Vanessa - The Best Employee Ever

Back in November we hired Vanessa to work with us from our Guangzhou office. We spent a lot of time interviewing to make sure we hired just the right person and we were really pleased when we interviewed Vanessa because we thought she was going to be great.

However we didn't expect her to be just as good as she is! Vanessa must be one of the most hard working, focused people I've ever worked with and her attention to detail is amazing. On our recent trip to China Jodie and I saw first hand how efficiently she's set up our operations in Guangzhou. It's not a simple task to do everything Vanessa is going, here's some of what she does for us:

• Tracking, quality checking, photographing, packing and shipping all our shoes. And this isn't a simple task. If I was doing this I'm quite sure there would be mistakes. In 6 months Vanessa has never missed sending an order or shipped a pair of shoes to the wrong address.
  
• Sourcing leathers and shoe hardware for us at the leather markets.
  
• Liasing with our shoe suppliers to follow up on orders, new shoe designs and materials.
  
• Organising the logistics and ordering of our new packaging (more on that soon!)
  
• She's in the process of organising warehouse space for us in China.
  
• We're planning to hire a second employee in China soon. Vanessa will be managing the hiring process and training the new employee.
  

On top of all this we asked Vanessa to keep a close record of our expenses and receipts in China and track them in the accounting software we're using, Saasu. While I've recently found that accounting is more fun than I thought, my book keeping skills leave a lot to be desired, as evidenced by the taco box I shove all my receipts into. You'd think someone running a shoe business could at least use a shoe box! :P

In comparison to my slack efforts, Vanessa tapes every receipts into a book, and enters every expense into Saasu daily. She must have entered around 1000 receipts by now and our Chinese bank balance matches the total in Saasu to the RMB cent! I plan to reconcile our main Australian bank account, which I look after, this week and even with less than 10% of the entries Vanessa has done, I know it's going to be way off.

We're so pleased to have Vanessa as part of our team, thanks for being the best employee ever Vanessa!

Online Retail in Australia Sucks - Part 3

Despite what follows in this post, I'm actually normally a glass is half full type person but following on from our previous two posts I need to get another online retail related rant off my chest.

Online retailers need to ship their goods to customers, and that requires a good postal or delivery service. In Australia we've got a large company who have been blessed with a massive government funded infrastructure of postal stores and warehouses, they're called Australia Post and their service is terrible.

When shoes don't fit a customer, we remake them for free and the customer sends us back their ill fitting pair. Before we moved into our office we were working from home and I'd have customers send their shoes back to my home address. Now the idea behind a postal service like Australia Post is that they deliver things to the address someone writes on a package. I would have had about 30 packages addressed to my home and not a single one was actually delivered to me there. Instead I'd get one of those slips saying, 'Sorry we tried to deliver a parcel to you but you weren't home. Please visit your local Post Office to collect it.' For a while I thought it must have just been bad timing and I had ducked out whenever the post man came by, but after about 15 parcels I realised I was home when these slips were being dropped into my letter box, the post man wasn't bothering to ring my door bell to even see if I was home! One day, after being home all morning, I found a slip in my letter box and I went up to the Post Office to collect the parcel. I was told it wasn't there yet as the post man still had it in his van. So postal workers are literally driving around in a van full of parcels, dropping slips into everyone's letter box without ringing doorbells. Great service and environmentally friendly too.

After a few visits to the Post Office it became pretty clear there were a lot of other people who's door bells also weren't being rung, because there was always a long line up to collect parcels. And to top it off the Post Office clearly has no system for laying out the packages that require collecting. At times I've waited more than 5 minutes for a postal worker to sift through all the packages to find mine, with a big line up of people behind me.

After realising this was happening I was walking down the street one day and saw a post man delivering letters. I spoke to him to ask if he would mind ringing my doorbell with the packages. He was friendly and explained that Australia Post used contractors to deliver parcels separately to letters, so I should visit my local Post Office to ask them about the issue.

So, armed with another couple of 'Sorry you weren't home' postal slips I went to my local Post Office and asked them about the issue. I was told this comes up a lot and that I needed to ring Australia Post and lodge a complaint and that I couldn't do that in the store. So I went home and did just that. Fortunately Australia Post are organised enough to have a 'Press 3 for complaints' menu option on their phone system (insert irony comment here) so I pushed that, waited the obligatory 10 minutes to speak to someone and lodged my complaint. I was told that they've made a note on my address and I shouldn't have this problem anymore. I made the point that this is probably happening to all my neighbours as well and I was told they'd look into it.

