It costs $500k per sneaker drop?
You probably watched the Complex interview with James Whitner, the owner of Social Status, A Ma Maniere, and A.P.B, as he went viral on sneaker Twitter. To fast forward to the meat of this article, Mr. Whitner said, “Whitaker Group Stores Spend $500k on Jordan Releases to Beat Bots.”
Coming from Bot Mitigation at larger companies, I have never heard of a $500k release/drop. So, I decided to break down why it would be so expensive for A Ma Maniére and Social Status. To start, I think outlining their technology profiles will help add some light.
- Both sites are built on Shopify Plus
- use Shopify Pay
- use Klaviyo
- use Cloudflare
- use Gorgias
- *optional* Making a new Site
Ok, so why does this matter?
Let’s start with Shopify Plus. Since both stores probably do more than $9.6M a year, I assume their pricing floor is between $2,000 — $10,000/Month. Included in Shopify Plus is their bot protection tool. To use the bot protection tool, you need to ping Shopify Plus Support, and it takes about ~ two days to activate (no surprise, last-minute drops)! Also, you can only do one bot protection event at a time with the maximum duration for a bot protection event is 60 minutes. Why? Multi-tenancy and network protection…🙃.
So, both stores are paying ~100K for Shopify Plus (yes, there are more perks) and probably using it for their bot mitigation. I estimate about ~3 drops per month (it’s a big month). Assuming they are going to do Shopify Plus’ bot detector (and assuming it’s the only perk), let’s take the estimated $100k cost and divide it by the three drops. That would make the running total of pure “bot detection $33,333 per drop. Again, Shopify Plus has so many perks that I doubt this is their only use case for the platform.
Shopify Plus takes about 2.4% + $0.30 for online purchases. Most raffles require a pre-authorization, which does not capture payment immediately. Pre-authorizing an amount (in layman’s terms), they see if your credit card is legit; if it is, they will authorize the payment at the time of checkout as you gave permissions to capture. So, instead of paying 2.4% of 4,000,000 different entries, you are paying 2.4% + $0.30 for 40,000 winners (or whatever stock you might have). Let’s just assume that the cost per shoe is $150, which equates to about $156,000. I would note that all transactions incur a cost for payment processing, so this is a new cost but not unique for releases.
Here’s where the bigger expensive come in, marketing & reaching out to your clients. Both these brands have created a cult following on social media, but sometimes you need to SMS/email to remind people a drop is happening. Assuming based on social media following, both of these brands have a client list of ~150,000+. To have enough credit to contact your entire Rolodex, it would start at ~5,000/month. On high-heat drops, you want to ensure you are getting all your clientele in and a lot of hype. You might even exceed these limits (especially if you aren’t cleaning out your Rolodex of bad actors).
Cloudflare prevents Bot and DDoS and provides WAF and DNS. Assuming they are on the business plan, it protects against “sophisticated bots & basic bot analytics.” For $200/mo, you are weeding out the lazy botters.
As a bit of a curve ball, I added Gorgias in. They are the chat button on almost every popular Shopify site — you’ve probably seen them. We all know bad actors message customer support more than ever. After a raffle, I am sure there’s a high correlation to the number of support messages a store receives. Assuming they the advanced option, it is $750/mo to ensure happy customers.
Lastly, as this is becoming a common practice (thwarting bots & marketing), making a brand new site for drops is an optional step, and imagine if you had to buy a domain + set up a site for all 100 drops per year. If a developer had to build a site to reduce the chance of botting (ideally, you would have this person under salary), it would be around $20k-$75k.
Above, we’re only talking about some of their published tech stack (thank you, BuiltWith). Of course, there are marketing expenses, photography, and more. A rough estimate is about ~$30k–50k (you already have your mass following on Twitter, reducing the cost).
If we add all the totals together, ~$278,000 per drop. I am leaving out logistics and warehousing fees.
Based on the interview, it seems that one team (or one person, Kev) is on deck, constantly collaborating with the drop, and with a $500k burden holding over his head. I was in that position once, and I did not love it per se. It’s a stressful nightmare with many many hate messages from random people from losing drops due to bots. I am here for you, Kev.
Looking back on the many many years I shed off my life due to that stress, we decided to create BotNot. No one should be in that position of stress, so wanted to provide a solution that is easy and increases your productivity. We give you data and actionable insights to reduce bad actors on your drops without having to drop a steep bag. BotNot allows you to operate on a single source of truth, which Shopify Plus or Cloudflare does not provide. By detecting bad actors, we can reduce your Klaviyo cost and help you prioritize the users asking for support from Gorgias. Our job is to reduce your cost (below $500k) and ensure you are a profitable e-commerce business, so no more need to find someone Fiverr/Upwork to build a new site. For the slight chance someone from the Whitaker Group is reading this, hi… we’re on Shopify and here to help you 👋🏻.
With Love ❤️,