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Bootstrapping an Online Fabric Shop and Growing to $20k per month (starterstory.com)
317 points by patwalls 8 months ago | hide | past | web | favorite | 132 comments



I run an almost identical fabric shop online. 20k/month revenue is great but remember this is not a SaaS with unlimited scale and low costs. It's actually a very traditional business model, and margins here are only going to about 20-30%, potentially a lot less if you have to pay for your storage space.

You buy the fabric, typically you'll double the price when selling to customers. Then you take off additional postage fees/packaging (note the flat fees on postage), payment fees (3-4%), discounts, returns, shopify monthly fees, accounting software etc.

You'll spend about 50% of your day cutting & packing orders, taking them to the post office etc. (or you can employ someone to help) and the rest of the time taking shots for instagram, sourcing new suppliers, working on SEO/blogging and doing admin.

If you're good at marketing you can shift quite a lot of fabric, but it will take you about a year to get your stock levels up to a sustainable amount to pay yourself a wage. If you want a real shop front you will generate most of your profit from running classes as the costs for a high street store are significantly higher than shopify and you gain little in terms of footfall vs online traffic.

This isn't a get rich quick model but over time it works well and is replicable at scale.


Thanks for your insight. You're not too far off, but my margins are much higher - thank goodness. I've been at this for 5 years and also have an employee who helps with all the cutting, packaging and shipping. I offer a flat rate shipping fee for small price orders anything under $45. Sales above $45 ship with a Canada Post calculated shipping rate. Good luck with your business :)


Thanks - how are your margins higher even with an employee? I'm guessing your markup is way higher?

I'm in the UK - I don't think our market can support higher margins (cost to import fabrics is relatively high), so just curious.


Firstly accounting. Almost anything can be included in your margin (as long you are consistent). I think you atter talking more in terms of net- profit margin (all costs included) whereas fridaysoff seems to be talking about gross-profit (sales minus cost of the goods that you sold). As an online retailer I would suggest that you understand your gross-margin (how much you make on the product) separately from the costs of warehousing and shipping and separately from the overheads of accountancy, banking etc.

The reason for this is that by just summing your costs you louse sight of how various areas are performing, and you also lose the ability to compare. If you become a better buyer your gross margin improves, but by employing a picker it stays the same, however type warehousing costs do increase.

So in essence when most people say 'margin' they mean a simple sales-minus-cost-of-goods-sold.

Disclosure: I'm in finance at a retailer/wholesaler who is doing around 5x what the article is doing on ecommerce, it's smallest channel (about 1/20th of the company, but growing)


Can I quickly thank you both for honesty - it's always good to get behind the scenes insights into businesses I know little about but see in passing. Thank you


You're in an overserved marked in the UK, whereas OP is in an underserved market in Canada.


I'd be very interested to know how customer sales typically break down between design categories: solid colours, geometrics, florals etc. Do you have any insight you can share there?

Context: trying to understand the design market.


We stock a lot of florals and dressmaking fabrics, I don't think the data is large enough to derive any insight on market trends though.


Just out of curiosity, have you tried building the price of shipping into the product, and marketing with free shipping? From my own experience in eCommerce, it really boosts conversions.


I have a similar-ish product. For non-discrete items sold at a single price per unit, and where people buy a wide range of volumes, baking the shipping costs into the product leads to strange prices outside whatever sweet spot you choose, because shipping prices don't scale linearly with your product.

The flat rate shipping under $45 in this example is probably because it costs nearly the same to ship half a yard or five yards; shipping 20 will cost a good deal more, but not be anything like 20 times the cost of shipping one yard. So there's no way to bake in a price that doesn't end up generating absurd results either for you, your customer, or both.


Can't you just give a lower price at 10 yards and again at 50 yards for example? Then you solve your baked in price issue and get to offer discounts on high amounts, incentivizing buying more.


Depends on your range of purchase sizes and industry expectations. My product will sell regularly in quantities from 1 to 10,000, and my shipping costs on those vary from about $5 to $50, so I'd have to have a lot of price tiers. That's kind of absurdly broad, though. I'd think fabric and other categories should have a few orders of magnitude less, but I might be surprised.

