Lessoned Learned from Running this Business (Part 2)
And now for the list of annoying details about the business! I’m not trying to deter anyone from jumping in, but make sure you have answers for these issues!
1) The market isn’t that big and highly fractured globally- Shouldn’t really come as a surprise. I estimate there is at most $1mil in revenue available to take in from strictly looners out in the world. Notice I said REVENUE, not PROFIT. I don’t really have a complex analysis on why I think this; I’ve based it on group sizes on Facebook and around the net, as well as keeping tabs on how often inventory refreshed at Balloons United and Nordic looners. If someone managed to make a business where they can pay themselves a salary of $50,000 a year, I’d be impressed. Balloons United was probably hitting that level…but even they soldout to someone else. If you want to move into this space, you are going to need to sell to normies/normie furries who just think your stuff is neat as prop for photos.
2) Shipping insanity- Losing a $100 order in the mail is a nightmare, EVEN if it’s insured because how much fighting you have to do with the shipping service. It will take you a dozen or more orders just to break even again. The post office NEVER scans the orders that go missing, and it’s always the most impatient customer who’s order goes missing, and it always arrives right after you issue a refund. Without fail. This is a hyper annoying issue. And if you don’t have a brick and mortar store, you’re going to have to run orders to the post office. USPS beats the pants off the rates of UPS or FedEx for packages that weigh as much as balloons do, and those other carriers are no better in service and often require guaranteed volume to get contracts. Overseas shipping is also a nightmare. Between the lockdowns crippling international commerce and prices going higher and higher…it’s impossible to effectively sell outside the US. Businesses in the EU often get a government subsidy to ship to the USA; it will cost them under $10 where it will cost me $26+ (and still get lost). Sometimes I’d get messages from overseas customers asking me to use a carrier I’ve never heard of, who’s nearest office is 2hrs away and still double the rate. Shipping is just a nightmare, even with automated services and label printers.
3) Unfavorable tax situation- Illinois’ tax rate is 9.75% where I live. It's insane the number of carts I’ve seen abandoned with a $10 order because checkout adds $2.99 shipping and taxes that too. Even cuter, Wix started snitching on stores selling to the EU. I used to mark orders as “Gifts” to help EU buyers avoid the 20% VAT tax…then Wix demanded I pay 20% on orders to the EU. So a typical EU order was $25 + $26 shipping + 20% VAT + 9.75% IL sales tax (YES! I have to charge for IL because IL has an origin based tax and I’m shocked it hasn’t been shot down in the SCOTUS yet). One of my favorite email interactions was someone yelling at me for all the taxes I was charging them, and it was “unfair” because they didn't charge others for it. Ya…exactly. I feel bad for other furry creators out there using Paypal to sell art or other products without a business license because they are now reporting net annual earnings over $600 to the IRS, and they IRS is trigger happy to audit.
4) Misprints/Defects- Another issue that compounds costs. Printers make mistakes. Sometimes their defect rate is under 1%. Sometimes it’s 10%. You can complain…sometimes you’ll get a credit, but they have your money now and usually don’t care. A bigger issue than misprints was defects with Cattex products. Easily 1 out of 25 items had holes or cuts or tears.
5) Inflation- The cost of everything went up. Pretty straight forward, but this was especially obnoxious with Cattex because they charge nearly $200 to ship a 20lb box. That adds nearly 25%+ to the cost of your products when you go to sell them (costs at the bottom).
6) Fraud- It’s unavoidable. It happens in business. I often hear others in different retail businesses online tell me it’s about 1 out of every 100 orders. For me it was closer to 1 out of 40. You can’t stop Timmy from stealing his parents/roommates credit card, insisting they never got their package even with a confirmed receipt, or straight up saying you sent them an empty box and opening a Paypal dispute. Online retail is 110% set up to favor the customer. All you can do is ban theses people and eat the loss. Fun fact: since the store has been open, I’ve sold [27] 6ft climb in balloons…14 of them have customer disputes/charge backs…so something about that product in particular attracts bastards.
7) Supply Shortages- The big one. I simply can’t get balloons made unless they are gray or flesh tone…and that’s not even a joke. Some of my printers even just stopped printing all together. It’s been bad since mid 2020 and hasn’t gotten better. Talking to my Qualatex distributor was like trying to conduct a drug deal. "Nah man, no purple, pink, or yellow, I only got 25 clear, and you gotta act now!"
8) I’m tired- Combine with everything above with throwing your own cash out into the wilderness and praying it comes back to you, hopefully with some friends, is stressful. All the time spent marketing, dealing with artists and manufacturers, customer emails, runs to the post office, tracking and packing orders…it adds up. Usually fat cat cigar smoking capitalists have wagies to do this work…but in this case it’s just my wife and me because see point #1. So while there is money to make, it’s below min wage unless you really scale big and can tap other markets.
All the above reasons are why I’m kinda done running this business. I always had that nagging voice in my head begging me try and run this type of business. The kinda voice where you’d regret not giving it a shot on your death bed. And now, I’ve done it. I can walk away knowing I did it. Whether or not I come back in the future…I don’t know yet. But for now, I’m fine walking away.
To close, here’s some RAW numbers on costs. I implore you, for the love of God do not simply go (Sale price – Cost) * Qty = $$$$$$$$. The cost numbers I list are PURELY manufacturing/product costs, they don’t include: sale discounts, fraud, undercharging shipping, misprint costs, defects, paying your artists, customer disputes, lost orders, gas to go to the post office, and most importantly, it implies paying yourself $0/hr for your time.
16inch Balloon prints from BalloonHome or Qualatex: $420 per 1000
Tuftex 24in prints: $1.30 each (250min, Tuftex stopped printing in 2021)
Qualatex 3ft prints: $6.80 each
Cattex 32in prints: $2.10 each after shipping
Cattex GL1200: $6.50 after shipping