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Thread: Fee structure of privately owned vs publicly run marketplace - How to fix everything?

  1. #1
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    Default Fee structure of privately owned vs publicly run marketplace - How to fix everything?

    Hey guys,

    I prepared a silly open letter I've been passing around to friends and sellers I've known for a while. I am just trying to generate feedback and gauge interest. The general gist of this open letter is to see whether people think there could be a solution to current paradigm. This paradigm is privately owned companies with sleek websites and useless features being deadweight to our actual use-case of exchanging secondhand clothing. All we need is a simple website with minimal fees and a commitment to user-experience over user-interface.

    What I can say is that we would look at trying to make a simple website with a simple hosting with open-source code so that we can start directly competing with halving the fees of ebay/grailed. And our actual plan would be to move, with scale, to LOWER fees at around one third of grailed/ebay. I explain how we will guarantee a commitment to lowering and lower fees indefinitely below.

    There will never be deadweight material on our site, if it goes ahead. Just things like authenticity checks, scam management, etc. We only intend to deal with a certain collection of brands due to the fact that we deem SZ-style brands less attractive to young people. Unfortunately as a community-run website we will have to exclude brands that are heavily associated with scamming like Supreme and Jordans. We welcome anyone to copy our idea, copy our code, copy anything to make a similar website dealing with these brands.

  2. #2
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    PROG

    Short Version
    - Online marketplaces charge too many fees and provide too many services we don’t want. None of the features or ‘culture’ on grailed is any good. We only want the listings.
    - Once-upon-a-time newcomer grailed didn’t do this and so we all went to grailed. Now they do. The problem is intrinsic to a privately owned marketplace.
    - Fortunately, a digital marketplace is a simple enough ‘product’ that it can be maintained and replicated at a very low cost. Therefore, the provider with the lowest fees, lowest friction, lowest costs (ie least features, culture or employees) will be the most competitive.
    - Just a community and all the listings in one place. Therefore, a public open-source project is the solution. No features, no spam and lowest fees.
    - As hosts of the implementation of this project we will be able to start out at collecting fees half that of ebay/grailed and eventually actually move to a model, with scale, collecting less in the future.
    - The goal is to get to fees of one third of those on grailed/ebay at around 6%!
    - The make up will be 3.5% paypal fee (unavoidable) and 2.5% fee for hosting, maintenance and remuneration.
    - No intention to ever scale up to a larger business or service provider we will only increase hosting size, not much else.

  3. #3
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    Long version (manifesto version)
    A spectre is haunting Grailed – the spectre of (…) a purely peer-to-peer version of an electronic marketplace which would allow online sales directly from one party to another without going through a (…) institution. (An institution that is obliged to its rent-seeking owners and shareholders; not its users. An institution which never founded, coined or created the service it claims to exclusively and therefore expensively provide. An institution which entirely wins off of our naivety and our community spirit. An institution which for seven years has consistently provided the worst fit pics, features and fee hikes imaginable… Let me take a step back. Joking [and Marx] aside.)
    I log onto grailed every day, often twice a day, by habit, to check out what has been listed. I like grailed for this reason. This reason, this habit, did not start with grailed. It is not their product I am after, nor their service; they just happen to be the simplest route to that ‘product’ these days. I used to use a combination of ebay, yahoo japan, superfuture, fuk, stylezeitgeist, rakuten, independent resellers, Japanese select shops and bapetalk before this. I’ll be the first to admit, its much easier to just log into grailed. (Even if it does mean neglecting yahoo japan’s gems). The product is the simple aggregation of all sellers’ items in one place: a marketplace.
    When grailed started out, it was us, users, that made it happen. Even the owner, Gupta, was one of us. We took from ebay, who was charging us too much, and moved our stuff to grailed. We took from forums, who were too disparate and niche, and so not providing us enough sales, and moved our stuff to grailed. We literally are grailed. When Gupta coded the goofy site below all it provided was all we ever needed and wanted. And from the comments section of every feature I see, all we ever cared about. Everything else since then has been an (embarrassing and exploitative) mistake. We don’t need more employees for (terrible) fit pics selections. We don’t need more fancy looking websites for (ridiculous) fee hikes. Do we need those awful thought(less) pieces which I can only assume are written by the interns or bots?
    http://web.archive.org/web/201402190...w.grailed.com/ LINK won't work, but you get the idea.