But, you can do that if it doesn't fly too much in the face of customer expectation. In some industries, like printing, it's common. In fabric I think there's a strong expectation of a single price per length unit, though I suppose you could challenge it.

I don't think lots of price tiers is a good customer experience, so I decided against it as a long-term customer satisfaction strategy. I do wonder if it's costing me sales. Maybe I should set up an alternate brand that does tiered pricing and free shipping.


There's a study of pricing psychology to separate the base and shipping.

[source] https://www.nickkolenda.com/psychological-pricing-strategies...


This is good advice. We do free shipping once your order is over $x. Interestingly when we email offers that are above x and will attract free-shipping the response is significantly better.


Used to run pretty active online shop from Toronto - I would advise you to look into CA to US shipping services. In our case (US centric customer) it was cheaper and more transparent to ship items via 3rd party forwarder and USPS, even back to Canada. Go figure.


> If you're good at marketing you can shift quite a lot of fabric

For me marketing is always the toughest part .

How do you do your marketing ?

What tips can you offer us that save the most time and money spent ?


Marketing and advertising is a 24/7 job for me. As soon as I take my foot off the pedal my sales suffer. You can automate some of it with email flows and facebook/instagram advertising , but you still have to stay on top of the analytics and keep the content fresh. The thing that works really well for me is treating the customers like human beings. The customer is always right. Being nice flows out and then your customers want to help promote your business on social media etc. Try everything.


I work in IT.

I never respected sales,

Until I tried it.


It really depends on your business / niche but what works for me is:

- Get to know potential customers. This means talking to them, making friends with (some of) them, getting involved in the community around your product etc.

- Build up a solid blog, instagram etc. for inbound and discovery marketing

- Giveaways / discounts can give you a temporary boost

- Tell your story well, if you're a small business people love to buy from you, and they even accept slower delivery and issues if you personalize your support

- Go to relevant events / shows, try to get featured on podcasts etc.

- Work on SEO

- Pay for ads directly to bloggers, vloggers and relevant content sites

- Send free samples to targeted influencers

- Use but don't abuse your mailing list

What doesn't work for me is buying traffic from google/facebook, they just tend to send junk through with an appalling bounce rate.


tl;dr: Learn retail.

It's kind of funny that people will get advice to get CS degrees, take a boot camp, learn a language, etc. to execute on an idea, but for soft skills you never see classes for business or marketing recommended. People could take 2-3+ business/marketing classes in the time it takes to learn React from zero Javascript knowledge. Instead, people are told to sign up to Stripe Atlas or Shopify and Instagram. "...and then a miracle occurs."[1]

Imagine a bizdev person saying, "for me, programming is always the toughest part, any tips?" and the response being, "Oh, you should definitely sign up for Stack Overflow. Simplifies things quite a bit." This may reflect a conceit on the part of programmers that it's soooo much more complicated and important, and the business side is full of chads and beckys who talk too loud on speakerphone (yes these people are a cancer, but that's beside my point).

Biz/Mark has its own, shall we say, "Data Structures and Algorithms" to it, there's just no one set of books that everyone (...) agrees on. Even so, people have been selling fabric for thousands of years, there's not much that the internet changes about that, or many if not most other business categories.

1. https://c1.staticflickr.com/5/4003/4633000725_8817dcedb9_b.j...


Look around for what I call The MicroConf Crowd. Practical advice on the business part of business abounds. Books courses and more. Often targeted at programmers.

The Independent Consulting Manual is a good place to start, then go down the list of authors and read their other stuff.

They often do a christmas sale too.

Follow Patio11 on twitter, read his stuff. Follow Amy Hoy, do 30x500.

Then spread out from there.

If you’re funded, great! All the same advice applies, you just have more gasoline to pour on the fire. Try things faster.


Ah yes this, I am lucky to discover the MicroConf Crowd early on in HackerNews.

Patio11 taught me how to raise my salary in my full time job.

Amy Hoy got me off the couch and start building products (that user wants).

Not to forget advice from Rob Wailing, Kai Davis etc too.


