In Your Neighborhood + Poshmark Fee Structure

Business brain, episode 588 for Wednesday, October 9th, International Beer and Pizza Day 2024. Greetings, folks, and welcome to Business Brain, the show where you send in a few ideas. We send in a few ideas. We all take a few ideas. We crunch them, we dissect them, we analyze them, we use them to tune our business brains to better our shot at living those charmed lives. Our sponsor for this episode is notion.com businessbrain. Notion is this awesome project management thing that combines like your docs knowledge base, AI all together in one. We'll talk more about that in a little bit. You can try it for free@notion.com BusinessBrain for now, here in Durham, New Hampshire, running 100 miles an hour. I'm Dave Hamilton.

Yeah. Out here in Lafayette, California. Same thing. We're, we're hustling. You know, I was in, speaking of beer and pizza, that's like the best day ever.

I know.

We were hitting New York, as I mentioned. We were in New York City last week, and one of our favorite, favorite restaurants makes a pizza where the, it's kind of a combination chicken parm pizza thing. And the, they take the chicken and they flatten it so thin that the crust of the pizza is the chicken.

Oh, all right.

What? And yeah, and then they put the marinara sauce, the cheese, and they sprinkle pepperonis on the top and they call it chicken parm pepperoni.

Okay.

And man, it's life changing. It's called Cafe Cafe Dell'. Arte. It's up by 57th Street. And man, it is awesome. It's great. I love it. Yeah, I highly recommend it if you ever, if you ever get a chance to have it, because it's a different kind of pizza.

Yeah, that's different for sure.

Yeah, it tastes amazing. Hey, so if you're listening in the background, you might hear some buzzing because I have some folks at my house taking some trees down with their chainsaws and everything. And they hit. This is. I don't know if this happens in your area, but in our area, we often get people come to like this when they drove up our driveway. We have this steep driveway. And I was in my office, I looked down, I said, what's this person doing in the driveway? And so I went down and she says, hey. I could tell she was with the tree company because she had a pamphlet, tree service. And she said, hey, we're in your neighborhood. Right? And I thought that is such a powerful statement because it's like, hey, we're already working with Your neighbors. So that gives them a little credibility.

It gives them third party trust, right?

Yep, yep. Third party trust. Your neighbors hired me, so why wouldn't you? And I said, okay. I wasn't really planning, but I do, I do had some trees that I wanted taken out. I did, I did some a couple years ago and I was kind of waiting budgeting, and they offered me a great price to take these nine trees we're having taken out down the hill in front of our house. And I got to thinking of this we're in your neighborhood thing because she was showing me, I was negotiating with her, as all good entrepreneurs should do. And she was showing me her cost structure. She had it in a little note on her phone. And this many guys cost this much cost that. And I said, well, that's great because you can keep all your guys working. You're right down the street, you don't have to go far. You know, I was trying to drive the number down a little bit, which I was able to do. And it got me thinking about other things that you sell that you could use. The we're in your neighborhood strategy.

Okay.

So because yeah, they're like, I spent like 4, $300. Take these nine trees out, which is a great price.

Sure.

But they, they're keeping their crews working and hopefully she's moving down the neighborhood just doing these deals. Right, right. And like, if I'm selling something on ebay or on my website or whatever, there's lots of other things I'd like to inventory that I have that I really just want to get my cost out of. Right. Because as a reseller, there's always stuff that doesn't sell. And you know, even if you're into it for zero or a small amount of money, why not? You know, everybody has this, hey, these are add on items you can add to your thing. Amazon, other people bought this, but actually change it a bit and help it move, help you move products that you just want to get rid of some excess something. Maybe it's a last year's model, maybe it's whatever. But can you drive the number down so low? Because when I see those, it's not like I think it's a deal, but if somebody said, hey, here's this thing and it's 50% off or 70% off if you buy it when you're ordering this right now? Yeah, right now. There's no extra shipping. We're going to cover the cost of this item. I just think it's an opportunity that.

