Etsy is a dream come true for Artists (isn’t it?)
Etsy is widely known as one of the premier websites for selling arts & crafts online. They essentially took eBay’s shop concept and focused it squarely on the creative niche so you no longer had to sift through lawnmowers in order to get to beaded lanyards.
According to the site, there are now over 7,000,000 items currently available for sale. These days it seems that every artist and crafter with a bedazzling gun, has opened a shop on Etsy. In fact, as of the middle of October 2010, there were over 249,000 active sellers, and according to our own highly non-scientific poll here on the site, almost 14% of you said that you are currently selling items on Etsy.
According to their own statistics in September 2010, Etsy sold 1,466,039 items for $26.6 million. Now if my English-major math is correct, this works out to an average selling price of about $18 per item with about a 20% inventory turnover (7 million available items – 1.46 million sold) in the month of September. In other words, it would appear that the company is doing quite well for itself as a marketplace for low-priced handmade crafts and collectibles.
[Update: Interestingly enough since this article has been published, Etsy has removed their "weather report" page cited above that shows their sales statistics and I have been unable to find this information anywhere else on their website. I'll let you draw your own conclusions here...]
So what’s the problem?
A friend of mine recently asked me my opinion on whether or not she should open an Etsy shop to try and sell some of her handmade jewelry online. As a regular on the Art Fair festival circuit, she was looking for an additional sales outlet especially during the slower winter months. Of course she had heard about Etsy before, but she had always been hesitant to sign-up after hearing more than a few Etsy horror stories about not-so-ethical sellers purchasing items from artists and then turning around and selling copycat designs in their own shop.
Putting aside this issue of unscrupulous copycat designs for the moment, does Etsy still have a viable future as a limited niche marketplace or has the handmade craft craze come and gone?
Now I’m not about to suggest that people are going to suddenly stop making felt hats for cats or crochet tea cozies, but I do think that the days of anyone setting up an Etsy shop and consistently making money with it may be over. . . that is if those days were actually ever here at all.
Taking a closer look at the numbers
Before we dive into the numbers here, let me preface all of this by reminding you that Etsy is a privately-held company and is therefore not required or very likely to publish any numbers that could potentially reflect negatively on their business. In other words, we can safely assume that they only release the “good” numbers and very few of them at that.
So we take what little they give us and begin to make some assumptions about their business from there. Please keep in mind that if you are expecting some well-researched and statistic driven journalism here–this ain’t it! This is little more than the imaginative ramblings of a math-averse English major so take from it what you will.
Here’s the numbers according to Etsy’s own website for 2010.
- January 2010: 242,028 new members signed up – 20.1 million dollars of goods were sold in January; roughly 21% lower than December
- February 2010: 236,034 new members signed up – $20.2 million of goods were sold in February; roughly 1% higher than January
- March 2010: 246,834 new members signed up – $22.4 million of goods were sold in March, roughly 11% higher than February
- April 2010: 236,040 new members signed up – $22.4 million of goods were sold in April; (0%) roughly the same amount from March
- May 2010: 239,340 new members signed up – $22.9 million of goods were sold in May, 2.2% higher than April
- June 2010: 233,167 new members signed up – $22.1 million of goods were sold in June, 3.5% lower than May
- July 2010: 260,267 new members signed up – $23.8 million of goods were sold in July, 7.7% higher than June
- August 2010: 278,208 new members signed up – $25.5 million of goods were sold in August, 7.1% higher than July
- September 2010: 280,538 new members signed up -$26.6 million of goods were sold in September, 4.3% higher than August
The biggest question that comes to mind after reading through all of these numbers is:
What exactly are all of these new members doing once they sign-up?!
Are they buying? Are they selling? Are they doing anything?
Think about this for a moment. According to their statistics here, they are averaging almost 250,000 new members a month but it would appear that very few of these new members are actually buying anything. I mean why exactly would you sign up to become an Etsy member unless you had already picked something out that you wanted to buy?
Since they don’t seem to be buying, does this mean that the majority of these new members are planning on opening up their own shop to sell their own creations?
Etsy (perhaps wisely) doesn’t divide up their new member numbers between buyers and seller accounts. I would have to guess that the official line would be that since every new account is technically a “buyer” account, reporting this kind of distinction would be impractical. While this may be true, because there is an additional seller account “sign-up” (aka give-me-your-credit-card-number), it would be fairly easy to report how many new seller accounts had been created each month. Now since they’re not telling us what’s really going on, deranged Liberal Arts majors with overactive imaginations like myself, begin to create these half-baked scenarios about what might actually be going on behind the scenes. . .