Some of those “Chads and Beckys” (I must be old as I don’t recognize those terms but know exactly who you are talking about) bring in absolutely massive amounts of revenue. Furthermore they can often be cheap since they’ll work for less than they can make elsewhere as long as they can have status markers (private offices, etc.) I made good money employing them.


The bible of marketing : https://www.amazon.com/dp/B000FC10HA/?coliid=I2YIAW7ADWWUPH&...

Simple straightforward and so insightfull !


Nice, thanks for the numbers! At a certain point you start competing with Home Depot, Michaels, Walmart, Amazon, whoever. You are in the product retail business, rather than the manufacturing or services business.

I think if you get really good at streamlining your marketing (Instagram photos and landing pages) as well as your pick/pack/ship operations (i.e running a warehouse), then you can expand into multiple niches. Fabrics, clothes, prints, whatever is super niche and high margin and can't be found on the shelves of a big box store.


You're welcome. Ya you can't be scared off by the big guys like Michaels, Walmart, Amazon. The fabric I sell isn't really mainstream and it's more boutique quality designer prints. My market isn't really people who would shop at the big box stores anyway. I tap into the niche markets, etsy shop owners, small biz crafters. There is a real community and it's one that likes to shop local and Canadian.


Thank goodness there are people like you that aren't scared off by the big box stores. I am not in the market for fabrics right now, but I am looking for various supplies for a home remodel. I frequently find that while the big box store might have multiple options in any given product category, they are all garbage and I have to look at specialty stores to find anything worth spending money on.


How do you source your fabrics? Do designers or agents approach you with existing inventory? Or do you seek new art online or at trade shows? My wife worked in fabric design and it's hard for new designers to break into the industry.


I work with a few manufacturers and meet with their sales reps on a quarterly basis.


What’s the URL? I’m in the market for specialty fabrics


www.fridaysoff.ca


You can also move up the supply chain into the wholesale or even raw materials business (but you need more capital here) or down into actually manufacturing bespoke/custom items (but that's hard to scale).

Ultimately I think you need to actually be passionate about the product you're selling and embrace the community around it.


One thing I've been wondering about wrt high-volume online shops: how do you protect your hands against the dryness of the cardboard boxes and papercuts? Is this an issue?


I developed an allergy to the fabric at one point and had to start wearing surgical gloves. As long as I keep them well moisturized in the dryer months I'm ok now :)


Lightweight cotton gloves :) Put them on, do all your materials handling, and be done.


At what point do you decide that it is not worth your time? To me it seems taht at a certain point, once you've established the the margins, you grow the business to where you're no longer doing any work.......turning the business into an asset which has some nice cash flow and allows your employees to be happy.


When you're bored with the business and uninspired to do the work then I think it's time to move one. Also if you're deep in debt and not making any money I would say that's a pretty good indicator too.


Note that she did something good from the very start - Solved a problem: "People were tired of paying high shipping rates from online fabric shops in the US and wanted to shop Canadian."

Find a problem. Build a solution. Market it. Listen to your customers. It is fairly standard advice, but it works well.


Hi! It's Alanna Banks, found of Fridays Off. Thank you for reading my story and all the comments below. I haven't had a chance to read them yet, but I'm going to run through them now. Please feel free to reach out to me with questions. :)


Hey Alanna! LOVING your story. its so genuine and raw. it shows that it isn't easy and persistence + constantly learning are key.

I'd love to host you on a podcast series I've started specifically focused on bootstrapped founders, starting side-hustles, and their stories of the early days.

Even though your post answers most of them, hearing them from you would be fantastic.

let me know if that'd be of interest.

Sending lots of good vibes, and telling my north-of-the-border -mom-friends about FridaysOff!


Hi! Sure I would be happy to do an interview. :) And thanks for spreading the word :)


Thanks for sharing your story!


I've always hated the concept of "revenues" in commerce. Honestly, who cares what your revenues are? Profits are all that matters.


I don't think that's true. If you have revenue from thousands of purchases, and lots of revenue, you have an avenue to reduce costs as your pipeline matures. It's not the only number you should care about, but it's hardly a who-cares item.


