, and make a little money off of it) would be hard to justify.  If we didn’t continue to sell through our own website, it would make no sense at all, and our parts would likely no longer be available.

Third, we have much less control over the content of our listings on Amazon.com, and our interactions with customers, than on our own website.  The listings are not considered our own, and it often takes some finagling to change the content, because someone occasionally resells a part they purchased from us through our listing on Amazon.com.  And, despite the fact that our own website has a wealth of information on dealing with issues with our parts when they occur, we can’t direct people there or risk having our seller account suspended.

There is a large movement in the US right now to buy local, in response to the difficulties that online shopping presents to local businesses.  In my own town, there is an 11% vacancy rate in our main shopping district, where 10 or 20 years ago 1-2% was typical.  The move to buy local is to support small local businesses that are valuable to the community in more ways than just what you buy there; they provide jobs and help support the local tax base among other things.

Similarly, in light of the increased dominance of eCommerce by just a few large platforms, perhaps there needs to be a similar movement to support small business websites like ours.  I believe businesses like ours provide something valuable that just wouldn’t exist if everything was dominated by Amazon.com and the likes.  Yes, it cost more to buy through our site, but it makes more sense if you purchase multiple items, and consider that when you do buy from us, you are supporting something worthwhile.

So yes, by all means, buy local, and, when you do shop online, buy from small business websites.

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What taxation of online sales means for small businesses

Online retailers come in many varieties.

– Some sell a variety of products, and some. like ours, have a very specialized niche.
– Some online retailers have employees, and some are owner operated.
– Some are a business and some are more of a hobby.
– Some are a full time job for the business owner, and some are a side job. Some, provide no income at all.
– Some, provide products you can’t find anywhere else.

Typical small business

I got my start in this business based on a need.  We were looking for replacement handles for some old Revere Ware and couldn’t find any.  Based on our need, the fact that the company that made Revere Ware, stopped selling replacement parts three decades before we came on the scene, and the large number of Revere Ware pieces that had been sold, I presumed that there was a good opportunity.

So I went through the trouble to get replacement parts manufactured, set up a website with lots of useful information and quite a few replacement parts for sale, and have served the community of Revere Ware cookware owners for almost a decade now.  Our story is probably not that uncommon among the small businesses that sell online exclusively.  This guy makes really cool devices that are useful for getting the most out of vintage Apple computers.  Like us, he serves a small community of customers and potential customers, and his products are incredibly useful for that that need it.

Supreme pain in the *[email protected]#$%

Among this backdrop, consider the Supreme Court ruling that came out this week, which opens the door for South Dakota to require people selling into South Dakota, but who aren’t located in South Dakota, to collect sales tax on the state’s behalf.

Our average order total is between $10 and $20.  We fulfill thousands of orders each year (not hundreds, not tens of thousands).  Right now, we are required to collect sales tax only in our home state, home county, and home city.

Despite the fact that we are more than 20 years into online retailing, quite frankly, the software we use to run our website, is horrible when it comes to extracting data.  Every year, in order to collect the data the California requires us to report about our sales, we spend quite a bit of time slicing and dicing the sales data to figure out exactly how much sales tax we collected, much less all the other data California wants, like breakdown of sales inside and outside the state, county, city.

Even if better eCommerce software was available, switching is expensive.  The last time we updated our website and move to a new platform, it cost us about $10,000.

We deal only with 3 tax jurisdictions.  In the US there are over 12,000 state and local tax jurisdictions.  It isn’t too hard to imaging how requiring online retailers to collect sales tax could become a nightmare that puts retailers like us out of business.  Among the myriad of problems:

– We only have to keep up with three rates right now – one state, one county, and one city.  Requiring us to keep track of and set up to collect 12,000 different tax rates would be simply impossible.  Even 50 or 100 would be substantially more work.
– We only have to file one sales tax return right now, which only includes one state, one county, and one city tax and revenue breakdown.  How in the heck would we file when considering 12,000 jurisdictions?

South Dakota has an exclusion for any business with less than $100,000 or 200 individual sales in the state.  But, for us just to be able to figure out for 50 states whether we are above or below the limit or revenue and transactions will require a lot of work.  And given that we make quite a few sales of small amounts, we will undoubtedly be above such limits in some states.  There will definitely be a crossover point where we just throw up our hands and say “it isn’t worth it anymore.”

A better solution

In my opinion, there needs to be a solution at a Federal level to solve this problem.  This is what I would want:

1. A flat sales tax for online sales that applies to every business every where.
2. A single authority that collects and distribute sales tax revenue to the states, counties, cities.

This presumes a couple of things:

– That 50 states and / or more than 12,000 tax jurisdictions can agree how to apportion tax revenue among themselves.
– That states with higher sales tax than the agreed upon common flat sales tax rate, will agree to accept a lower rate for online sales

Which is basically saying it probably won’t happen  But what if it did?  It would sure make my life easier, and it would remove the barrier for a lot more small businesses to open up.  Every single bit of bureaucratic filings and fees makes it that much harder for a small business to form and stay in business.   Perhaps you haven’t heard, but small business formation is down to about 2/3 of historical norms.  It isn’t hard to imagine that bureaucracy has a lot to do with this.