Yeah, I see That a lot.

Looking at it that way, when I.

Buy, like, I buy, like, CBD online a lot.

Yeah.

You know, and in the checkout will be like, if you add this thing, and sometimes it's for your pets or sometimes it's for you, like, you know, this salve or something. Like, I'm buying.

Yeah.

You know, CBD capsules or gummies or something. And then it's like, yes. You know, here's this thing, this lotion or whatever, and the price is way less. It's like 40% of what the. The price would be on the website.

It's listed on the site. So if you went and looked at it, you'd see it. Okay, well, that's good. I'm glad people are doing it.

And I've even gone through, obviously, like, you know, open another browser, try and buy that thing. What happens? And it's like, oh, yeah, no, no, no. Like, if I were to do that, like, it's legitimate. It's exactly what you're saying.

Yeah, that's perfect. So I'm behind the eight ball, so.

I'd love it as a mania.

But. No, no, no. But I just thought that. That. That concept of. Of that, hey, we're already here, you know, you're already buying this thing, you know, and maybe you have to get it to them a little later in the checkout. I don't know. But something where they're committed. Yeah. So maybe it's even when their credit card has already entered. You could say, hey, you know this or something.

Yeah, no, they. They figured it out at this one place I go to, cbdfx. I'll put that link in the show notes. But they're really good about. And the deals are legitimately good. Like, it's not. It's not bs, you know what I'm saying?

Yeah, that's right. You can't trick people and be like, oh, it's $10 off or what? It doesn't work.

Right. No, it's legitimately a good deal. And it's clear they're trying to push out inventory, so.

Yeah, makes sense. Interesting idea. If you do it, let us know. Feedbackusbrain show. We'd love to hear from you.

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Yes, yes, we do. I want to talk about. I've talked about this before on the show. I started the handbag business on Poshmark as an experiment, sold about $3.7 million worth of bags. And I'm Poshmark used to charge 20% for their fees. And I was okay with that because they offered a lot free authentication. They paid all the credit card fees, discounted shipping, so I never had to pay for shipping. They ate. It was like $7.95, which saved me. That's, you know, probably $7 or $8 per box. And they managed all the fraud and they pay a ton of money to get your results up in Google. You know, they're paying for Google shopping and all that stuff on top. So you're not just regulated to their platform. They're pushing it out on this and spending millions of dollars on SEO. I was okay with that. Got it. But you know, it seems high and everything. So what's fascinating is on October 1st, they sent a message out to all their users and said tomorrow a new fee structure is starting and it's basically 5.9%, 6% for sellers plus a dollar $2 or $3 depending upon the anything over 50 buck you pay 3 bucks plus 6% under 50. It's 2 and under like 20, it's like, I think I have it the opposite. In any event, the 1, 2, 3 is not the huge thing, but the here yet. Oh, between 15 and 50 is $2. 15 over is 3 bucks plus the 6%. But the fascinating thing about it is that the buyers are also going to pay that 6% when they buy. And I did a post about it. I know you're searching. I'll put it here so you can reference that. I'll put it in our, our chat.

Yeah.

And there's a lot of uproar over it and people are, it'll never work. Buyers will never pay.

Sure.

But I actually think that there's some method to their madness here. They've obviously figured out that the biggest growth they have are live shows and people selling live on the, on the, on the platform.

Okay.

But a lot of that stuff is inexpensive and I think they're hungry to get the high dollar sellers that may have left to other platforms. And so lowering that to 6% plus 20%, it would have helped me dramatically. I'm selling a thousand dollar, $1,000 bag. I would, you know, certainly would have saved a significant or $2,000 bag. Save a lot of money and your.

Buyer on a bag. I'm looking at this chart that somebody put together on Reddit and which I'll also link to and it shows that the where the old fee and now the new, you know, fee would factor in. And as soon as you hit about 100 bucks on the item price, the fees are less all in combined. Right. So before 100 bucks, it's actually a little bit more, sometimes quite a bit more. But once you're 100 bucks and over the total, the grand sum total of the fees on any given sale is less. It's just a different structure, so.