I respectfully disagree. Without context, revenue by itself is less than 'who cares', it can be something of a damaging number in the sense that it can lead financially illiterate people astray.


Lots of financially literate people exaggerate the significance of revenue numbers. It's a close cousin to EBITDA, often just a way to avoid admitting you aren't making money.


I don't see how you can solve the 'financially illiterate people [will be led] astray' with some other metric. Profit is similarly useless without context (e.g. Is this reoccurring, or one-time?). Giving all the metrics you might care to can still lead financially illiterate people astray.


Agree. I work for a big healthcare company that likes to throw around the revenue numbers (pretty much all public companies do). Of course it's huge, cause healthcare is expensive (US). Our profit margin is like 2% cause COGS and labor is just as expensive and our top line revenue is basically just a made up number that we like to bill people, with no hopes of actually getting paid that amount, it's before the insurance companies "contractual adjustment", which is essentially a huge discount that we know invalidates top line.


The question is so what if your profit margin is 2%. Are you big and expanding or are you contracting and belt tightening? Do your shareholders demand higher earnings? How much power do they have? Amazon famously zeroed out profits for a decade in pursuit of growth.


I get it. There's no one metric to rule them all. It's a narrative. But that's kind of my point, the obsession with revenue doesn't always make sense. For example, my company talks about growing revenue for many recent years. That's the biggest takeaway if you we're doing laymen research. However, we talk about it because it's a good story instead of mentioning that our margins are eroding. Actually, our business is shrinking but due to growing revenues nobody knows it. For us, revenue naturally grows at the same clip of healthcare cost. When that's 20% and we're growing by revenues by 15%, well most outsiders would not know we're shrinking.


Ok I understand. Typically any public statements made by a company are carefully orchestrated PR because interests of management and key employees who are compensated in stock and options is tied to stock performing well (if public) or valuation remaining good (if private) and retaining the confidence of the board which represents shareholders and can fire them. In very large organizations, internal messaging about overall company financials are also carefully orchestrated (eg. Teleprompters are frequently used in internal "town-halls") because with so many people, internal communications are also quasi public, still messaging tends to be more blunt. However at a operational level, if you are seeing delusional communication, it's probably time to pack up your bags


Revenues are necessary but not sufficient for profits.

Personally as a sole operator i'd prefer 10k revenue and 5k a month in profits over 100k in revenue and 2k in profits. However the last is more preferable for expansion.

To expand if you have 2M in gross revenue and only 2k in net profits this surely means that there is demand for whatever you are selling and some sort of optimization/innovation would bring you greater profits.

If you have billions in revenues then profits matter even less as long as the company keeps getting external financing from the markets and there is perceived need/potential for company products. Look up on how AMD, MU etc has been operating for 30+ years.


Revenues show sales, profits show sales + costs + spending. Wayfair, for example, has large revenues, and is profitable for its businesses, but not after it's spending. The spending though is because they've found a weakness in their business model, and they're building assets fix the problem. In the long term, they'll be able to grow faster, it will be harder for competitors to enter, and they'll be able to get higher margins. Revenue tells a story that profit can't.


Depends on scale and runway. If you have 200k/month in revenue you can easily make (or lose) a boat load of money with a few small adjustments to your margins.


Every month I buy a Ferrari for 250,000 en sell it for 200,000. I can now make a blogpost and say I have a revenue of 200,000/month.

Revenue alone is not a valid metric.


Genius, time to profit. /s


> easily

Citation needed. Because everyone else would be doing it if that were true. It’s certainly possible, but not by any means “easy.”


Starter Story is blogspam. There isnt anything useful, but it seems they have lots of accounts on many websites to upvote and comment positively.


My wife runs a small little shop in the creative space too: the margins can be quite high for nice, high quality stuff and customers are easy to draw in for multiple purchases.

(also it helps I do the tech side of things and there is so much open source, free or cheap stuff available tech-wise)


A friend of mine's wife started a very high margin business selling scrapbook grabbags on eBay. She'd buy up clearance items and local craft/hobby stores, and bundle them up to sell on eBay. She made enough money that after two months, PayPal came along and froze her accounts, cutting her cashflow off, effectively killing the business.


