Man, that’s probably a huge reason why every business strives to scale to such huge amounts too. It’s impossible to comply with all these laws without spending a fuck ton, requiring you earn even more. Sad.
Discussion
Yup, and I don't think it's uncommon for about 5-7% of a sale to be spent on ad-spend since 2022, I think its probably much higher for larger companies. In my experience, you need to be working with minimum of 30% margin on products to cover that an make a 5-8% slim profit accounting for cc fees, hosting, taxes, shipping miscalculations and so on (physical products of course). When 2022 hit the company I worked for saw drops from average 30% to 20% or even lower margins on resale, at high quantities. We just ended up dropping anything that was less than 20% and stopped advertising anything less than 25%.
Damn it, that’s so depressing.
It was tough, it shut the retail part of the business down (me along with it), but we learned a lot. Still learning a lot XD
Most competition started to vertically integrate and cut off resellers to drive sales up. Larger players started buying up smaller manufacturers and building their own retail websites with VC money, forcing retail competition out. We were only one of many.