Last week Etsy.com, the online craft and vintage marketplace, announced they were seeking an Initial Public Offering (IPO) on the New York Stock Exchange. It sparked my interest and curiosity about the company, which also launched a wholesale arm last August.
While many people know I have run a retail bookstore for almost a decade now, you might not know I began my journey as an entrepreneur in the wholesale world. I owned a tea manufacturing company during my college years. One of my investors referred to it quite accurately as “the best education” I could have gotten. Amen! Amen to that fair prayer.
As someone who has been both a producer and a seller (and is always a consumer) in the entrepreneurial equation, I find the Etsy wholesale platform particularly fascinating. If you aren’t familiar with Etsy, it is an interesting online place to spend some time. It was launched in Brooklyn, NY, in 2005, and it is still largely a handmade marketplace—though there are “vintage” items for sale on it. (I myself once sold an old set of Christmas tree decorations as an experiment. I didn’t learn as much as I had hoped.) Also, they have begun to allow Etsy shop owners to have their products manufactured, which has given rise to some debate about the handmade-ness of the offerings. What you find available there includes people trying to make some extra cash from thrift-store finds, life-long crafters trying to develop their hobby into a business, people who have developed really strong business profiles and brands, and importers from all over the world who are selling goods of all kinds and qualities. Though I haven’t ordered them, I find the hand-crocheted, flowered knee-high boots from Ukraine more endearing than cheesecake. However, I am not ordering shoes form the Ukraine any time soon; especially, not when there are so many wonderful cobblers back in the good ol’ U.S. Pretty much anyone who is willing to abide by their policies can open an Etsy store.
The wholesale side is, of course, a little different. Wholesale doesn’t mean you have one unit of an item available; rather, it means you have cases of an item available to ship to retailers. So the shops that apply for and are selected for the wholesale program are a little slicker, a little more polished and put together, and a little more experienced than many of the other sellers. Also, the wholesale program isn’t a place to promote yourself for custom work.
I have a fascination with stained glass, which was my hobby for a few years before the bookstore took over almost every waking moment of my life. (I’m not complaining: I’m just stating the situation as it is.) I love to look at stained glass and fanaticize. It’s like porn for wannabe artists, I guess. Anyway, if you spend time looking at the (large) stained glass available on Etsy, it basically falls into two categories: things people have salvaged and are selling as vintage pieces, and examples of work that aims to get custom-order requests.
I decided, as a retailer, to apply for a wholesale account to see how it works. To be clear: In order to purchase wholesale you must provide a business-tax ID number that permits you to open a wholesale account, and also obligates you to collect and remit sales tax on the items you purchase wholesale. Usually, after you send in your info, it takes a couple days for the company to process it and get your account opened. Etsy was the same: It was about two days after I got the forms filled out.
They currently are listing over 2,600 wholesale vendors. There are more than 1.4 million merchants on regular-retail Etsy. When browsing the wholesale side, it is fascinating because there isn’t just one basic set of wholesale parameters. Each shop has a different set minimum first order and a minimum reorder. (That whole minimum ordering thing is part of why sometimes a small-retail operation might take a month to be able to restock something: We have to come up with pretty substantial quantities to be able to place an order.)
Just like in most wholesale catalogs they have both the wholesale price and a suggested retail price listed, but the percentage of mark-up suggested by each chop ranges greatly form 30 to 50 percent. That might not sound like much, but that is actually a pretty big variance. Some shops offer drop shipping, which is interesting. Perhaps the most fascinating listing in each shop is the estimated production time necessary to fill orders. After a couple hours, it became clear that, much like retail, Etsy was about building individual relationships between artisans/crafters and clients. The wholesale side specifically was developed to forge a bond not between the Etsy wholesale platform and retailers, but individual wholesalers and retailers directly. It’s kind of like a weird dating site for small-business owners.
When I was starting my tea company, something like this would have been a gift from the gods. Indeed, there is a lollipop maker that has captured my attention (Etsy allows sales of manufactured foods). Finding distribution and building relationships is the hardest and most important part of a wholesale business. I traveled every single weekend for almost three years to promote my teas. To have had something like this, which legitimizes what you are doing and provides a showcase and payment-collection system, would have been beyond my wildest dreams.
As a small-business owner who tries very hard to promote and stay connected to the small-business world, this looks like it was built for someone like me. For example: If we decided to get serious about VW-themed housewares as a product line we wanted to offer, I actually can call up about 10 different artisans who make VW-themed housewares: towels, glassware, décor, etc. For the most part, they are small operations. I can see where they are located and learn about their businesses and practices. It’s business to business (B2B in the parlance) for the small-business set; frankly, it’s long over due.
Part of what makes the Etsy IPO so intriguing is that they are what is known as a “B Corp.” That is essentially a certification process that says they meet very specific standards of environmental and social transparency and accountability to their employees and customers. It’s a lot like LEED certification for buildings. Perhaps most compelling, given its business structure, is its commitment to the interests of stake holders, not just its shareholders. If anyone remembers the outcry form eBay sellers about fee increases, etc, that is a pertinent statement. Going public is not something that B Corps have done on a wide scale thus far. Rally Software, also a B Corp, went public in 2013, but it has been noted by several media outlets that their revenues in 2014 were $56.8 million, whereas Esty’s were $195.6 million that year. It’s a vast difference. Not to mention, Etsy still operates at a loss in spite of that kind of revenue.
As a self-professed Luddite, I get a lot of grief from people who claim I can’t find anything nice to say about our brave new world. I have ventured into this, and next week I am going to find a teenager to explain to me what an “app” is and how it works. Apparently, downtown Wilmington now has one. (Is that singular? Can a collective ownership be singular? Does anyone own an app? These are the questions that befuddle me.) I am going to learn about this and report back. It is really depressing that I feel like the old guy who needs an 8-year-old to program the VCR, but this was destined to happen one day.
To our local designers: If anyone is selling on Etsy Wholesale, I am curious to hear how your experience has gone. Get in touch. To everyone else: Support small, cottage-industry-level designers and artisans. There are many in our own Port City who do stunning and beautiful work.