ETD: 976 Cash Flow Analysis; Tips on Decreasing Cart Abandonment; Direct from Market — Hong Kong Gifts & Premium Fair

[E-Tailer's Digest]

  E-Tailer's Digest --- Everything for the  Retailer
  Issue #0976      May 9, 2006
  George Matyjewicz, Moderator         mailto:georgem at gapent.com
  Published by:  GAP Enterprises, Ltd.  http://www.etailersdigest.com
----------------------------------------------------------------

     CONTENTS
  [1]  Greetings
  [2]  Cash Flow Analysis
  [3]  Tips on Decreasing Cart Abandonment
  [4]  Direct from Market — Hong Kong Gifts & Premium Fair

---------------------------------------------------------------
  [1]  Greetings.
----------------------------------------------------------------
Hi All:

Today we have a piece on Cash Flow 
Analysis.  Many people are under the impression 
that it you are making money, i.e., you have a 
profit, that you are OK.  WRONG!  If you don't 
have cash, you can go bankrupt.  In the old days, 
when the store owner looked in his pocket at the 
end of the day, and if he had cash, he was OK - that's not far from the truth.

We also have tips on decreasing card 
abandonment.  We have been discussing some of 
these, in particular the one about accepting different credit cards.

Meredith Schwartz of Gifts & Dec reports on the 
Hong Kong Gifts & Premium Fair, which is the 
biggest in the world.  They have 4,500 booths and 
a waiting list of 1,000 wanting to exhibit.  They 
set the trend for giftware in the next year.

Now, let's get to everything for the retailer.

Sincerely


George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, LLC
mailto:georgem at gapent.com
http://www.etailersdigest.com

----------------------------------------------------------------
  [2]  Cash Flow Analysis
----------------------------------------------------------------
We are creating cash flow reporting for a client, 
and thought I would share the logic with you.

All businesses have cash coming in and cash going 
out. The trick is to have the cash-in higher than 
the cash-out, and to try to retain some of the 
difference.  I saw a statistic that said over 30% 
of the businesses that file for bankruptcy 
protection each year are profitable.  They simply ran out of cash.

To manage cash effectively, you need to analyze 
where your cash will come from (sources of funds) 
and where it will go (use of funds), and you need 
to do so over a period of time.  This means you need to:

1.  Analyze your accounts receivable by customer 
to project when cash will come in based on their paying trends.
2.  Analyze your sales by day by month, comparing 
it to last month and last year.  You need to spot 
trends.  Is sales up or down this day vs the last 
period and is this month up or down vs last year? 
This will help you in managing inventory and 
ordering goods.   Sy Sims has the right attitude 
for managing inventory.  If goods don't sell over 
a period they reduce the price, and continue to 
do so over various periods until the goods are 
sold. The same would hold true with ordering.  If 
goods take 21 days to receive, you need to plan 
your inventory to have goods available as projected.
3.  Analyze your accounts payable, and project 
out your cash needs based on terms offered by the 
vendor.  Sometimes quick payment discounts aren't 
as helpful to you as is the need to use that cash elsewhere.
4.  Either with a spreadsheet, or software from 
your system, match the projected cash in with the 
projected cash out over the next 90 days 
(week-by-week).  Look to see where you will be 
short, and start talking to your bank.  Or talk 
to your vendors about extending terms, and to 
your customers about speeding up the payment cycle.

An accurate cash flow projection is key to 
success in any business.  This is a VERY 
simplified explanation, which does require a lot 
of thinking, planning and implementation.

If you need help with your cash flow projections, let us know.

George
----------------------------------------------------------------
  [3]  Tips on Decreasing Cart Abandonment
----------------------------------------------------------------
A truly successful and customer service friendly 
ecommerce shop will have an intuitive and well 
designed checkout system. The more difficult it 
is to purchase something from you, the less 
likely a customer will try. Here are some tips to 
ensure you’re running a customer-service friendly checkout system.

Payment Options: Be sure to accept as many 
different payment methods as possible. Many shops 
I have seen only accept Paypal or MasterCard and 
Visa. This is probably because merchants don't 
like to deal with the fees that other credit 
cards charge. There are many payment gateways out there, however.

With a decent merchant agreement, you can obtain 
decent credit card fees, and offer all four major 
cards. Furthermore, American Express is an 
especially important credit card to accept. Yes, 
it can cost you a bit more but it’s well worth 
it. Why? Almost all business and corporate cards 
are AMEX, and if you don't accept them than you 
may be losing sales from businesses.