And this isn't all. We use a company called EMS to ship our shoes from China. EMS contract Australia Post to carry out the local delivery in Australia. We email all our customers a photo of their shoes, a note to say we've shipped them and a guide as to when their shoes should arrive. We regularly receive emails from customers in Australia (this happens in no other country we deliver to) about a week later asking where their shoes are. When we check the tracking details online we invariably see the message, 'Carded to Post Office' and the customer hasn't actually received a card. If this happened once or twice, maybe that's not the end of the world, but it happens regularly. Clearly my local parcel post contractor sucks, but there are worse ones out there who can't even be bothered leaving cards as they casually drive around the city in their van full of parcels. This is a bad experience for our customers and no doubt will make them less likely to purchase from us in the future.

So what's our alternative? Courier companies like DHL and UPS offer shipping from China to customers all over the world, but they don't have the same massive infrastructure base in Australia that Australia Post do, so to get a reasonable price from them we need to increase our volumes. We will be switching to them as soon as is humanly possible. In the meantime, we, like many other small Australia online retailers, are stuck using Australia Post.

With their wonderful level of service Australia Post is now applying to the ACCC to increase prices for their letters. In my, perhaps naive entrepreneurial mind, I don't think a company should raise prices unless their product and service is so good that customers won't mind paying the extra money. Clearly in the mind of a monopoly, you shouldn't have to follow the same rules. Fortunately the ACCC doesn't make it so easy for Australia Post to increase their prices and their application is still under review. Maybe if Australia Post stopped acting like a monopoly, and offered a reasonable service, the ACCC would be less inclined to treat them like one.

Update: I sent this blog post to the ACCC and they included it as a submission paper regarding the Australia Post price increase. There are some pretty fired up people amongst those submissions!

Currency Hedging

Prior to our launch we raised the issue of currency movements and hedging for our business.

We pay for our shoes in Hong Kong Dollars and Chinese RMB, both of which are pegged to the US dollar. So when the Australian dollar falls in value against the US dollar, our costs go up, and when the Australian dollar rises against the US dollar, as it has since we started putting our business plan together, our costs go down.

The Australian dollar is currently sitting at 0.9255 US cents which is great for us cost wise. But what happens if the Australian dollar moves, say to somewhere like US 0.48 cents which it got to about 10 years ago?

We're lucky in that we've developed a natural hedge. Over the last month nearly 30% of our sales have come from the US, 25% from Europe, 40% from Australia and a smattering from the rest of the world. We charge customers in their local currency. The 30% of sales in US dollars goes a long way towards covering our Hong Kong dollar and Chinese RMB costs, so if the Australian dollar drops in value against the US dollar it won't impact as much as it would otherwise.

In fact, over all we want a weaker Australian dollar. We're now a net exporter so if the Australian dollar is weaker against all other currencies, when we convert our foreign currency receipts into Australian dollars we'd get more for them, and our foreign currency receipts are higher than our foreign currency payments, which would also increase with a weaker Australian dollar. That said, the best result for us is for the Australian dollar to be strong against the US dollar (and therefore the Hong Kong dollar and Chinese RMB) and weak against all other currencies.

Given the way our sales are panning out, the biggest currency risk for us now is if the Chinese government revalue the RMB and Hong Kong dollar against the US dollar. The general consensus amongst economists is that the RMB is being undervalued by the Chinese government. The Chinese government is doing this to make Chinese products cheap for the rest of the world to encourage exports and growth in the Chinese economy. The US government has been pressuring the Chinese government to increase the value of the RMB because it's difficult for US firms to compete with Chinese prices, and arguably the US economy is suffering as a result. But so far the Chinese government has resisted this pressure, and for our sake, we hope they continue to do so.

Facebook's New Developer Goodies

Today Facebook launched a new suite of developer tools which enable third party developers to easily interact with Facebook data.

In my opinion the coolest feature they launched was a universal "Like" button that can easily be added to your wesbite. It actually didn't take us long to implement this feature on all of our shoe design pages on Shoes of Prey. Here's an example you can try out.

When a visitor to your website clicks the "Like" button on your website, a news story is instantly posted on their Facebook wall. As a developer you can customize this news story through special meta tags that are placed on the same page as the like button. There is also a new analytics feature that allows you to see what URLs people are sharing on your site.

The code to get this working is quite trivial - and could be implemented by anyone with a basic knowledge of HTML. You can find the instructions here. The new API is worth a look too, if only because it seems cleaner and better documented than their old one.

