I realize many of you are thinking about the holidays right now, but today I’m going to start a conversation about the future beyond — the long-term direction of Etsy and the practical implications for sellers.
As I wrote in May, we have big ambitions. We believe that Etsy can help fundamentally change the way the world works by making it possible for individuals to make and sell unique goods to other people around the globe. Every day, millions of people visit the Etsy marketplace and choose a better way to spend their money by supporting your shops. We’ve been taking this message about a people-powered economy all over the world, including the halls of power.
In that quest, are we trying to grow the Etsy marketplace? Unequivocally, yes. We think there is tremendous opportunity for platforms like Etsy to be a model for a brighter economic future for people. Though we’re growing incredibly quickly, today Etsy represents a tiny fraction of the world economy. But we don’t think we need to “sell out” to grow.
A New Way of Doing Business
The old mode of business where a company “wins” and you “lose” is outmoded. Etsy’s business model is based on shared success. We only do well when our community is doing even better. Every fee that we charge is designed so that we make money by delivering even more income to you. After some early experimenting, the listing price on Etsy settled at 20 cents in 2006 and has not been raised since. (In fact, we effectively lowered the price with the change we made in May so that you don’t pay for quantity up front.) Your listing fee gets you exposure to a large audience. The transaction fee you pay to Etsy means that 96.5% of any sale goes to you. We think keeping the fees low creates more opportunity for everyone to be rewarded by participating. In business speak, this is “creating more value than we capture,” as O’Reilly Media founder Tim O’Reilly has put it.
That is not to say that Etsy, the company, doesn’t want to make money. We definitely do and we have no reason to pretend otherwise — you have costs, like supplies, advertising and rent, and so do we. It’s what we create with that money that matters. The beauty of our business model is that we can continue to operate and grow this company while giving back to both our community and our shareholders. This is why in May we became a Certified B Corporation and why we believe that this new type of business is a powerful vehicle for good.
Etsy Sellers Are Entrepreneurs
This probably sounds obvious to those of you reading this, but running an Etsy shop is a serious business that requires serious business skills. We often hear people outside the community describe Etsy sellers as hobbyists. We know that not everyone who opens a shop wants to make it their full-time focus. We strive to make it easy for anyone to get started quickly on Etsy, and to choose the level at which they engage — whether that’s just one or two listings or a fully stocked storefront with a line of wholesale business on the side. Just because Etsy is accessible doesn’t mean it isn’t hard work. We sometimes sense a subtle strain of dismissal, and even sexism and elitism in that “hobbyist” sentiment. More than 75% of the sellers on Etsy are women, and there’s a long history of women’s craft being undervalued. But you don’t have to choose between being a maker and being an entrepreneur. The barriers to enter the retail trade and to start your own micro-enterprise are crashing down and Etsy needs to evolve to keep pace. That means building the tools today that micro-entrepreneurs will need tomorrow. We’ve made good progress with new shipping tools, payment tools, gift cards and search advertising — and there’s much more to come. In particular, we’re really excited to announce our plans to create a new wholesale marketplace on Etsy.
The Way We “Make” Is Changing
The world around us has changed a lot since Etsy launched in 2005 — at that time the iPhone didn’t exist and Facebook was essentially unknown beyond college campuses. We’re now in the middle of a revolution, powered by new technologies, which is quickly extending to all aspects of making. It’s changing how we think about what is made by hand.
In the past, machines that seem commonplace in your making process now, like the well-loved sewing machine, caused riots when they were used en masse in factories. In 1841, the inventor of an early sewing machine, Barthélemy Thimonnier, saw his factory destroyed by tailors who feared losing a way of life and a livelihood that revolved around small shops.