Easy Flow: Many carts make the mistake of asking 
too much from a customer who is trying to check 
out. Asking about joining a newsletter, or 
providing feedback, or trying to sell numerous 
add-on items can hurt you in the end. They are 
all valuable additions to a cart, but if they’re 
used in excess, you will lose more than you gain.

Test It Out: Most shopping carts have 
customizable checkout pages. Try placing 
important buying-decision information on these 
pages. For example, you may put a few 
testimonials on one of the pages. Or perhaps make 
your site’s security seals prominent on these 
pages. Test different graphics to see what customers respond best to.

The ultimate goal of analyzing your checkout 
process is to reduce abandoned carts. By 
following the simple steps above, and making sure 
your checkout process is graphically simple and 
easy to follow, you should find the number of 
abandoned carts decreases. Compare your checkout 
process to other merchants. You may be surprised 
at the opportunities for improved conversions that you are missing.

Nick Loeser
President of CT Web Studio,
an ecommerce design and development company.
http://CTWebStudio.com
http://www.mivacentral.com/articles/payment01.mv?linknote=nl_2006may08_pecomtext

----------------------------------------------------------------
  [4]  Direct from Market — Hong Kong Gifts & Premium Fair
----------------------------------------------------------------
  As soon as you arrive in Hong Kong, it's 
obvious that gift sourcing is big business here. 
Several gift shows, including one in Las Vegas, 
advertise at the airport, and the Alibaba.com 
wholesale sourcing website has ads wrapping the 
baggage claim and pillars in the subway, as well 
as adorning the tops of the red taxicabs. The 
ride from the airport to the convention center 
passes a forest of container shipping cranes. 
Jeffrey Lam, chairman of the Hong Kong Gifts & 
Premium Fair Organising Committee, says that Hong 
Kong shipped over 20 million containers last 
year, a business that grew at a rate of 5 percent over last year.

The Hong Kong show has grown 10 percent since 
last year, to 3,800 exhibitors in 4,500 booths. 
These days, the convention center is practically 
bursting at the seams. Even the parking deck was 
turned into a new exhibition hall called "Expo Drive".
A cushier but more out-of-the-way option was the 
exhibits placed in the convention center's 
erstwhile meeting rooms, sometimes as few as two 
booths to a room. (The Hong Kong show has 
eliminated seminar programs to maximize exhibit 
space; exhibits even fill the wider hallways.) 
With 54,875 buyers, including 26,321 from outside 
Hong Kong, there was plenty of traffic, though 
total attendance did not grow compared to last 
year, and overseas attendance dropped almost 5 percent.

Still, the show has a waiting list of more than 
1,000 would-be exhibitors, and management plans 
to expand the convention center with the goal of 
200,000 square feet — or 1,000 additional booths 
— available by 2009. The Hong Kong Trade 
Development Council also hopes to expand the 
event strategically, by adding a new sector. 
Potential categories for expansion include 
Christmas, personal care and candles, all 
under-represented when compared with most U.S. gift shows.

Three features of the show were new to us. The 
Hall of Fine Designs featured non-standard booth 
designs, and the 49 exhibitors really went to 
town, with eye-catching structures including dome 
two-story booths. But even more surprising was 
the large amount of open space between exhibits, 
even as other areas of the show were packed 
together. It gave the Hall of Fine Designs an 
immediate distinction, with a gallery feel that encouraged browsing.

A second unique feature were mini-booths that 
gave up-and-coming product designers — such as 
Samuel Young, creative director of Ikonee Intl. 
Ltd., Hong Kong — a place to showcase their work.

Lastly, there was the Design Gallery, opened in 
1991 and located at the Convention & Exhibition 
Centre. This gallery is open year-round, and 
features selected pieces of Hong Kong design ­ 
including many exhibited at the show.

Regional Changes
Show management's biggest concern was to 
emphasize the Hong Kong show’s continuing 
advantages — service, experience, a congenial 
atmosphere, and fully convertible currency — over 
growing competition from within Hong Kong itself, 
as well as from mainland China and elsewhere in Asia.

Meanwhile, the buzz on the show floor was that 
some exhibitors are choosing to attend Hong Kong 
over Frankfurt, perhaps because the trip can be 
combined with visits to factories, as well as the 
Hong Kong Trade Development Council’s Housewares 
show (which split off from the Gifts & Premium 
Fair in 2001), and the Canton (China) show. The 
Housewares fair’s overlapping audience makes it a 
good predictor for gifts, according to Lam. 
Additionally, data from the Housewares market is 
encouraging, with exhibitors seeing a 16 percent 
increase in the volume and 18 percent increase 
over last year in the value of orders placed. The 
United States and Europe are still the largest 
export markets in the world, but mainland China, 
Russia, India, South America and Japan are all growing.

