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> This sounds like business the stores wouldn't be getting otherwise (so it's incremental) Have you ever run a business where the margins don't even reach fift

> This sounds like business the stores wouldn't be getting otherwise (so it's incremental) Have you ever run a business where the margins don't even reach fifteen percent? Because that is a lot of small businesses. More sales at unsustainable margins are not better than fewer sales. Software people forgetting that COGS exists is common enough in the VC space but most of the world has an acute understanding of the costs of their supply chain. "Suddenly, we decide when your margin drops by twelve percent and there is no recourse except to fuck off" is bad.

tomnipotent 7y ago
> Have you ever run a business where the margins don't even reach fifteen percent? I'm willing to wager the average margin for an Etsy seller is much better than that, but it makes for a dramatic example to try and prove a point. > More sales at unsustainable margins are not better than fewer sales. That's not how margins work. Scenario 1 - No Participation - Orders: 1,000 - AOV: $30 - Gross Sales: $30,000 - Cost: $15,000 COGs - GM $: $15,000 - GM %: 50% Scenario 2 - Participation - Orders: 1,000 + 100 Outside Ad Orders - AOV: $30 - Gross Sales: $33,000 - Cost: $16,500 COGs + $450 = $16,950 - GM $: $16,050 - GM % 48.6% This is before you factor in other costs, or your time.
- stordoff 7y ago
  That's one scenario. I can very easily gin up some numbers where it doesn't make sense: - Organic Orders: 500 - AOV: 20 - Gross: 10000 - Margin: 15% - Net: 1500 A nice little side business. Nothing amazing, but a little extra income. - Extra Orders: 100 - Gross: 12000 - Net: 1560 ([Orders * AOV * Margin] + [Extra * AOV * (Margin - Esty Ad Cut)]) Hang on - why am I doing 20% extra work for 60 quid? If Etsy takes some of my organic traffic, I make a _loss_: - Organic Orders: 450 - Value (AOV): 20 - Margin: 15% - "Extra" Orders: 150 (100 from above, plus 50 that _would_ have been organic but are now attributed to ads) - Gross: 12000 - Net: 1440 I'm doing 20% more work, and making _less_ money. Even if you increase the margin to 25%, you can still be looking at very marginal gains for the additional work if there is a shift from organic to ads (500 sales - net 2500; 450 sales + 150 ad sales - net 2640). As a seller, it's driving my workload up without giving a corresponding return, which might not be wanted. That's why not being able to opt-out is a problem - for some sellers, it could make a lot of sense and drive profits; for others, it could be an unwanted drain.
  - tomnipotent 7y ago
    > I'm doing 20% more work, and making _less_ money. That's not how it works. Overall you're making less per hour, but making more overall money. Maybe you were at $20/hr, and now you're at $19.50. This is not a bad trade-off, as otherwise you wouldn't have made that money but you still would have had those hours of productivity available. Where do these exaggerated 10-15% gross margin numbers come from? These stores do not exist, or do not exist long. And I can't imagine any product at 10-15% that isn't being sold everywhere else because it's mass-produced. How much of every seller's business comes from free Etsy traffic? Should Etsy charge more for orders they can validate came from them, which the seller otherwise wouldn't see?

tomnipotent 7y ago

> Have you ever run a business where the margins don't even reach fifteen percent? I'm willing to wager the average margin for an Etsy seller is much better than that, but it makes for a dramatic example to try and prove a point. > More sales at unsustainable margins are not better than fewer sales. That's not how margins work. Scenario 1 - No Participation - Orders: 1,000 - AOV: $30 - Gross Sales: $30,000 - Cost: $15,000 COGs - GM $: $15,000 - GM %: 50% Scenario 2 - Participation - Orders: 1,000 + 100 Outside Ad Orders - AOV: $30 - Gross Sales: $33,000 - Cost: $16,500 COGs + $450 = $16,950 - GM $: $16,050 - GM % 48.6% This is before you factor in other costs, or your time.

stordoff 7y ago
That's one scenario. I can very easily gin up some numbers where it doesn't make sense: - Organic Orders: 500 - AOV: 20 - Gross: 10000 - Margin: 15% - Net: 1500 A nice little side business. Nothing amazing, but a little extra income. - Extra Orders: 100 - Gross: 12000 - Net: 1560 ([Orders * AOV * Margin] + [Extra * AOV * (Margin - Esty Ad Cut)]) Hang on - why am I doing 20% extra work for 60 quid? If Etsy takes some of my organic traffic, I make a _loss_: - Organic Orders: 450 - Value (AOV): 20 - Margin: 15% - "Extra" Orders: 150 (100 from above, plus 50 that _would_ have been organic but are now attributed to ads) - Gross: 12000 - Net: 1440 I'm doing 20% more work, and making _less_ money. Even if you increase the margin to 25%, you can still be looking at very marginal gains for the additional work if there is a shift from organic to ads (500 sales - net 2500; 450 sales + 150 ad sales - net 2640). As a seller, it's driving my workload up without giving a corresponding return, which might not be wanted. That's why not being able to opt-out is a problem - for some sellers, it could make a lot of sense and drive profits; for others, it could be an unwanted drain.
- tomnipotent 7y ago
  > I'm doing 20% more work, and making _less_ money. That's not how it works. Overall you're making less per hour, but making more overall money. Maybe you were at $20/hr, and now you're at $19.50. This is not a bad trade-off, as otherwise you wouldn't have made that money but you still would have had those hours of productivity available. Where do these exaggerated 10-15% gross margin numbers come from? These stores do not exist, or do not exist long. And I can't imagine any product at 10-15% that isn't being sold everywhere else because it's mass-produced. How much of every seller's business comes from free Etsy traffic? Should Etsy charge more for orders they can validate came from them, which the seller otherwise wouldn't see?