What does this all mean? Well, for a start, I'm excited by the prospect of very easily allowing our users to interact with Facebook. It will make our site more visible on Facebook which should mean Facebook continues to be a strong source of traffic for us.

More broadly it strengthens Facebook's offering to businesses. Clearly they are trying to insert themselves directly between their users and businesses. I wonder at what point they will transition to charging for this service. Probably sooner rather than later if only because it will a decent filter for silly/inconsequently content. Too much of that, and people will stop using Facebook. Alternatively, if "likes" never see the light of day either users will stop clicking on the button, or publishers will simply remove them completely.

It's also going to be interesting to see what Facebook does with all of this data. An obvious application would be to provide personalized content recommendations based on your history.

If you've implemented some of the new features on your site, let us know how you are using them in the comments below.

Online retail in Australia sucks - Part 2

Following on from our earlier post about online retail in Australia I wanted to write about another issue that bugs me about the industry here - credit card processing. For an industry to thrive it needs strong supporting industries. A key part of running an online retail business is having a good credit card processing vendor to work with and the Australian vendors are terrible.

We're using the US based PayPal to process credit card payments for Shoes of Prey and PayPal is fantastic. Here's why:

1. Convenience
You can access your merchant account online, just like normal online banking.

2. Easy to set up
Integrating PayPal into our site was easy for Mike to do, the whole sign up process happens online and is fast and simple.

3. Multi-Currency
We can accept payments in multiple currencies which has boosted our conversion rates overseas.

4. Fraud Detection
They have amazing fraud detection built into their system so we haven't had a single charge back or issue with a fraudulent transaction. When I was accessing PayPal a couple of weeks ago from China using a VPN they locked me out of our account as they thought someone might be breaking into it. That's a smart thing to do, I was impressed.

5. Fees
There are no up front fees to use PayPal.

Last year when we were setting up Shoes of Prey I did some research into credit card processing through the Australian banks. In contrast to PayPal their offerings are a complete disaster:

1. Convenience
For most of the banks a credit card processing account requires you to install software on your computer to access your account. NAB, who are actually our online option (more on that shortly) require you to run Windows to run their software. This is not at all convenient.

2. Easy to set up
NAB don't publish their fees online so you need to ring around to get quotes, and their application process requires you to go through a lengthy quoting and approval process that, among other things requires you to send them a detailed business plan and takes more than a month. In addition to signing up with a bank you also need to sign up with a second vendor to run a 'payment gateway' for you. I don't even understand what this is because it's explained so poorly. PayPal don't require this.

3. Multi-Currency
NAB is the only bank in Australia that currently allows you to accept payments in multiple currencies. With more than half our sales in foreign currencies this is a must which means our only choice in Australia is NAB. And using this option sounds like a nightmare. We have to have separate NAB accounts in each of the currencies that we want to accept, and pay a $400 set up fee per currency.

4. Fraud Detection
The banks put all the onus of fraud detection on you, the merchant. And if you get chargebacks from customers who's credit cards have been used on your website fraudulently the bank charges you extra fees and if it happens too much they might cancel your account. We don't know anything about credit card fraud detection so if we want help with this we'd need to sign up with a third credit card related vendor to help us with this.

5. Fees
There are so many different fees to use NAB it takes a spreadsheet to work them all out, and I don't think I ever actually got across all of them. Here's some of them:
Annual Fee: $28
Minimum Monthly Fee: $22
Fixed Transaction Fee: $0.15
Percentage Transaction Fee for domestic cards: (I vaguely remember being asked not to publish this, so I won't)
Percentage Transaction Fee for international cards: (I vaguely remember being asked not to publish this, so I won't)
Multi Currency Establishment Fee: $1200
Multi Currency Set Up Fee - charge per currency: $400
And to top it off, NAB wanted a security deposit of $10,000 in case we got a whole bunch of those fraudulent transactions that they can't help us prevent.

In contrast, PayPal only charge a percentage transaction fee. PayPal's fee is higher, and at a certain point NAB becomes cheaper for us to use, but we'd rather be investing our time and energy into increasing our sales than wading through the nightmare that is trying to accept credit card payments through an Australian bank.