> She made enough money that after two months, PayPal came along and froze her accounts

What does that mean?


It means that PayPal (incorrectly) suspected her of fraud and took her money (froze her accounts). If this all sounds weird to you then you should search for more info because PayPal loves screwing over sellers on their platform.

Alternatively, she could have had a wrong account type (personal instead of business), but my charitable assumption is that GP took care of that.


> PayPal loves screwing over sellers on their platform

That makes no sense.

I think a more sensible take is that PayPal's AML/KYC process is a little too coarse-grained and poorly implemented.


Yeah, there's definitely risks, but with quite low running costs and bootstrapped/free inventory there's not much risk.


The danger here is that it's easy to get sucked into doing tech stuff, and not focusing on directly revenue generating things. I see so many people spinning their wheels with "free" things when low cost subscriptions would save them hours and hours and hours of effort.


We use Woocommerce and have definitely bought a few plugins. A lot of them are free however and quite good.


I am glad that the advice is not unusual and refers to the usual suspects: judicious A/B testing of SEO keywords, personalized correspondence with early customers, and leveraging media and coaches. It gives confidence that anyone can do this.


Thanks! I'm just a regular person trying to make a go at my own thing because the corporate world just wasn't for me. My goal is to help people realize that if they have a dream they should go for it, but also to realize that it doesn't come easy. It's A LOT of work!!


>After returning from a year long maternity leave I found it difficult to juggle my new life as a mom working in the confines of a 9-5, I also came to the realization that the corporate life just wasn’t for me and became very unhappy. I was tired of faking it and really just wanted to follow my forever dream of doing my own thing and being my own boss. So, I did what anyone would do in that situation and got pregnant again ;) ... Knowing I had another year-long maternity leave on the horizon, I started brainstorming e-comm business ideas.

This doesn't sound good, basically kickstarting a company on another company's money.


Maternity leave benefits in Canada are paid by the federal government through Employment Insurance (EI) program. New parents get 12-18 months of EI payments. Your employer is only required to hold a position for you, they are not obligated to pay your wage.


Ah, that's good to know because in Finland, your employer does pay it.


Hey, serious question from an American. How does this policy not cause massive hiring discrimination against young women, especially recently married women? I asked my Canadian relatives this question, and their answers basically boiled down to 'well that would be illegal'. But from what I can tell enforcing anti discrimination in hiring is next to impossible, especially if you interview and hire even a slightly more qualified candidate.


A few things seems to help, although there certainly still is some discrimination (in certain jobs especially).

1) All your competitors have to follow the law too, so it's just another cost of doing business.

2) Women are having children later, generally, so employers will see a 25-year-old and think "eh, I probably have 5 years at least".

3) Men are starting to take more parental leave, and the law is mostly gender-neutral (there is some amount of leave specifically for mothers who have given birth, but most can be taken by either parent). In fact, both parents can take the leave and have their jobs protected, although you can't double-dip on the paid benefits. I took three weeks off at my daughter's birth and 3 months when she was ~9 months old.

4) Maternity leave coverage is a great way to try out an employee for a year - hire Jim to cover for Jane, if you like him keep him on after the year, if not he disappears. (Part of this is Canada is more resistant to the contractor/employee trend than the US).

5) The people doing the hiring are likely to either have children or will in the future, so they feel like it's a reasonable/good policy.

Nothing blows my mind as much as hearing Americans talking about maternity benefit. I was listening to a podcast and one person said "we were lucky to have such good maternity benefits, I didn't have to go back to work for 6 weeks" and I was floored.


A candidate may get pregnant between the ages of 20 - 40. About half the people in my social circle with kids aren't married and almost all had their kid(s) after 35. This is quite a definite trend here in W-Europe.

Here in Belgium maternity leave is actually quite short, but you have the option to extend it for many months albeit at a reduced pay (provided by the govt). Not everyone can afford to extend it. Dads can also get paternity leave, up until the kid is 12yrs old.