Government entities are sometimes greedy and unreasonable

Remember that, in addition to the requirements for collecting sales tax and filing returns, there is always the threat that any tax jurisdiction can file an action against a business demanding that they pay a presumed amount of sales tax, or prove that they don’t have to. Thing this is far fetched?  Let me tell you as story.

In California, and probably other states, businesses are required to pay business property tax on assets.  Imaging having to go through everything the business owns, assign it a reasonable value, and then pay property tax on that value, just as you would on real estate.

But there is an exclusion.  If you have less than a certain amount of assets, you don’t have to pay.  But you are _supposed_ to file a return anyways, proving that you don’t have to pay.  It is just another bit of red tape.  I now my business assets are below the threshold required to pay this business property tax, so I never bothered to file a return (who has the time).  So someone that works for the local assessor decided one day to just randomly assign a presumed value of assets that would guarantee I would owe business property tax, and send me a bill … to the wrong address, even though they had my proper mailing address.  Months go by and someone slips one of these letters from the assessor under my door, as they happen to recognize my business name.  Now they are charging me late penalties as well.  Two years later, after filing an appeal with the County Board of Supervisors, and winning, I am still having trouble getting the assessor to remove the assessment from their system.

Now multiply this experience by 12,000 tax jurisdictions and you’ve just killed every small business.

 

 

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Competing against ourselves on Google Adwords

If you regularly read our blog posts, you know that, in addition to writing about topics that are helpful for owners and fans of Revere Ware cookware, we also like to write about our experience running an online business.

Today’s topic is Google Adwords, something which is pretty essential for running almost any online business.  If you don’t get traffic, you can’t make sales.

Let’s start with this graph that shows the average cost per click we’ve paid since we started the business, about 8 years worth of clicks.

One thing to realize is that, when it comes to most of the keywords we advertise for, like “revere ware parts” or “revere ware handle” we are the only business providing these parts.  You might think that there is little to no competition for the Adwords phrases we pay for, and you would be right.  By any standard, the amount we pay per click is tiny.  Some businesses will pay tens or hundreds of dollars for a single click, while we spend mere pennies.

But still, a curious thing has happened over the last 8 years … our cost per click has continue to trend up.  (There are a couple of anomalies to ignore.  The large spike near the start of the graph was us weeding out keywords that were far too costly for our business, and the downward trend towards the end of the graph before it started going up again was us again weeding out the most costly of the phrases we paid for.)

How is this possible given that we are the only business that does what we do?  Well, we recently discovered the likely reason.  Check out this email we recently got from Google.

Well that’s interesting, we are mostly competing with Amazon.com for keyword phrases.  The strange thing about this is that, well, we are the ones selling our parts on Amazon.com.  So, it appears that Amazon.com, in order to move more of the business for our parts to their website rather than to ours, is purchasing the same phrases as us.

What does this mean to our business?  At one level, not much.  Our net margins of selling through our own website and using a fulfillment center to ship the orders, versus selling on Amazon.com and using Fulfillment by Amazon to fulfill the orders is about the same.  Well, mostly.  Take a look at the graph of our margins over the last 13 months.

As you can see, our website margins (in blue) are right in line with the Amazon margins (in red), except for the last two months.  Our fulfillment service has a certain fixed cost for using the service (base cost that doesn’t change every month) and then a variable cost per order (handling, packaging materials, postage).  If our website sales get too low in any month (in the summer months we do about half the volume per month than in the winter months) then there aren’t enough order such that the shipping charges sufficiently offset the fixed costs.  This affect is smaller if you consider the full year, but, if the proportion of our sales that are sold through Amazon.com continues to go up, eventually it simply won’t be profitable for us to sell through our own website anymore; we will at some point start losing money on every order.   Selling through our own website is beneficial, as it allows us to keep much more in touch with our customers, and get direct feedback from them, than selling through Amazon.com, so that would be a shame.

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Revere Ware retail arbitrage on eBay

Arbitrage is the exploitation of economic inbalances.  An example would be borrowing money from a low-interest rate country and investing it in a high interest rate one.

The appears to be some kind of economic arbitrage happening with our parts for sale on Amazon.com and those parts being listed on eBay.  Here is an ad for two of our lid knobs on eBay.

The ad is identical to our listing on Amazon.com, including the title, pictures, and down to the description.  We sell the pair of knobs on Amazon.com for $10.49; on eBay they are listed for $14.49.  Similarly to the fake web store we found a couple of months ago listing our products from Amazon.com, it seems likely that the back-end systems of this seller simply place orders on Amazon.com with free Prime shipping whenever an eBay order is placed, and make a few dollars on the difference between the prices.  This particular seller has 3 other products of ours from Amazon.com listed, all of which are our top sellers (so they are being smart about it).

