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[6 comments]

Etsy makes wholesale changes

August 7, 2014

Etsy is looking to bring its artisan-created goods to the world. It has officially launched Etsy Wholesale to enable boutiques to buy its handcrafted goods at wholesale prices.

According to a blog post by Rand Niederhoffer, program manager for Etsy Wholesale and co-founder of Thistle & Clover boutique, Etsy has been working with retailers large (Nordstrom and West Elm) and small over the past year to explore opportunities for growing their sales.

During the beta phase of Etsy Wholesale, the company used feedback from buyers and sellers to develop "user-friendly tools and seamless integration between Etsy.com and Etsy Wholesale."

To participate in Etsy Wholesale, members pay a one-time fee of $100. Etsy will also collect a 3.5 percent transaction fee for wholesale orders. The new venture, according to Mr. Niederhoffer, "is a step into the future of retail buying and offers convenience and access to unique products that you can't find anywhere else."

Laura Daly of Mockingbird Domestics boutique in Austin, TX said, "Usually the expenses associated with going to a showroom keep out the smaller, unknown, independent designers — Etsy Wholesale makes it simple and cost effective to source fresh products all the time."

Looking ahead, Etsy is focused on finding additional ways to grow the marketplace for the independent sellers on the site.

Etsy Wholesale will be participating in American Express's Small Business Saturday and is asking retailers to participate in trunk shows on November 29. Participating retailers will receive a trunk show kit with promotional material, a $25 gift card to purchase goods from Etsy sellers and a $50 American Express Shop Small Reward Card. Registration for the event begins next month.

Etsy is also working with a Brooklyn-based magazine, Dossier, to showcase items made by its independent sellers in the publication.

While Etsy supports independent business owners, there's nothing small about the online marketplace for arts and crafts. The certified B Corporation, a designation for companies that seek to use the power of commerce to solve social and environmental problems, has over 40 million members, over one million active shops and lists over 26 million items for sale. Merchandise sales in 2013 reached $1.35 billion.

In an interview on CBS This Morning, Etsy CEO Chad Dickerson said, "The beauty of Etsy is that you can get something that no one else has." He added, "It feels really good to support an artisan."

Discussion Questions:

Do you see continued growth for artisan-made goods in the years ahead? Will the launch of Etsy Wholesale help to spur even faster growth?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you think American consumers are more or less interested in buying artisan goods today than 10 or 20 years ago?

Comments:

While I think it is great retailers can find new merchandise easily, I think this is rotten for the artisans.

Most don't know their costs, yet think selling wholesale is a blessing when it is a curse. I had a friend who made handblown wine stoppers. They were beautiful.

They were excitedly trying to sell to wine shops. Did they factor in all their materials costs, marketing and time? Nope. It ended unprofitably after about a year. The slim margins they were making were given over to the retailers. This program would give it over to the retailers and 15 percent to Etsy.

Like a Groupon the idea of vast exposure seems good, but the costs, unless you're really savvy, just don't pencil out for the small guys.

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Bob Phibbs, President/CEO, The Retail Doctor

There has always been a market for artisan-made goods of high quality. The challenge for the small local artisan has been how to reach customers beyond their immediate area.

Setting up a website is overwhelming, or too time consuming for many artisans, who also have challenges collecting electronic credit payments. Esty provides a very compelling, low-cost solution for artisans. Etsy already has a compelling member and shop base that creates immediate traffic. The latest move to Wholesale will continue to grow and expand Etsy and its base.

The major challenge with the Wholesale concept is whether the local artisans will be able to produce sufficient quantities for retailers wanting to carry their products. Crafts and unique artisan gifts are notoriously seasonal purchases, and the smaller artisans may lack both the experience and capacity to produce sufficient quantities for seasonal spikes around holidays.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Consumers seek the unique and unusual and artisan-made goods fit well in that category. If the economic recovery holds, then artisan-made goods should see healthy growth in the years ahead.

Etsy Wholesale will be an attractive opportunity for independent business owners to reach a significantly larger buying public. Success at Etsy Wholesale ought to translate to success at the local level.

What I really like here is how the Etsy Wholesale model allows local-to-national exposure with minimal additional investment for the independents, while simultaneously building up Etsy's attractiveness to consumers. Of course, as Mr Phibbs suggested, the local artisans need enough business savvy to price their products properly. But the Etsy Wholesale concept as such is sound.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

I'm bullish on the artisan market for lots of reasons, starting with the fact that consumers like unique items and there are just a lot of folks out of work or in underpaying jobs.

The intersection of those two trends ought to be a boom for the artisan market for at least a decade, probably longer.

Etsy is critical because it takes over the marketing function for people who know how to make, but don't know how to sell.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

I think it's a bit greedy for Etsy to take 15 percent of wholesale. Artisans are typically less aware of total costs. Etsy could help educate members to true financials, and perhaps have a floating commission model that allows the artisan to find a path to true profitable revenue.

I do like the idea of partnering with very local magazine publishers! That has very good potential as artisans can share costs of pages that feature their work.

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Anne Howe, Senior Vice President, Shopper Solutions, part of Acosta Mosaic Group

There is a lot of potential in this approach. Of course, the artists need to be knowledgeable about the deal they make, but Etsy can perform functions they do not do well, or on which they do not want to spend time. Retailers have the opportunity to offer a variety of merchandise and to change the selection of merchandise often, which may be a drawing card for getting consumers into the store. The consumers have an opportunity to find artisan products with a physical inspection that would not be possible in normal circumstances. If the approach is collaborative, with everyone getting a benefit, this approach could be very interesting.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

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