Lam also said that the Hong Kong economy is back 
in the black. And according to the Hong Kong 
Trade Development Council, more Hong Kong 
companies are moving their manufacturing to the 
Chinese mainland, and shipping direct from there 
to overseas markets. These companies are shifting 
their in-house emphasis to product design, 
prototype construction and marketing.

Trends — Tech Goes Mainstream, Multifunctional
Blurring the line between technology and 
traditional gifts was the single biggest trend at 
the fair. Debuting products were less reflective 
of dramatic technological advances than 
technology that’s been given a design makeover 
and crossed into home decor. Retro radios by 
Hedworth Ltd., Hong Kong represent the home decor trend.

Other trends included technology that reflects 
personal fashion, and multi-functional designs 
that do several clever things at once. The show 
has a substantial consumer electronic section, 
but tech gifts were popping up all over, no 
longer as a separate category but part of the general gift selection.

USB memory drives turned up joined to everything 
from watches by Lattitude Ltd., Hong Kong, to 
home (or office) fragrance delivery by Debreu 
Ltd., Hong Kong. In addition, there were 
USB-powered devices that do everything from clear 
the air to warm a cup of coffee. MP3 players 
embedded in sunglasses from Xonix Electronics 
Co., Hong Kong, drew a crowd, and other popular 
items included technology add-ons such as 
wire-managers for earphones in the form of fish 
or dog bones by V.33 Design & Marketing Co., Hong 
Kong; “tough boxes” to protect fragile electronic 
gear; and digital “pets” that play or move to music.

Trends — Gifts with Personality

Digital pets are an example of two converging 
trends: technology and the continued expansion of 
anthropomorphic design, turning almost any 
household object — from clock to picture frame to 
bookends to paper towel holders — into a functional friend.

Driven by the affordability of molded plastic, 
and informed by the “anime” style of character 
creation, the newest twist brings these 
characters into the office in the form of screen 
cleaners, mouse pads and desktop decor. Plush and 
other characters are simplified and stylized 
rather than realistic, and many feature oversized 
heads and eyes. Notable exhibitors included Semk 
Products Ltd., Hong Kong, for clocks with legs 
and dog shaped speakers; Adda Products Ltd., Hong 
Kong, for Pets at work; Playhouse big-headed plush 
in fabrics from tartan to corduroy by Thomas 
Crown Gifts, Hong Kong; and Mellow Pets on 
everything from cardholders to cushions, by LOL 
Design, Hong Kong. Even the Chinese Zodiac 
pillows by Jackie Chan (yes, that Jackie Chan) 
Design, Hong Kong, feature extra large heads and eyes.

We also noticed a lot of the color orange at the 
show, on both product and booth décor. Several 
fashion-forward designs coming out of Thailand 
featured orange natural rubber. Rubber Gift Ltd. 
played into a Trade Development 
Council-identified trend toward environmentally friendly alternatives.

Premiums Trends
Steve Stagle, CEO of Promotional Products 
Association Intl., which brings a few hundred 
members to the Hong Kong show, noted that newly 
affordable electronic and multifunctional gifts 
are the up-and-coming trend in promotional 
products. Stagle also emphasized that today the 
promotional product market includes corporate 
gifting, and no longer has a necessary low price 
point limit. Nor is it limited to private-label goods.

Indeed, high prestige brands with promotional 
packaging have become an important part of the 
corporate gift market. Stagle also said that 
promotional product companies are facing 
increasing competition from gift cards in the 
corporate gift market, despite their lack of 
pass-along promotional value, since the brand may 
appear on the card, but not on what's bought with it.

“Retail gift cards are probably the most 
controversial part of the industry at this time” 
said Stagle. For more on gift cards, see “Paper 
or Plastic?” in the May issue of Gifts & Decorative Accessories.

— Meredith Schwartz
Gifts & Dec Magazine
http://www.giftsanddec.com

----------------------------------------------------------------
  Links to follow
----------------------------------------------------------------
GAP Enterprises, Ltd.		http://www.gapent.com/
E-Tailer's Digest              		http://www.etailersdigest.com
Interim Help			http://interimhelp.com
Sophisticated Me		http://sophisticatedme.com/
Marketing Your Web 		http://www.gapent.com/myweb/
Automated Press Releases      	http://www.automatedpr.com