The internet is abuzz after Etsy had their Town Hall Meeting the other day.
And by abuzz, I mean staring at the computer screen like this:
And then reacting like this:
If you don’t know about it, here’s a recap.
For those of you who don’t want to read all that or watch the 2 hour press conference, here’s basically what has every LEGITIMATELY HANDMADE Etsy Seller past and present in a huff:
Etsy is now allowing sellers who mass manufacture their designs by factory.
Ok, fine. Etsy has always been doing that, though it may come as a surprise to those who think they are strictly buying handmade on Etsy. But now they are finally admitting it.
After the announcement, numerous sellers have asked and requested that Etsy separate the two types of sellers out. Etsy’s, or should we say specifically, CEO Chad Dickerson’s, response? It’s too much of a gray area to decide who is truly hand made and who isn’t.
Honestly? Not that hard of a problem to solve. Handmade should = made with the seller’s hands. WHOA.
All they would really have to do is make a new selling category to go along with handmade, supply, and vintage. They could call it “small designed” to show it was designed by a small business, but was not handmade.
This would include any and all mass produced items. This way nobody is left out, nobody is offended, all the small businesses win, and Etsy still gets to make their money.
BUT the thing with Etsy, as usual, is always deceit. Etsy still wants consumers to go there under the belief that they are buying items that are handmade and unique. The real reason Etsy won’t disclose right out in the open that not every seller is going to be making items by their own hand, is that they don’t want to lose their roots in the handmade buyers and they don’t want to lose the money making mass producing sellers by forcing them to disclose what they do in an immediately noticeable place.
Yes, Etsy has said that those particular sellers would need to disclose how their items are made on their about page, but how many people actually read a shop’s about page before purchasing something on a whim?
The biggest issue concerning sellers with this, however, is that Etsy is practically inviting designers with established brands and factories into the market place. (Think Martha Stewart, Vera Wang, Dolce and Gabbana etc.)
Now, we all think it is great that Etsy is allowing the small businesses to expand, as in the past, they have closed shops for getting “too large”, but doing so is very hard and expensive. Unless a small seller has a financial backer, a rich family member, an amazing side job, a Kickstarter that goes viral, or some super duper awesome credit, the chances of Etsy’s small sellers expanding is pretty small.
The biggest problem is that relevancy for who shows up in search terms on Etsy is based on how many items are listed in a shop and how many times the items are bought.
If everything is lumped together as “handmade”, the seller who makes one of a kind items and can only produce and upload ≤ 6 to 10 pieces a day is going to be completely slammed away by the seller who has outside workers producing, relisting, and uploading 100+ items a day.
There are only 250 pages that come up under Etsy’s search. The sellers like the first hypothetical one are going to either be way at the end of the results, or on page 500, which doesn’t exist.
The next problem is how pricing is going to be viewed. It costs a lot less per item to mass produce your designs, than it does to individually create the same amount by yourself. That is because in a factory situation, items are made much quicker and at wholesale costs.
If I make a necklace in Connecticut, and the supplies cost me $30 in retail supplies to make, and the piece takes me 6 hours to create, I can charge $162 using the formula:
[$8.5(CT min wage)x6(hours)+$30(supplies)]x2(wholesale price multiplier) = $162
(Yes I pay myself minimum wage and only charge wholesale price, because I already can’t compete with the manufactured goods that have slipped through on Etsy.)
Now make me a designer who goes to factories to create their work. Depending on the area’s wage laws, they can pay employees almost nothing to work. (Let’s say $1.50 an hour for now). Ignoring the complexities of assembly lines and such, we’ll assume that single worker makes the same kind of necklace I just made in the same amount of time and lives in another country than the seller.
Many companies only offer wholesale supply prices to large companies and factories. Wholesale is usually 1/2 price of retail. So instead of paying $30 per necklace in supplies, the seller only pays $15 for supplies.
Using the same formula:
[$1.50(wage of factory worker)x6(hours)+$15(supplies)]x2(wholesale multiplier)+$8 shipping from other country = $56
That’s a pretty big difference. Now, if all of theses items are being lumped together as handmade, the customer mentality for possibly purchasing a genuinely handmade item is going to become "I can buy a similar handmade necklace from this seller for less than half the price. This seller is trying to rip me off."
This means small sellers who actually make their items and are trying to make a living are either going to have to lower their prices A LOT, or are going to be completely run out of business all together because we can’t price our items that low.
In the necklace example, we would only be making a $26 profit at that price.
(I would like to add in that the mass merch seller’s profit is slightly less per necklace, at $24, however keep in mind that these are more likely to sell because based on Etsy’s relevancy search criteria, they are more likely to come up during searches.)
Some sellers (not me, unfortunately I’m at an average of 1 sale a month) are lucky enough for four sales a day. So let’s pretend that is the case with our necklace creator who was forced to lower his or her prices.
$26x4 = $104 a day.
Sounds good, right? But then figure in the rest:
4(necklaces)x6(hours) = 24 hours of work
$104/24(hours of work)= the seller paying his/herself about $4.33 per hour, half the CT minimum living wage.
Not exactly a livable wage when you are needing the income and making very few sales already.
And all the good people at Etsy can say about this is we are “afraid of competition”. We are not afraid of competition, we just know it is going to kill our businesses.
All we want from Etsy is for them to make a separate category for those who strictly design and those who design AND create. It’s not hard Etsy.
On a related note, many of the small “hands on” (hehe get it?) etsy businesses are using the hashtag #TrueHandmade all over social media to show they make the items with their own two hands, not by Etsy’s weird new standards. If you use social media to shop, start using that hashtag, and if you are truly a handmade business, start using it yourself!
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