Launching Your Own Store

Over time, as your sales increase, the same features that make online marketplaces great places to start turn into vacuums eatinf your store’s profit.

Take this example. As of 2022:

Every sale has a 3% processing fee + 25 cents. Moreover, there are transactions costs on each item sold. Currently, this is a 5% fee per item. And finally there are listing fees of 20 cents per listing.

All in all, a sale of three products totaling $57.00 will go as follows:

• $57.00 Revenue

• $2.08 Processing Fee

• $2.94 Transaction Fees

• (I’ll remove the listing fee from this example for simplicity)

• $5.02 Total Fees

• 8.81% Total Fee Percentage

eBay, likewise, will require you to pay large sums via fees. 

In the beginning, as you start in the experimental phase, this is okay because you are saving on the costs of experimentation. 

However, once you have winning products, fees become a major problem because their damage magnifies in the scaling phase. For example, a fee of 5% on $100 would only take $5 from you. But at a million dollars, 5% would mean you have to hand over 50k in fees. This is why financial products like savings and retirement accounts always fixate on fees —  because with time and compounding, a small fee amounts to a large effect. 

Second, and most importantly, you’ll need to scale beyond online marketplaces capabilities. Sites like Etsy and eBay are like starter cars — they’re safe, reliable, and easy to control. But when you’re ready to race and go pedal to the metal, you’ll need something with more robust controls and handling. In this example, the “faucets” that control scaling, such as are driving traffic, controlling your ads, and owning your customer-list, can only be utilized outside of these marketplaces. Without these faucets, your brand will have a ceiling. And while things may feel good, they could be so much better.