How Etsy keeps its big sellers from going solo

In the decade since Etsy launched as a digital flea market for knitted headbands and handmade cards, it has evolved into the world’s fifth-largest online marketplace with 1.5 million active sellers and 21.7 million active buyers. Tuesday, the company announced that in the first half of 2015, its shops drove more than $1 billion in gross merchandise sales.

With such growth, some individual Etsy shops have become standalone brands in their own right. A 2014 survey of its sellers found that 76 percent of them consider their Etsy shop a business, and for almost a third, it is their sole occupation. Tielor McBride, who began his leather good shop TM1985 as a hobby in 2010, has since sold items at Banana Republic and Japanese retailer Journal Standard. Rebecca Schoneveld used her Etsy earnings to help establish a brick-and-mortar bridal boutique in Brooklyn.

As these individual brands under the Etsy umbrella grow in scale and expand across channels, they are presented with the opportunity to operate entirely outside of Etsy’s ecosystem. But perhaps counterintuitively many sellers with strong brands of their own are choosing to stay on the site for the streamlining and support it provides. Kimm Alfonso, Etsy’s director of seller development, said that as brands grow, they need a different set of products and services. “We don’t want them to leave, we want to keep developing tools to keep them with us,” she said. After all, keeping sales onsite is how Etsy makes money: 20 cents on each four-month product listing and a 3.5 percent transaction fee when an item sells.

Here are four services Etsy provides to keep sellers from going solo.

“What we try to provide first and foremost is education,” said Alfonso. That can be on pricing, hiring employees or expanding into multiple channels, and it is delivered mainly through the seller handbook, which is available to all Etsy sellers. Its 10 categories cover everything  from photography to shipping and new articles are published twice a week.

Marketing Support
One of the biggest challenges for an upstart Etsy brand is how to effectively market itself, said Jason Goldberg, gvp of strategy at Razorfish. Marketing support is a major value proposition that Etsy retains. Both McBride and Anna Joyce, whose eponymous brand has become popular on the site, credit Etsy with launching their success. On Jan. 30, 2012, McBride’s shop was featured on Etsy’s homepage. He said that his sales jumped from 50 total to 200 orders in just one night. Joyce had a similar experience when two of her products were featured in Etsy’s holiday gift guide. Along with internal product placement, Etsy allows sellers to purchase promoted listings on its site, and it provides support with how to use ads on Google shopping.

Etsy Wholesale
Last summer, Etsy launched its own wholesale platform to help connect sellers with prospective retail buyers. Sellers apply to join the platform, pay a one-time fee of $100 and a 3.5 percent transaction fee on each wholesale order they receive. “Sellers were doing it already, and this was an opportunity to make it easier,” said Alfonso. Joyce took part in the beta phase and was featured in four full pages in a catalog sent out to introduce the program to buyers. Her line is now carried by around 45 retailers worldwide. And while only around 25 percent of her wholesale business has come from Etsy wholesale, she said she prefers to use its interface because of its simplicity and ability to track payments. She doesn’t mind the 3.5 percent transaction fee because it is no more than she spends accepting credit cards or paying for an invoicing system. Etsy could not confirm the number of brands on Etsy Wholesale, but at the end of last year, there were over 6,500 buyers on the site.

Fund on Etsy
Launched in June, Fund on Etsy is a crowdfunding platform that addresses financing and product development by allowing sellers to raise money for new products by taking advanced orders. If the funding goal is hit, the new product is sent out to customers; if not, buyers aren’t changed for their order. The platform is still in a testing phase that will run until Aug. 16. Some campaigns have already reached their funding goals, but Etsy couldn’t confirm a precise number as the pilot is ongoing.

“I consider myself a full-fledged brand that just happens to sell on Etsy,” said Joyce. But with the traffic, revenue and support that Etsy provides, “I don’t see myself getting off Etsy anytime soon.”

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