We’re at the start of a different kind of industrial revolution now: people have the ability to manufacture things in their own homes, studios, and shared workspaces, with entirely new tools that were either inaccessible or unaffordable a very short time ago. These new developments are being called “personal manufacturing,” “micro-manufacturing,” or “desktop manufacturing.” In other words, the once riot-inducing sewing machines — and the 3D etchers, CNC routers, and knitting machines of the world — are part of the home or small shop environment now, alongside tools that have been a vital part of making for centuries. Because of this, we want the world we’re building at Etsy to be one where we are constantly and thoughtfully redefining what it means to be a maker.
Our Evolving Policies
Naturally, that redefinition has to encompass our policies about who can sell and what can be sold on Etsy. Our current marketplace guidelines have remained mostly unchanged since 2009. We’ve told you how we enforce the rules today, but the next issue at hand is having a better framework for the future. Our policies just aren’t clear enough, and the rules have grown gradually out of sync with sellers’ needs. In Etsy’s earliest days, “the seller” often meant one person — an artisan — who did everything herself. For some shops, remaining a one-person operation is still the right approach. For others, meeting their goals necessitates more help. We know that many sellers are still confused about whether they can bring in other people to help them run their shop, and how much production can be done by others, either within or outside their business. This lack of clarity sometimes results in sellers tying themselves in knots to comply with rules around drop-shipping or remote employees that we never intended to stymie businesses of their scale. Here is just one example where our policy on location prevented a beautiful collaboration between a daughter and mother:
I am having a difficult time understanding the reason behind an Etsy rule… My mother is recently retired and has taken up her past hobby of making beaded jewelry. I’ve encouraged her to open up an Etsy shop of her own, but she is currently not able to run it without assistance… I thought it would be awesome to surprise her by opening up a shop and running it for her while she gains confidence with selling online…. I asked for permission to help run her shop and was categorically denied because I do not live with her. Many adult children of retiring parents are looking for ways to help them enjoy their hobbies while encouraging them to keep up with the new economy. This rule makes it impossible for us to help them learn the joys of being a part of an online community like Etsy and is disheartening to say the least.
Ouch. This is a case where a well-intended rule developed to prevent outsourcing to mega-factories is unintentionally hindering a family. We know this needs to change. The reason we haven’t yet rolled out any changes is two-fold. One, it’s very delicate work, providing enough flexibility to allow you to grow while preserving the handmade spirit that makes Etsy unique. We’re still thinking it through. Two, we can’t decide on changes without your input. For that reason, we don’t plan to adjust any of the rules during the holiday season but we are committing to giving you an update in the new year. In the meantime, we would really like to hear your stories, like the one above. It’s near-sighted to think that we can grow and expand the marketplace without evolving our policies to match, but we’re committed to doing so in a way that’s driven by your goals.
Rewarding and Celebrating Success
We want to build a community where you can expand your business as much or as little as makes sense for you, but where success is rewarded and recognized. I’ve heard from some sellers who have grown from scratch on Etsy, but actively try to downplay their success when talking in the Forums or within Teams. Frankly, I find this tragic. In a world where many people are struggling financially, having rules that discourage honest people from sharing their success and inspiring others is a failure.
I have heard speculation that the only reason Etsy cares about retaining our most successful sellers is because we stand to lose the most money when they leave. This is just not how we think or act inside this company. We have surveyed highly-successful sellers who left Etsy about the reasons why, but we have actually never calculated the amount of revenue lost when they close up shop. As a growing company, our business interest is in keeping our tools and services relevant to where our member base as a whole is headed down the road. Top sellers are amazing bellwethers of our future.
What This Means for the Future
Looking ahead, we are trying to find ways to encourage success and reward ambition. We are not going to change the world by thinking small. In order to create as much value as we can, while preserving the heart and soul of Etsy, we’re going to need your help.
We’re building the roadmap to our future; in order to get there, we need to hear how you envision yours. We know there are many diverse opinions about what success looks like on Etsy so I ask you to send your stories and thoughts on my post to firstname.lastname@example.org.
I want Etsy to be an independent company for a very long time, and more importantly, to provide independence to sellers and the ability to make a life, not just a living. Changing the world means that we need to think bigger, and we want you to think bigger with us.