    A marketplace has its value in the sellers, not the location (nor the site, an e-location). If the sellers weren’t there, well it wouldn’t be a marketplace. The marketplace only gets its value from the sellers. And the sellers only get their value from the buyers coming to the marketplace. If buyers and sellers could all meet at another marketplace which was a better marketplace because they both got better value, then they should. Buyers plus sellers are users. Bringing all this together, users come to a marketplace but who owns the space that the marketplace operates on? What do they provide? The owners should be providing the users with a better experience. And this was what grailed used to do. Now their tax on our experience is costing more than the benefit of the service. We should move marketplaces.
    And so enters in the inevitable solution: a competitor. A new marketplace. However, the competing idea I propose will be different in nearly every aspect. What I propose is a public, open-source marketplace with a clear roadmap and capped fees. I don’t think we need a fancy website; all we need is a site that collates all listings into one marketplace. Like I said, that’s the product and it wasn’t theirs, it is ours. We are just taking it back. Since I’ve already explained the second proposition, regarding a marketplace being the only product we are seeking, let me try to explain the first one.
    What would a public, open-source marketplace with a clear roadmap and capped fees look like? The public component I propose would be to have two features. The first is a simple voting feature for anything that users want added beyond the very basic marketplace. The second combines with the open-source element. I think the project should be open-source such that we run it on something like git-hub. Anyone (who is a coder/engineer etc) can make an improvement proposal that is assessed by current admins/coders and can either make a one-time contribution or join the part-time team. (Everyone would be part-time and we could work out a small fee structure for architects who add value, again this would be capped and a one-time payment.) The only full time work would be the website host who makes a small and clearly outlined amount. This amount would be made up of costs and a small wage that is relative to the amount of work and size of the website. There would be no intention to expand into an increasingly profitable marketplace.
    The open-source element is partially explained above. One of the things I am really trying to represent here is a commitment to the users. I mention I am really trying to represent because I am going to get a bit theoretical and philosophical for a moment and so you may want to just skip this section. What you should take away from the next two paragraphs, if you do skip them, is that we are committed to users. The way we are committed is we will provide publicly the basic blueprint of the site so that you can make the site yourself if we ever prove to be no good (or you have a better idea and we won’t implement it).
    The internet is a public good, like a public square. We should all be able to use the public square. What’s unique about the internet is that the square is not a material good but a digital good. They are both real, useful and occupiable. But only one is not easily replicable. Unfortunately for people providing these digital squares they must not extract more out of the users than they provide otherwise we have every right to ‘fork’ (that is duplicate) the square (or marketplace) and occupy that one instead. Therefore, I think grailed did a good job of synthesising the large square from many other ‘smaller’ squares like ebay, forums and foreign auction sites (please allow me to indulge on the use of the word square). However, once they created this square I think that after attracting us with free fees they then cordoned off the square and started charging huge amounts of entry and exit fees. Therefore, they are exploiting us unfairly. They grow by attracting us then continue by extracting from us.(https://onezero.medium.com/why-decen...s-5e3f79f7638e )

    Looking at the curve above you can see this in abstract form. The argument is made of many digital platforms with ‘network effects’ like Facebook and Uber (https://medium.com/public-market/the...n-a0f895639ffb) . I do not pretend this solution is unique or my own. It is a well discussed topic in my industry and field of research. Therefore, as a commitment to the users we will make our square public in use but also public in blueprint. What I am saying is that we will provide the code for the original basic website so that if we ever do become like grailed you can ‘fork’ us by making a new site with no fees. You will just have to work out the mess we are solving for less than we are charging. Just like that capitalism is inverted. The capitalist, rent-seeking owners are competing with other capitalist rent-seekers for access to the capital, ie the users, for profit. Rather than users stuck in a captive system with no ability to initiate change. We don’t pretend that the product is not the individual/people/user, just like in traditional capitalism, but we do make sure entry for competition is frictionless so that we invite competition thereby making the people that have to work the hardest and compete is us, the owners. This way we do not end up providing dead-weight services like crappy fit pictures and poorly-researched features that no users cares about. (Which is essentially just marketing and advertising in the form of spam). We stay true and competitive to the users’ actual interests and use case: low fees and as many listings as possible in one place.
    I believe this use-case (the ‘product’ of our combined listings) is a unique opportunity for this because the product is sufficiently basic that it can be run in the commons, ie the public space, with minimum maintenance and maximum benefit for the users. We only need to recoup basic costs for hosting and a small wage for the engineers/architects. (Since the 4% paypal fee is unavoidable we expect most case arbitration to be handled by them, to keep costs down) after the initial difficult workload of setting up and neatening things out, we can expect fees to actually GO DOWN. This brings me to the clear roadmap and capped fees.