We can draw a couple of possible conclusions from this phenomenon.

  1. Our prices are too low.  Given the proliferation of our products (and we are the only maker of Revere Ware replacement parts) on eBay at higher prices than we sell on our website or Amazon.com, perhaps the market can bear higher prices.
  2. We should start selling on eBay; there is clearly a market for our parts there.

Doing a little searching on the subject reveals that Amazon-eBay arbitrage is actually a pretty common thing.  There is nothing wrong with it, per se; people are selling a listing something on eBay and then fulfilling the terms of the sale via Amazon.com.  The only problem we have with it is that the un-savvy shopper is paying more than they need to, and that any issues with the sale may track back to us via our Amazon.com sales channel.

We would actually love to use Fulfillment by Amazon as a way to fulfill eBay sales, and the difficulty of fulfilling them separately than how we handle our own website sales (via a fulfillment company), and Amazon.com sales (via fulfillment by Amazon) is what keeps us from listing our products on eBay.   As of yet, there doesn’t appear to be a way to do this that is supported by Amazon.com.

The moral of this story is, if you want the best price on our parts, avoid eBay and go straight to Amazon.com or our website.

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Fake web store?

Plenty of our parts are available on eBay, as we recently mentioned.  Most appear to be parts that were likely obtained through us, or through our store front on Amazon.com, and are simply being resold (at a higher price).  So we aren’t totally shocked that other people are selling our parts.

But we recently found a site that lists all our parts, at substantially higher prices

 

They list a lot of other kitchen related items as well.

Given that we don’t currently sell wholesale, and those are clearly our stock pictures, it seems unlikely that they are fulfilling from inventory. That leaves a couple of options.

Our first thought is that it is a completely fake store and they will just harvest your credit card number and keep your money.

Our second thought is that, it is just a storefront sitting on top of Amazon.com fulfillment.  If they simply order the parts through Amazon and have it directly shipped to the end-customer, they don’t have to carry inventory for any of  the items they are listing.  So far, we haven’t been brave enough to try purchasing something to see if it arrives in an Amazon box.  But if someone is willing to try, we’ve love to see what happens.

The store looks pretty fake, as do the reviews.  It all looks as if someone tried to make it look like a legitimate store, but didn’t quite succeed.

Their contact page lists a German address and an emails: [email protected]  When I go to the tsc-retail page, it is a fancy presentation with text overlay talking about bringing the world closer together through retail … and the video shorts are of Seattle.  Hmm.

In any event, just a word of caution: We are the only folks that make these Revere Ware replacement parts presently.  We sell them through this site, and on Amazon.com.  The items we’ve seen for sale on eBay appear to be legitimate second market items.  But I would stay away form any other outlets (and the prices are much higher anyways).

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The seasonal nature of Revere Ware parts sales

Here is a graph of our sales for every year since we started.

This cyclical pattern appears in almost every way we measure our business.

  • Sales on our website
  • Total site traffic
  • Sales on Amazon.com
  • Google Adwords impressions and clicks
  • Number of Revere Ware related items for sale on eBay.

In retail sales, this is exactly what one would call a seasonal sales cycle.  From peak (December-January) to trough (June-July) is about double the sales.

With respect to our little part of the retail world, I’ve often wondered why people are twice as interested in Revere Ware related items around the holidays then during the summer and fall.

I have no idea what percentage of our replacement parts are purchased as gifts, vs people buying them for themselves.

In any event, it is in interesting factoid around our business we thought we would share.

 

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What 20,000 orders means

We reached a milestone yesterday, order number 20,000.

Since we started selling Revere Ware replacement parts, our business has shifted more and more to Amazon.com.  While we still sell a fair amount through our own website, about 2/3 of our business now comes from selling our projects on Amazon.com.

In all, through both channels (and a brief stint selling on eBay), we’ve fulfilled about 40,000 orders since we started selling back in 2009.  This may not sound like a lot relative to the e-commerce success stories you can read about in the news almost any day.  But for us, we like to think about having made 40,000 people able to continue to use their often decades old cookware, and that makes us happy.  After all, we started this business because we were looking for Revere Ware replacement parts and couldn’t find them.

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Expect good customer service

Just a reminder to our customers or potential customers that we do our best to provide good customer service.

If a product arrives damaged, we will replace it.

If a shipment fails to arrive, we will ask that you work with the Postal Service to locate it, and it that doesn’t work, we will replace it.

If a part fails and you weren’t abusing it, we will replace it.

If you are having an issue installing or using one of our parts, we will do our best to help you, and if that doesn’t work, we will take it back for a refund.

If you have a question, even one that isn’t related to one of our parts or won’t result in a sale, we will do our best to answer it.  However, we do shy away from giving marital advice.

The only thing we ask is that you give us a chance to solve your problem before giving up (and leaving us negative feedback), and that you are kind in your communications.

I wish more people who purchase products online would expect good customer service (and hold businesses accountable when they don’t provide it).  If everyone did that, businesses that didn’t provide good customer service would not survive.

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