I had this conversation with an Amazon PR person — whose name is withheld for their privacy — as part of my reporting on the company for Inc. I’m publishing the transcript here so that readers will have access to a fuller picture of Amazon’s perspective. The “dear so-and-so” bits have been cut, but otherwise this is copy-pasted verbatim from the email exchange (except for one redacted bit, which is noted, and prettified links).
This website was archived on July 21, 2019. It is frozen in time on that date.
Sonya Mann's active website is Sonya, Supposedly.
Tech Under 10 is an Amazon affiliate store that aggregates inexpensive gadgets. The creator posted on Reddit about launching the site and how well it’s done so far. Amusingly, he’s made almost $10 — $9.39 as of three hours ago — but I think he has the potential to make quite a bit more.
Tech Under 10’s primary assets are its memorable name and beautifully no-nonsense implementation:
I found the products very alluring when I was scrolling through the homepage, and I’m a vehemently anti-clutter, anti-buying-useless-stuff person, so that’s pretty impressive. (I just really want a moon light, okay?!)
Each of the product images links to Amazon. I almost wonder if this wouldn’t work better as a Tumblr account (still using the custom domain name, of course). There are Tumblr themes with a similar layout and design, and that version of the site would leverage Tumblr’s distribution network. On the other hand, then you’re dependent on a platform’s whims, which is never comfortable.
At first I was quite critical of the business concept — 10% of $8.50 or whatever is only $0.85, and you need a lot of those small purchases to add up to the endeavor being worth your time. But then someone in the comments reminded me that Amazon Associates cash out whenever a shopper who’s clicked on one of their links buys anything within twenty-four hours. That drives the potential earnings way up.
The creator said in his Reddit post:
“I’m launching reddit, Bing, Facebook and Google ads on June 1st. In addition, I’m creating a weekly newsletter, Instagram, and Facebook page. The delay gives me more time to add a few hundred new products. […] I’m coming up on 4,000 sessions, and 1,000 clicks on my site, with a 1.2% conversion rate. My main demographic is males 18-30 from the US. Reddit’s proven that there is a market for my site, and I’d love the chance to compete with the big niche sites out there.”
1.2% is a pretty decent conversion rate. And I really like the guy’s attitude — he had an idea, he executed a minimum viable product, and now he’s spreading the word in a likable and enthusiastic way. Kudos.
Making a perzine is cheap. You write everything yourself, you use crappy paper, and you mail out copies in flimsy envelopes. Making a zine more along the lines of a chapbook is expensive, especially if you want to pay contributors a decent amount. I learned this while editing four issues of my now-defunct lit zine Balm Digest, even though I stuck with low-end materials, and I’m learning it again with User-Friendly Urbanism.
I launched Tradeoffs Press with an editorial vision, but also with the purpose of making money in order to facilitate my creative endeavors. (I’m aware that this might doom the whole thing — pleasing customers should be the foremost concern of any new business. And yet.) My goal is to earn enough to compensate myself for the time I spend as well as to earn back the cost of materials. I hope that I can do so while being open about money — I like being open about money. Please don’t resent the dollar of per-unit profit. Anyway, without further ado…
User-Friendly Urbanism Costs
- $20 for Big Cartel (covers October and November)
- $215 for Divya Persaud*
- $250 for Nicole Dieker*
- $200 for Loretta Carr*
- $50 for bubble mailers
- $70 for paper
- $25 for card stock
- $115 for ink (I sprang for the name-brand stuff because it really does print slightly better)
- $1.42 postage per zine — $142 for 100
*Divya, Nicole, and Loretta each contributed an 800-ish-word essay, but the final lengths were slightly different.
When I added up the expenses, I had slight sticker shock:
- $1,087 total for 100 zines → $10.87 each
- $1,489 total** for 200 zines → $7.45 each
- $1,891 total** for 300 zines → $6.30 each
**Doubled and tripled the material costs accordingly.
$10.87 / $7.45 / $6.30 are production costs, not retail prices. I calculated that if I print 300 copies and sell 250 of them for $7.50 each ($7.27 after processing fees), I’ll make $0.97 per zine, AKA $242.50 total, which leaves me just $72.50 short on overall production costs. Selling the ebook for $3.99 → $2.79 profit, so if I manage to sell 100, I’ll make $279 and end up in the black for this whole project to the tune of $206.50. If I don’t sell as much of either format as I’ve guessed, then I’ll lose money. Which is okay — I wouldn’t undertake this gamble if I couldn’t afford it.
Should I have gone with lower-end paper and stuck with flimsy envelopes? Should I have offered to pay $0.10/word instead of $0.25/word? Yeah, maybe. CreateSpace or some other print-on-demand service might have been cheaper.
Granted, either way I can write off the expenses on my taxes! ¯\_(ツ)_/¯
I don’t remember the exact moment I discovered the existence of global culture magazine Monocle. But recently I bought a copy. (So sue me, I like luxury.) Tracing my progress toward that decision is interesting.
- Months ago I read a Nieman Lab interview with Monocle founder Tyler Brûlé.
