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You are touching on a point that Benedict Evans has made quite eloquently in the past: >There was a joke a few years ago that rent is the new [Customer Acquisi

You are touching on a point that Benedict Evans has made quite eloquently in the past: >There was a joke a few years ago that rent is the new [Customer Acquisition Cost], and that now applies to everything. The [Total Addressable Market] for search ads is not ‘advertising’ (let alone online advertising) but everything that is spent to reach and serve a customer, starting with retail rents. This applies to Amazon, but even more to Google - you can ask whether Google’s ads are ‘advertising’ or ‘marketing’, but also ask whether the TAM for buying placement in Google search results is ‘advertising’, ‘marketing’ or just its customers’ operating margins. How do you reach a consumer? Do you spend your budget on TV ads or search ads, or on retail rents, or on giving retailers a margin versus selling direct, or giving the retailer a better price for better placement, or free shipping, or a better returns policy? Everything below P&G’s COGS line is up for grabs. https://www.ben-evans.com/benedictevans/2023/3/6/ways-to-think-about-amazon-advertising https://www.ben-evans.com/benedictevans/2023/3/6/ways-to-thi... There will be no site that does not offer advertising, because advertising allows the site to determine which sellers can afford to pay more while still being profitable. It's a scaled version of the same way a landlord will raise rents on a profitable storefront.

codexb 3y ago
It's going to be a bit harder to win on this end I think. Manufacturer's require retailers to agree to this type of restriction all the time time (and it's mandatory, not voluntary) like it is with Amazon.
simpaticoder 3y ago
>There will be no site that does not offer advertising, because advertising allows the site to determine which sellers can afford to pay more while still being profitable. It's still possible that people exist who charge "what it's worth" rather than "what they can get". Those people can still make a fine living off of a two sided market place through flat transaction fees. Craigslist is an example that comes immediately to mind. Smart market participants are already punishing providers that maximize profit with payola, which is leading to success of new smaller niche markets - reverb.com comes to mind, or bricklink.com or alibris.com. That is not to say the market of markets is "solving" this problem - we probably want more consumer protection law - but it does show that your startement about ads is, strictly speaking, false.
- afiori 3y ago
  But you need the entire marketplace to follow that rule. You cannot charge "what it's worth" on amazon because you either pay the ad tax or you compete for the lowest price.
- alsetmusic 3y ago
  Craigslist is a hell hole. I stopped selling there because even when I was practically giving electronics away (to prevent buyer’s remorse), people still emailed insultingly low offers. I just gave up on the site maybe five years ago.
  - simpaticoder 3y ago
    CL has gotten much much worse over the last few years. So has FB Marketplace. Perhaps a hidden value of the payola approach is to avoid these outcomes. Or perhaps every marketplace declines like this. It may be that private secondary market online market is simply not a sustainable business. That would be unfortunate, but interesting.
  - tgma 3y ago
    I think that reflects more on your sales strategy than CL in general. If there's negotiating expectations in a market (Middle East or Craigslist) you gotta start higher to arrive at the desired "halfway point" (think Ross pricing for clothes) and you gotta ignore spam/lowballs altogether. In fact pricing things too low undermines the quality of the item you're selling perceptually and attracts lowballers disproportionately. CL has gotten worse since FB Marketplace has gotten foothold people visit it much less. FB Marketplace on the other hand is a race to the bottom due to ease of sales by laypeople.
- balex 3y ago
  The problem is that "what it's worth" can only be determined via "what you can get". Flat fees are just operational costs + capped profit. And the next question would be, where do you place that cap and why there?

codexb 3y ago

It's going to be a bit harder to win on this end I think. Manufacturer's require retailers to agree to this type of restriction all the time time (and it's mandatory, not voluntary) like it is with Amazon.

simpaticoder 3y ago

>There will be no site that does not offer advertising, because advertising allows the site to determine which sellers can afford to pay more while still being profitable. It's still possible that people exist who charge "what it's worth" rather than "what they can get". Those people can still make a fine living off of a two sided market place through flat transaction fees. Craigslist is an example that comes immediately to mind. Smart market participants are already punishing providers that maximize profit with payola, which is leading to success of new smaller niche markets - reverb.com comes to mind, or bricklink.com or alibris.com. That is not to say the market of markets is "solving" this problem - we probably want more consumer protection law - but it does show that your startement about ads is, strictly speaking, false.

afiori 3y ago
But you need the entire marketplace to follow that rule. You cannot charge "what it's worth" on amazon because you either pay the ad tax or you compete for the lowest price.
alsetmusic 3y ago
Craigslist is a hell hole. I stopped selling there because even when I was practically giving electronics away (to prevent buyer’s remorse), people still emailed insultingly low offers. I just gave up on the site maybe five years ago.
- simpaticoder 3y ago
  CL has gotten much much worse over the last few years. So has FB Marketplace. Perhaps a hidden value of the payola approach is to avoid these outcomes. Or perhaps every marketplace declines like this. It may be that private secondary market online market is simply not a sustainable business. That would be unfortunate, but interesting.
- tgma 3y ago
  I think that reflects more on your sales strategy than CL in general. If there's negotiating expectations in a market (Middle East or Craigslist) you gotta start higher to arrive at the desired "halfway point" (think Ross pricing for clothes) and you gotta ignore spam/lowballs altogether. In fact pricing things too low undermines the quality of the item you're selling perceptually and attracts lowballers disproportionately. CL has gotten worse since FB Marketplace has gotten foothold people visit it much less. FB Marketplace on the other hand is a race to the bottom due to ease of sales by laypeople.
balex 3y ago
The problem is that "what it's worth" can only be determined via "what you can get". Flat fees are just operational costs + capped profit. And the next question would be, where do you place that cap and why there?