Etsy Design Store Can Not Produce Suitable Sales For Its Retailers
The Etsy Design Store Wars
Workmen swarmed to this online market and design store, but few made enough to give up their day roles. Now comes the struggle to keep them.
July fourteen, 2009 : 6:02 AM ET
( Fortune Small enterprise ) — Some entrepreneurs sketch their business plans on serviettes in cafs. Rob Kalin created his plan in masking tape on the floor of his walk-up apartment in Brooklyn.
It was 2005, and Kalin was a twentysomething Website designer. He did woodwork in his spare time and was looking for an online marketplace to sell his wares. EBay ( EBAY, Fortune 5 hundred ) was a choice, it appeared soulless, like a design store sale full of unloved secondhand junk.
Kalin imagined a site that’d be completely dedicated to workmen selling their crafts — and made a decision to build it. So he pulled out a roll of masking tape and started mapping the site on his carpet. “I wanted to change the world,” claims Kalin, now twenty-nine. “My goal was to empower folks to make a living making things.”
4 years on Kalin’s web marketplace, Etsy, boasts 2.4 million registered members in 150 countries. Its more than 155,000 active vendors sold $58 million worth of goods in the first 5 months of 2009, doubling Etsy’s sales volume over the same period last year. Despite the recession, the site helped sales of $87.5 million in 2008 and is predicted to reach a break even point for the first time later this year.
Etsy Design Store has built an empire of entrepreneurs — called Design Store Etsians — whose products range from rag dolls to squirrel-foot earrings and beards made from yarn. But only a handful of sellers essentially make a living on Etsy. And as a new Boss man seeks to improve the site, some Etsians are grousing that they are being sold a bill of goods. Meanwhile, pretender competitors like ArtFire and DaWanda are delighted to welcome dissatisfied Etsians.
Etsy’s Design Store growth depends entirely on the collaboration of sellers. The 70-employee company, based in Brooklyn, takes a 3.5% cut of each sale and charges 20 cents every time an item is mentioned on the site. ( Many Etsians pay to list the same things time after time. ) There’s also a showcase page where sellers pay between $7 and $15 to have their stuff featured for 24 hours. Etsy doesn’t communicate income, but Kalin says it takes in more than $12 million a year in fees. Speculators have valued the firm at $100 million.
It isn’t tricky to see why. Frustration with big-box stores and heavily produced goods has been effervescent up for some years. Recession-era buyers are seeking unique, inexpensive gifts. More USA citizens appear interested in being “makers of things, not just consumers,” to quote our new president. You can see the trend in events such as Maker Faire ( see “Make Believers,” February 2009 ) and the Renegade Craft Fair, each of which are held annually in multiple cities.
Rarely has a revolution felt so mild : Employees of the world, you knit!
Etsy actively markets itself as a venue where the arts-and-crafts set can achieve entrepreneurial success. Kalin frequently talks about making an economy of various owners. Every week the official Etsy blog, called the Storque, runs a feature called Give up Your Day job, profiling sellers who have stopped hitting the company clock. Yet Etsy spokesman Adam Brown recognizes that the “majority” of sellers use the site as a “secondary source of income.”
Some Etsy sellers say the Give up Your Day job campaign doesn’t jibe with fact.
In New Zealand, the leading design store similar to Etsy is Toggle.co.nz