Different structure. Yeah. And you know, I, about 73% of everything I sold on that platform was from a best offer. Okay. It's all an offer game on that platform. So I think that the buyers are, you know, theoretically could just offer less. Right. And the, and the seller may say, okay, well I'm going to eat that quote 6% fee because you know, on top of the fee, they have to pay sales tax for each state.

And I think I saw a note, they are calculating the fee post shipping and tax.

Just like eBay. EBay, just like.

Correct, correct. Yes.

They all do that now. Yeah. There's no more angle to it and so I'm curious to see how it's going to work. They're Offering some discounted shipping plans called Posh Pass where the buyers can get shipping for 5.95 if you're buying from a Poshmark Ambassador, which is kind of their top rated seller program. And what I actually like about it is it's different, it's change. What kind of threw me for a loop is they gave everybody 24 hour notice. And so it wasn't like, you know, ebay used to do this stuff all the time and it would drive sellers crazy. They'd make changes like right before the holidays and you'd be like what the heck man? We gotta introduce all this new stuff. It's our busiest time of the year.

Yeah.

Yeah. I think that if you're gonna make dramatic and drastic changes like this, you probably, I would say you want to give them a couple week notice to make any adjustments. Maybe they have to change things on their pricing structure. I don't know.

This is a tough time of year to change that stuff in the consumer market. Yes.

Yeah. And I think their, their gmv, their gross, gross market volume is, is down. Certainly it's down from COVID probably like everybody. So they're trying to, to make more money on those low dollar like I had one person describe them to me like crack shoppers. People that buy, buy, buy, buy in the, in the live things that are 10 bucks, 20 bucks, 30 bucks.

Sure.

They want to make more money on that and they want to make sure they protect their high dollar sellers that they're going to make 100, 200, $300 from when they're selling. It's interesting. And I wonder, you know my ebay selling fees based on discounts and everything you get best price I get them down to is about 12%.

Okay.

There's some other incentives that you can get to it, but it's fascinating any all the buyers are saying oh, I'm not going to pay that. And it's like, well, I wonder if it'll just, it'll just. They will. If you want it bad enough you to think the overall deal, is it a good price including your 6%. And if sellers can't sell, they'll lower those prices or they'll accept your offer. That's going to take that into account.

Shave it off the top and make an offer.

That's it, it'll equalize. I think it's going to equalize. And I.

Two weeks from now no one's going to be talking about this. And maybe hang on. Maybe Poshmark timed this intentionally because of how crazy Q4 is you do this to people in July when sales are slow, everybody can like ruminate about it and slow down. Right now, no bitch and moan. Yeah, yeah, right. But right now everybody's moving really quickly, plowing through all of this. And so like within two weeks it's just going to be water under the bridge. It's like this is the way. That's it.

I think so too.

Yeah.

Yeah, I think so too. I would. I love this new structure as an average sale price of an items that my sale, you know, $800, let's say is average sale price. It's better for high end sellers and I think that's where they're making more money and they want to attract those sellers, you know, makes or retain them certainly because you know, there's certain brands that do really well there and handbags are always in their top five categories.

Sure.

It's probably, probably number one. Women's fashion is number one and handbags are right up in. But it's interesting if you're an online seller. If you're selling at Poshmark, I'd love to get your take on it. You can find Dave at davehamilton or @shannon Jean up on X. Let us know what you think of it and or how you're going to adapt to it. You know, what changes do you have to put in place to not pay more money if you're a lower dollar seller? Right.

Yeah, exactly.

Could be interesting.

Thanks for hanging out with us folks. Like he said, said feedback at businessbrain show. We would love to hear from you. We love all the interaction that we get. It's really a huge reason why we do this show. Keep living that charmed life. We'll see you on Friday.