Wildly Speculative Scenario #1 – 90% Buyers 10% Sellers
Let’s assume for a moment that almost everyone who signs up for a new account on Etsy is planning on buying something. As I mentioned previously, why would someone go through the trouble of signing-up for a new account unless they had already picked out something they wanted to buy?
The only problem here, is that if you look at the actual sales growth numbers, it seems a little hard to believe.
According to their own statistics, over the first ten months of 2010, sales have increased roughly about 5% a month on average. This seems okay until you realize that the company has been adding almost a quarter-of-a-million new members/buyers each month. In fact, Etsy has signed up over 2.2 million new members so far in 2010 and had an increase of $6.5 million in sales, which may sound like a lot of cabbage until you actually do the math and realize that works out to about $3 a person. Since we already know that the average selling price of an item is about $18, we can assume that a lot of these new members aren’t making any purchases at all and that doesn’t even take into account the thousands (millions?) of members Etsy had already signed up before 2010.
Wildly Speculative Scenario #2 – 50% Buyers 50% Sellers
Okay, let’s say that maybe half of these new members aren’t planning on buying anything at all. Maybe they just want to open their own shop and sell their arts and crafts. On the surface, this theory would appear to better explain the company’s so-so sales increase.
So if we imagine for a moment that half of these new members who signed up in September were buyers, that would mean that the other half (~140,000) would become potential sellers. So then our question becomes, how many new sellers were added between September and October 2010? Was it anywhere near 140,000 people?
Because Etsy doesn’t officially publish the number of active sellers they have from month to month, I only have the numbers from the last two months to compare.
According to their website they had approximately:
239,000 active sellers in Septemeber 2010
249,ooo active sellers in October 2010
Net increase of 10,000 sellers or roughly about 4%
So even if you factor in those new members who plan to someday open an Etsy store but just haven’t gotten around to it yet, you still have somewhere in the neighborhood of 130,000 new members unaccounted for. Unless of course, these new members really are opening their new shops, and it’s the current Etsy sellers who are closing down their shops and leaving in droves. . .
If this is the case, what’s driving these previous sellers away?
- Is it the lack of business?
- Is it the problem with copycat sellers?
- Is it the competition or the fact that there are too many sellers?
- Is it the lack of promotion or traffic to their shop?
What should I tell my friend? What would you tell someone if they asked you about opening a store on Etsy?
What can we take away from all of this speculation? (if anything)
Even though we can’t really know what’s going on behind the scenes, it is fairly obvious that either a lot of people are signing-up for an Etsy account and then doing absolutely nothing with it, or these new members are simply replacing the current members as they continue to leave en masse for whatever reason.
Either way, I would caution you to be very careful about putting your entire online presence in single marketplace whether it’s Etsy, eBay, DeviantArt, or any other online site. As technology and the online environment continues to change and evolve, no one knows if today’s Etsy will become tomorrow’s eToys.com.
Even if they do survive, who knows if they are going to want you as a shopkeeper six months from now? I have heard far too many stories of Etsy shops being shut down literally overnight for one reason or another. Always remember that when it comes down to it, it’s still their “shop” and they have the power to close you down if they feel like you have somehow violated their “terms of service”.
This is one of the reasons that I always encourage artists to create their own online home first and then branch off into these other social media sites and online marketplaces. Use these websites like the tools they are, and not as your complete online identity. Remember to always send your visitors to your own website first and then link out from there to your Etsy shop, Twitter, or Facebook page.
[2013 Update: So has Etsy's policies and customer service gotten any better since this article was originally written? Here's a hilarious new video created by Ming & Ingrid called "The Etsy Inquisition" that may help you decide for yourself. You can read more about their own harrowing experience in their post "Etsy's Reign or Terror"
Has anything like this ever happened to you or someone you know?]
Are you a member of the Etsy community?
Even though Etsy may not be giving us the full picture, I would like to hear from you about your experience with Etsy as either a buyer or seller. Give us the inside scoop and let us know if you think their current business model is going to be able to survive long-term. Do you think that it’s still a good place to sell your artistic creations online?
I would also be interested in hearing from those of you who may have once had an Etsy shop and closed it up for whatever reason.
- Are you currently selling (or buying) your art on Etsy?
- What do you think are currently the biggest benefits or challenges to running a successful Etsy store?
- How have things changed since you’ve been there?
- What advice would you give someone who might be interested in opening up their own Etsy shop?