  4. #4
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    The roadmap I will not be able to propose in full yet since this is just an open letter to see if there is interest in this kind of solution. I will create a provisional roadmap that will always be a work in progress due to contributions from users. What I can say is that we will try to attract users with low fees. This is not an initial commitment but a life long commitment. The model is not to expand into a large business. The model is to provide a simple service and not expand on it. That is why I am confident being open-source is not a problem. There is very little room for improvement on the product. If someone thinks they can provide a better service for the same fee (or a sufficiently better service to attract users despite a higher fee) we welcome that competition. Fee models we are competing with make this relatively easy for us to enter the market. Ebay charges 10% + 3.49%. Grailed Charges 9.9% +3.49%. (Note how ridiculous their sales proposition has become at 0.1% less than ebay). And finally Paypal charging 4.4% + a fixed fee. Therefore, our proposal is to make the infrastructure that sits on top of PayPal’s payment settlement service for as little as possible. So as to be functional and still pay a small wage whilst being committed to the ideal of the use case for the user rather than an expandable business idea. There will be no future plan to make the website expensive, fancy, or with features which are not critically useful and so paid for with taxes by the user.
    The proposed fees will initially be PayPal’s 4.4% fee plus 3% for us. The 3% can easily be explained as the majority will go to initial costs for design and hosting. With scale we could provisionally imagine that we will be able to make the 3.49% deal with PayPal as a business and make the 3% fee into 2.5%. Therefore, we will start at 7.4% which is roughly half of Grailed/Ebay fees. We will aim to get down to 3.49%+2.5% which is a third of grailed/ebay fees.
    So the roadmap will be built with contributions from this letter but essentially we will build a marketplace that has the lowest fees and has written into the code a commitment to low fees. The commitment is ensured by the fact that the code will be open-source and so anyone who thinks they can do better can ‘steal’ our idea, mirror the product, and start their own version. The best way to think of this website will be as just a marketplace for listings and literally nothing else unless it is requested. Things we think we need to provide as part of the marketplace are listed below.

    - Allow users to easily verify their grailed, ebay, facebook or other significant seller account so that we can represent that on our marketplace for their credibility
    - As a public marketplace mistakes and fixes we make and need to address should be front page stuff. Therefore, one of the only features of the website on the homepage beside listings will be a forum consisting of issues and pinned threads of mistakes we’ve made and how they can be fixed.
    - Case arbitration can be made simpler by simple suggestion from the community. One way I have always avoided scammers using paypal directly is ask for the sender and recipient to video the packing/unpacking of the parcel to make it maximally easy for the arbitrator (PayPal) to assess.
    - Authenticity checks will be done on a case by case protocol. We will not be intending to list brands and items that in my long-term experience as a trader attract an unfortunate amount of scammers (think supreme, jordans etc.). We welcome someone else to make that market. Authenticity checks will be done by admins or creditable users on request and that service will not be remunerated, therefore we will not bare any additional costs. This is just something the community can provide to each other.

  5. #5

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    count me in!
    calvinc - "Found this place and omg the people here are so cool and they dress super ultra mega well!"

  6. #6

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    me too!

  7. #7

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    I had read this post a few months back but totally forgot to respond. You can count me in.

    I have also been reading about the internet as a public good lately, and your idea reminds me of this article in particular about an open-source music database: https://www.eff.org/deeplinks/2021/0...st-musicbrainz

    Something the founder said that struck a chord with me was “...My team should work on the things that aren’t fun to work on. The volunteers work on the fun things...”

    For projects like you are imagining, I think it's an intriguing perspective to think about. Everyone who still bothers to check around this old dump of a community, clearly still gives a damn about fashion. Personally speaking, I would love to work on the supposedly "boring" things to contribute to making something "fun" and open flourish.

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