- Last week I started a project about modern cities. The magazine’s radio station Monocle 24 has a show called The Urbanist, which I knew because Jessica Bridger mentioned contributing on her website. I listened and liked it.
- I sampled some of their other podcasts. Enjoyed them.
- I downloaded the Monocle 24 app, which alternates trendy multi-continent music shows with various talk segments. (The music lineup is slightly more repetitive than I’d prefer.)
- I thought, “If I like the audio this much, maybe I would like the magazine too.”
- I searched the web for other articles about Tyler Brûlé (found and read: 1, 2, 3, 4).
- I wrestled with Monocle’s ecommerce interface.
- I wanted the magazine enough that I tried again.
- Success! Received this email:
By the way, the cost wasn’t negligible: £6 copy + £16.75 shipping = $35 (roughly). If I had realized how expensive shipping would be before sending the purchase through, I would have found another way to get the magazine. I think Pegasus Books carries it…
If the magazine is pleasurable enough, I will probably subscribe. That’s $150+ dollars per year. Not nothing!
Have you noticed #brands in your feed, invited or not? Of course you have. Social media and email marketing are powerful channels for anyone selling a product to reach potential customers. The goal is to usher people toward the gaping maw of a sales funnel. Granted, at the moment ecommerce accounts for less than ten percent of retail sales, but the numbers are higher when it comes to apparel. A tenth may not seem like much, but the market-share is steadily growing.
National or international brands have the resources and know-how to use digital sales channels with utmost savvy (notwithstanding marketers’ cringeworthy affinity for youth culture). Can smaller businesses keep up? It’s more difficult to coax a customer into your brick-and-mortar shop than it is to get them to click a link. Even when small businesses are based online, lacking economies of scale means that they can’t offer the tempting perks and discounts that big brands do. Keeping everything on sale, all the time, eats into your margins.
The proprietor of a now-closed outdoorsy retailer in Wisconsin, who prefers not to be identified by name or city, doesn’t see big brands “supporting the little guy”. In an email she explained, “Certain brands keep separate inventories for their retailers versus their online business […]. It is hard to explain to a customer that you can’t get an item, when they can go to the brand’s website and buy it direct. The brands generally offer free shipping and many times 15%-off coupon deals just for sharing their email.”
She observed, “Customers are being trained to only buy with a deal or incentive.” On the phone, this former store-owner described a man who went into a local sporting goods shop to examine the products, while as the same time searching for the best deals on his smartphone. “He had absolutely no qualms about that,” she told me. Instead of buying from the store whose inventory he was touching and evaluating, he bought from Amazon or a similar retail aggregator, in order to save a couple of dollars.
From the customer’s point of view, shopping online for the best possible deal makes complete sense. Most won’t even bother to take advantage of testing a local store’s physical goods. Why wouldn’t you purchase the same thing cheaper without even having to leave your home? Everyone knows Amazon is a cutthroat company willing to crush competitors of all sizes, but that doesn’t stop people from shopping there, and it never will. If you can pay less to buy a parka online, and have it delivered to your doorstep, the alternative must be very attractive to entice you to do otherwise.
In 2013, technology analyst Ben Thompson wrote, “With the loss of friction,” meaning hassles and barriers to action, “there is necessarily the loss of everything built on friction, including value, privacy, and livelihoods. […] The Internet is pulling out the foundations of nearly every institution and social more that our society is built upon.”
Thompson continued, “Count me with those who believe the Internet is on par with the industrial revolution, the full impact of which stretched over centuries. And it wasn’t all good. Like today, the industrial revolution included a period of time that saw many lose their jobs and a massive surge in inequality. It also lifted millions of others out of sustenance farming.” It’s not all good, but it’s not all bad either. However, when you’re a family business-owner who is being “disrupted”, it’s almost entirely bad.
The analogy doesn’t work in every respect, but mostly this is the current state of affairs: Traditional retailers are horse-drawn carriages compared to steam-powered trains, or traditional taxis compared to Uber. Because of the internet, anyone can easily set up the infrastructure to sell directly to end users. Adjust your value proposition and differentiate or die, because the market doesn’t care about your ability to put food on the table.
This is the hard truth retailers have to confront: If you can’t compete on price or convenience you have to compete on quality, but it’s impossible to compete on quality when you’re selling the exact same product that people can easily buy online for less money. All you’re left with is the experience, the feelings you can evoke and the values you extol, urging customers to “shop local” and, as the anonymous Wisconsin store-owner said, “support the little guy”. She suggested staging events and collaborating with other local businesses, all boosting the community together. Her store used to host yoga classes run by a local instructor. Then Lululemon moved in down the street and also hosted yoga classes — free ones.
This is all very grim. Does the internet revolution mean that retailers based in physical stores should give up hope entirely? Of course not. It means that you have to be intentional about your business strategy, and understand the ways in which you can and cannot compete. It means you have to double down when it comes to reaching the customers who you can actually serve, to whom you can offer a benefit that is meaningful to them.
Understand that shopping in person instead of defaulting to the cheapest, highest-rated item on Amazon is now a luxury. Craft a rewarding experience, whether rustic or glossy, for the customers who show up in person.
Written in early June, 2015. Languished in my Google Drive until now.
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