Gender roles are changing a lot, paradoxically me as the father / chauffeur of the family is the one who has to leave by 5:30PM every day to get to day care on time while my partner doesn't have that limitation on her working hours.


This is totally a wild guess, but I think a small part of it is just the cultural values. It seems most people are for such leave, including the people who hire.


I would argue that it's not the law that's preventing discrimination, it's the fact that nearly 50% of the workforce is made up of women, thereby excluding a huge category is detrimental to your business. You wouldn't be a very good manager if you decided not to hire women because one day they might take a year off. Additionally, many managers are probably also parents themselves and understand the importance of maternity leave and understand it's part of having a workforce. Plus, in my department, we actually see the benefit of maternity leaves. We get to hire a new person for a year that can bring new insight and experience into the role. If they are good, we try to find a place for them, if they are bad, the year expires and they go off without any fanfare.


I believe quite contrary to the other responses you have received, it's not about kindness really, but mostly a function of where it would affect people the most and how those companies operate and are formed: through a very small circle of friends who know each other and because such companies are in minority such discrimination would be quite invisible whereas Big Corps(tm) can just eat such costs quite easily and they are held to the standard of hiring more. Smaller companies (that require higher education or good thinking skills) also probably get people who care about their career more at that point, getting kids at a young age is pretty low education thing to do (just as a statistics on who gets kids and when) and those people work in very gender separated fields usually.


I wouldn’t say it’s funded by the federal government, but through EI premiums paid by employees and employers.

It’s a very regressive funding model paid by a flat income and payroll “tax” on earnings between $3500 and $50000.

Last I heard, it takes in billions more than it pays out.


It’s not against the rules. I don’t see the problem. But even better, she’s growing the economy and everyone wins. You gotta like people with grit and tenacity to strive all while playing by the rules.


Thank you!


Of course it's not the against the rules.

I'm criticising the system for enabling such action while punishing the employer.


>> This doesn't sound good, basically kickstarting a company on another company's money.

Can I work on my startup idea when I take 2 weeks vacation in the summer? What's the difference?


50 weeks?


How about:

-Vacation time is not paid time while maternity leave is time the employer has to pay for.

-If working does accumulate vacation time (meaning it is paid) it's a fixed perk that the employer can take into account and knows when hiring you

-You must still always negotiate when you are going to take that vacation, you can't just start at a new job and instantly take paid vacation time.

-2 Weeks != Maternity leave


"maternity leave is time the employer has to pay for"

Not in Canada. Maternity leave is funded through the federal Employment Insurance program. The only obligation the employer has is to hold the job for a certain period of time.


There are employers that top up, to varying degrees, what EI pays out (maximum benefit is ~$500/week, and taxable).


Vacation time not paid??

Probably US.


2 week vacations are almost always paid in the US.


Very cool story. One of my favorite stores is Britax in San Francisco, where you can see fabrics going north of $1,000/yard. She doesn't seem to use Pinterest, which seems like a natural fit.


I know. I need to get moving on Pinterest. It's a total fit.


I was about to tell you that Britex had gone out of business, but I fortunately for you they've simply moved from Geary to Post :)


“Knowing I had another year-long maternity leave on the horizon...” said no American, ever.


Looks like there are about 10m women staying at home with kids - https://www.nytimes.com/2014/04/09/us/number-of-stay-at-home...

I wonder how many of them doing such businesses, and how many could engage in such businesses, and if they do not want to do it - why.


Maternity leave is generally paid. Parenting is not.


I am interested only in ones, who already stay at home.


Is using a year long maternity leave to start a business an argument for extended maternity leaves?


Not really, it’s an argument against. A government funded maternity leave is for the benefit of the child. At the point you have enough time to start a business you can support your own kid.


Not necessarily. Time with a kid is not sliced in a way that supports a nine to five, but could support an enterprising, driven person in the margins. You can fully support the child and have some time to support your own interests.


I think there's enough arguments for extended leaves already. This just seems like an added bonus to me.

At least where I live there's rules against making money when home with kid (government pay you to be home with kid).


Canada has the same rules about earning income while on leave.

Usually you lose a dollar in benefits for every dollar you earn.

But if your business turns losses in the first year...


