I created this little infographic a while ago. At the time, I was feeling very negative about a review on a 3rd party site saying that the notebook wasn't worth the x amount that the customer had paid.
I screamed at my computer screen "you didn't pay x for the notebook! You paid x for the notebook to be designed, created, sent to you on a fully tracked service and you bought it on a marketplace that takes an enormous commission on every sale." It wasn't that succinct, nor was it that expletive free. Gosh! It put me in a bad mood that day! I accept that the lady in question had every right to leave a less than perfect review - I am the last person to promote censorship, but I did feel it was unjust.
it was one bad review in a sea of positivity but it irked me at the time so I made this and then felt even more dispirited. As you can see, the red, orange and yellow portions are immediate hard costs on every order. We, unlike many, do charge a bit more on marketplaces because we can't afford to take more of a hit than we already do with their commission. The green section is everything else and I'm sure there are so many more costs that I've forgotten about that should be in there.
I was very dispirited for a while until I flipped the whole thing on its head. And then I suddenly felt so much better! Because if £3.74 or £4.10 is the amount that I have left to pay for the product, PAYE salaries, advertising, storage and everything else and I'm still managing to earn a living then fuck me! We must sell, quite frankly, a shit tonne of gifts (I think you'll find that is an official measurement).
But I still think it's a good infographic and I wanted to share it to give a bit of an insight in the actual money situation of a small business selling products these days. You might find it interesting, you might already be aware of it all and you might also be shocked at how much is not spent on the actual product... please don't be too bothered by that - we buy in very large quantities and economies of scale really do make a huge difference (but do, of course, add to the warehousing costs!).
Back to the infographic. Firstly, the commission. I've been in this business so long that I remember when Waterstones used Amazon for its online fulfillment and I said that, before long, Amazon will simply become yet another middle-man and will, effectively become the Google for shopping and we'll all be just paying another 'tax' to another fat cat. I hate to say I told you so (and I'm fucked if I can find that Facebook posting now) but it feels that this is exactly what they set out to do and it's happening. To use Amazon is not free for anyone. If you're finding something cheaper on there, someone is paying for it and, eventually we will all be paying for it. The death of the High Street, the zero hour contract timebomb, the working conditions and the complete and utter lack of tax being paid is all something to consider when you think 'but it's all so easy' and click that checkout button. And don't get me started on their returns policies and the issue of doorstep thieves. If Amazon continue their growth, your choices are going to be severely affected and, at that point, the pricing and service will be down to the behemoth and you'll suddenly realise that you're stuck in your AirBnB in the middle of nowhere unable to find anyone that will sell you batteries for the remote control to the telly. I get that it's easier and I entirely understand that there are some things you can't seem to find anywhere else but it's terribly dispiriting, as a small business trying to do everything right knowing that huge companies are doing so much wrong.
Of course there is a much bigger fish that has come this way in the last year or so and, if the government don't do more to limit their reach, stop their constant IP infringement and/or be stricter on their import tax laws then we're we'll likely be in all sorts of problems...!
Talking of governments, we're on to the orange slice. The VAT, a tax that lots of small businesses don't pay if they're running they're business selling as a side hustle. The threshold has just increased to £90,000 per year. So if you, as a business, take less than £90,000 in revenue a year, you get to keep all the money. Personally I think the law should change as I'm aware of businesses who simply cut their revenue up between different businesses and are therefore a whopping 20% better off than the likes of lawful schmos like us - it would be good if more investigations were to take place but that's yet another government issue and I shan't talk politics.
On to the yellow... and as you can see, our postage costs are very high (and even higher for parcels) but we use Royal Mail for lots of very good reasons: They are one of our country's largest employers; they don't employ on zero hour contracts so that when their workforce retires, the country won't be picking up the bill for their pensions and they pay sick pay, holiday as well as overtime. They also pay VAT and have to deliver to every UK address - unlike all of the other services out there. Their infrastructure is already in place and we should be using it as much as possible. The top brass are idiots in my very humble opinion but the actual boots on the ground are the backbone of a well oiled machine that works. We've found their fully tracked service is pretty damned impressive and as we take so much pride in our products and our packaging that we want you to have the best service that is available to us and, right now, that is Royal Mail. Dan the postie, who picks up daily come rain or shine is a loved and much appreciated part of the team. He's a lovely chap as are most postmen we know. So, the choice of courier is a very deliberate one - and judging by the reviews we get, is a big part of the 5* experience (thank you very much 🤗). Sadly, since I wrote this, the Royal Mail pricing has increased so another little cut into our bottom line.
And then we get to the rest of the expenses with less than half the money you've paid out. That whole pound difference to you and 36p difference to us really can make a lot of difference. I should mention that the £3 commission is taken from one particular marketplace - other marketplaces have different pricing structures and, some are less, some are more.
And whilst we're on the subject of marketplaces - you might think that your consumer rights are better protected using a larger website than our little one. They're not. I'd even say the chances of you being able to contact a human and get something sorted is so much greater on an individual site than elsewhere. If we've made a mistake on your order and you get in contact, we get the mistake rectified and, although we're mortified, it usually ends up that you'll be happy with the outcome and we'll only be slightly out of pocket. If we make a mistake on a marketplace, you'll struggle to get hold of us at all. Yes, you might get an automatic refund but that's put us at a massive disadvantage and you'll still be left with the wrong thing.
That extra 36p gives us just a little more to play with and we're so extraordinarily lucky to be making enough of them to keep going.
Without it, the designs and the slogans that we come up with will not be available to you to buy.
Which you might think is no great shakes (and, in the grand scheme of things, our little business going out of business isn't that important) but extrapolate that to thousands of other small businesses in this country who are paying their taxes, employing local people, buying from other UK businesses and creating unique things that simply wouldn't exist without them, it quickly becomes apparent just how important every penny you spend actually is to us indies.
We genuinely like to do everything right here. We only buy the best quality we can find, we pay all our taxes, we use the right couriers and we always want to bring new, fresh ideas out to give you the best chance of finding the right thing at the right time for the right person. Please pass the message on to everyone you know that taking a couple of extra minutes to search for individual companies is a virtuous thing that keeps thousands of small businesses afloat. Be aware that if you see our slogans and designs on cheap Chinese sites, they have stolen from us and your purchase from them strengthens their place in the market and will, in time, put us out of business.
I hope I've not come across as too preachy - we've recently been making some changes to our site to encourage more spend (we want you to buy two pins instead of one as our postage cost remains the same so we make a better return). The extra expense in using 3rd party apps has been an expensive disaster so we're constantly learning ways to encourage you spend a little more. Keep checking out all our bundle offers!
Times are tough and we're a small business who are lucky to remain busy after 23 years in this gift business. So my sum up sentence is:
Check us out - we're actually amazing value for your hard earned money!
And that is all I have to say about that.
Sarah 🖤