And we shouldn't expect any innovation in this space. In August last year the Commonwealth Bank told me they were trialing a multi-currency service. From what I can tell on their website they still haven't launched it. Compare this situation with the US. In addition to innovators like PayPal coming from the US, new companies like Square and Verifone are launching credit card scanning devices that attach to the iPhone and iPad so small businesses can accept credit card payment using these devices. Square's device works by plugging into the audio jack on the iPhone. The scanner reads the credit card details, converts the data into an audio signal which transfers through the audio jack and is read by their iPhone app which then speaks to their servers and processes the payment online. That's incredible and would be amazing for us to use somewhere like the Bondi Markets.

The Australian financial industry is so heavily regulated that we're unlikely to ever see companies like these launch out of Australia, and it's likely to be years before these US companies are able to expand here.

So that leaves Australian online retailers behind their US competitors in what is a large, growing global industry. Online retail in Australia sucks.

Procrastinate No More!

One of the things I've always wanted to eliminate from my life is procrastination. I actually wrote that down as a key thing I wanted to change in an MBA assignment a few years ago. Procrastinating isn't enjoyable and isn't productive.

The other day I had to write a contract for an agreement we're setting up with a partner and, just like with every one of my law assignment at uni I found myself procrastinating. The great thing was though, I realised it was the first time I had procrastinated in a long time!

Day to day a lot of what I do isn't exactly exciting. I review our orders, discuss them with the workshop, email with customers and do our accounting. But these often mundane things I actually enjoy doing, and am motivated to get done quickly and efficiently because I'm doing them for my own business. I get the full reward if I do them well, and I suffer the full pain if I don't. So I do them without procrastinating.

This is wonderful. When I think back to my University days and even some of my work days working for someone else there were a lot of good times, but I clearly remember the pain of procrastinating.

Procrastination is no more. This is good.

Image Credit

Following your passion

I read this great post on Girlstartup.com the other day. In it the author, Simone, talks about how she tried a scrapbooking related online startup, but it failed, primarily because scrapbooking wasn't her passion. It's an excellent read and a very honest post.

I couldn't agree more, passion is hugely important. Though I don't think you necessarily have to be passionate about the product your startup is selling. Take Shoes of Prey. While I'm developing a passion for custom made women's shoes, they are to me what scrap booking was to Simone, I'm not super passionate about them. My passions are online marketing, customer service and business development. So one of my business partners is Jodie and boy is she passionate about custom made women's shoes, so she takes care of that side of the business. My other business partner, Mike, is passionate about web design and programming, so he takes care of that part of the business. I'm left with the online marketing, customer service and business development, all of which I love! So between the three of us, our passions cover off everything we need in our startup.

I don't think you necessarily have to be passionate about what your startup is doing, but you do need to be passionate about what you are doing in the startup.

Image Credit

Online retail in Australia sucks

I'm going to a wedding in a few weeks time and the bride and groom have a gift registry with David Jones, a retailer who position themselves in the Australia market as the top department store in the country, with 37 department stores and a market cap of $2.4 billion. "Excellent" I thought, Jodie and I can go online, have a browse through the registry and pick something from the registry for them.

No we can't.

We can view the list of products on the gift registry but if we'd like to make a purchase we can do so in store, by phone or by fax! I can't purchase from the registry online? Nope. And I can't even view images or detailed descriptions of the product, instead I get to view helpful information like the bar code number of the product and a David Jones ID number, great.

I suppose I should be pleased. If this is the effort that arguably one of Australia's best retailers is putting in to their website, there's obviously plenty of room for startup retailers like us to succeed. The downside though is if consumers can't buy online from our country's 'top' retailers then they're less likely to be in the habit of shopping online.

Language barriers are falling down

20% of the visitors to Shoes of Prey have their browsers set to languages other than English. And no doubt that figure would be higher if our website was translated into other languages (more on that to come). But how do we support customers who don't speak English?

Enter Google Translate. Paz from Spain wrote in, in Spanish, suggesting that he'd like to see Shoes of Prey translated into Spanish. 5 years ago I wouldn't have been able to even read his email, let alone reply, let alone explain how to translate shoesofprey.com into Spanish for him. Using Google Translate, here's my reply:



And using Google Translate to write it:



And with amazing things like the following translation in Google Goggles on the way, the language barriers to doing business are no doubt going to continue to fall. I'm looking forward to Google Goggles being available in Chinese so I can use it when we travel to China!

Website redesign - we'd love your feedback

On Tuesday we launched a redesigned version of the Shoes of Prey website. We'll likely do a couple of posts over the coming weeks regarding the logic behind the redesign, but for now we'd love to get your feedback.

Do you like it or dislike it? If you have a strong feeling either way we'd love to hear specifics.

Thanks!