Seems like damned near every other non-third world country gets it...


Not just non-third world countries. I think US stands rather uniquely when it comes to holidays and maternity leave.

https://timesofindia.indiatimes.com/india/parliament-passes-...


Still probably doesn't make up for their low Canadian salaries though.

Given the choice I know which country I'd rather have a career in.


Pat, you should be marking your topics as Show HN:

Promotion of your blog should be clear to readers.


So nobody can submit their own content unless it has a Show HN on it? Come on that’s ridiculous.

Also, “Show HN” is specifically for products we can play with after clicking the link. Please do not pollute Show HN with blogposts; I will flag them and I’m sure others will too.


Maybe this is just spam then


Why are you so adamant that my website is spam? You've made multiple comments about it.

I spend a lot of time on it and it provides a lot of value to a lot of people. Maybe the content is not super relevant to you and that's fine. You don't have to read it.

Why are you leaving so many comments about this?


Blog posts, sign-up pages, and fundraisers can't be tried out, so they can't be Show HNs.

https://news.ycombinator.com/showhn.html


Nice interview! FYI the learn more links at the bottom are broken.


Thanks! Fixed.


Revenues are irrelevant. Profits aren't.


Revenue is vanity. Profit is sanity. Cash is reality.


It's not so black and white. They are both valuable. However, sharing revenue is a consistent theme of my website, like IH.

If you read more into the many interviews I've done - you can find many founders talking about profits/margin.


This is a really ignorant thing to say. If you have a hearty revenue stream but no profit, you can tweak the model to make it profitable. Some profits aren't possible at small scales, so having revenue proves you have demand and can lead to safely risking big bucks to get to a profitable scale.


Especially in the eCommerce business where you might have a deal with a supplier. It's not unusual to be able to negotiate a higher margin the more you sell. Any single financial metric alone cannot tell the whole story of a business. Revenues are equally as important as profits.


> If you have a hearty revenue stream but no profit, you can tweak the model to make it profitable.

I don't think this necessarily follows.


Yep, this is a reoccurring problem on his blog. Low quality interviews and articles.

I believe he has lots of accounts to upvote, otherwise this would be hidden.


This to me is almost not a hacker news.


  What seems to work for me is getting the write keywords in my meta description
lel


big funny, much laugh!


Beware. There's a whole lot of "start an e shop and get rich quick" bullshit out there.

https://www.gimletmedia.com/reply-all/117-the-worlds-most-ex...


I got down to where he said he paid $10 for shipping and instantly clicked that it was a watch from Aliexpress and it was a classic dropshipping gig.

There were some people a few years ago that managed to sell off a few hundred Hawaiian shirts that were most likely drop shipped from China by using some well targeted FB (and probably Instagram) advertising, and giving the shirts funny names (named after local alcoholic drinks). They were probably making $20 or $30 per shirt.

An interesting take on the Aliexpress game is theive.co [1]. It's basically a curated list of stuff on Aliexpress with referral links. Since I last looked at the website they've apparently launched a product aimed at drop shippers, where you can get market insights. Morally it's murky, but it's clever.

[1] https://thieve.co/


> Morally it's murky, but it's clever.

No offense, but this is the kind of thinking that holds back people from succeeding in business. I see it a lot from non-biz engineering types.

There is nothing, nothing “morally wrong” with dropshipping. The main value you provide is discoverability; if the customer finds a product through you that they would not have found otherwise, then you added value. Also, you provide customer service and return policies that the supplier may not. Finally, you also provide value to the supplier by selling their merchandise in channels they are unable or unwilling to reach.

In fact, all that really matters is that the customer made a voluntary decision to purchase a product from you, and was not misinformed about the terms of purchase or shipping.

You are under no obligation to inform the customer of your suppliers. If you disagree morally with that, then feel free to link them to a site where they can buy your product from someone else.

The idea that there is something “wrong” with selling a product for more than you pay for it is ridiculous, at best. That is literally what business has meant since the dawn of civilization.


Having been in the (software side of the) digital marketing business for a few years, I generally agree with you.

On the other hand, there are some complaints you can level at the industry. One is that they're exploiting an information asymmetry between the buyer and the seller; buyers as of yet haven't realized just how cheap and available things are on Aliexpress, and the sellers do their best to hide the source of goods. I think this will resolve itself over time as buyers get more savvy.

There are also some questionable practices. "Free, you just pay [$10+] shipping" seems aimed at some sort of psychological defect in the part of the human brain that calculates value. And digital marketers often are often rather indifferent to IP rights.

I guess my biggest complaint is that there are an awful lot of online marketers that really just don't seem to care all that much about the customer. They're often selling one-time impulse buys which are priced too low to be worth the trouble to return and they don't expect a repeat customer, ever. They've never even seen the products they're selling. I guess I want a little more value-add from my vendors - I've gone back to buying things offline where I can.

(I'm sure the article author is in a very different category of seller, which is heartwarming!)


I didn't mean the dropshipping is inherently morally murky (which I'll get to in a moment), but that Theive.co harvesting all their user data, then selling that to other companies to use for marketing and whatever else you can do with the data is morally murky.

I used to work for a company that was intending on selling all their user data to third parties (anonymised, of course) as an extra revenue stream. It definitely made me uncomfortable, my boss fully intended to sell as much of the data as legally possible. It was one of the reasons I left the company, especially considering the nature of the data we held.

Now, back to dropshipping. Falsely representing your product as "normally $80, now free if you just pay $10 for shipping" like in the linked podcast is false advertising. It's also probably illegal, you can't put product costs into shipping costs. It's a pump and dump scam. It's like the classic fake watch scam run on street corners all over the world, except you're now wheeling and dealing on the internet instead.

Selling a bunch of drop shipped Hawaiian shirts by using clever marketing, that's fine. The shop I mentioned made no misrepresentations, they didn't claim they were bespoke shirts made in some little village on a Pacific Island. They didn't claim that they were offering a massive discount.

But if you claimed that you were some bespoke Hawaiian shirt manufacturer who's just started up, and you're giving away shirts if you just pay shipping and tag your mates in the post. That's sort of sketchy isn't it? You can see the moral difference here? Maybe you buy some likes and followers on Facebook or Instagram to make you look more legitimate. Put a couple of stock photos of your "employees" in some remote village in the Solomon Islands. Maybe claim that your shirts are ethically sourced. Are we getting into morally wrong territory here?


This is different though - the gimlet podcast is about dropshipping, where you don't keep inventory and are literally just creating a sales pipeline for someone else, and absorbing all of the marketing costs (hint: why would a manufacturer / wholesaler let you do this for them if it was profitable?).

In this case you're entering the supply chain of a product (cut fabric), which end customers cannot do for themselves and wholesalers cannot scale.


"(hint: why would a manufacturer / wholesaler let you do this for them if it was profitable?)."

Wayfair is a 9.7B company, that dropships. They found a way to make it profitable.


This episode only looked at one side of the business. There is a "legitimate" side of dropshipping, and there's the get rich quick, then die side of drop shipping. To dropship "for real" you need to build actual relationships with suppliers who are typically in the states. The margins are paper thin, and they're not very tech savvy most of the time. You typically have to prove yourself. Dropshippers provide real value. Good dropshippers are marketing experts. They build good customer relationships. It's a legitimate business. But getting into it is A LOT harder today. Consumer habits are different.


> "PJ: That is the one thing that actually makes it look slightly scammy... like Nike's not like we just sold a pair of sneakers."

I do have to disagree on this. This is them trying to increase the "social proof", proof that you are making a solid choice in buying this item. Nike doesnt need to do this because everybody knows nike, and feels that they are good shoes worth their money.

Showing proof of other purchases increases that proof, and you are more inclined to buy it. Of course this all assumes legit "soAndSo bought it too" messages


> Of course this all assumes legit "soAndSo bought it too" messages

And this is why I would never trust such messages. It's way too easy to fake it, and too much work to make it real, and there's no way for customers to verify it's real anyway.


Doesn’t matter. If it pops up you still have to actively remind yourself not to trust it to be immune to it’s effect.


This is so awesome!




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