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article imageSmall crafters help build $1 billion business

By Jenna Cyprus     Nov 1, 2013 in Entertainment
You might not normally associate an arts and crafts firm with big turnover figures, but online marketplace Etsy.com has just announced that their annual revenue has exceeded $1 billion for the first time.
Started in 2005, the site is home to more than 1 million "storefronts" run by independent crafters and designers. They sell all manner of hand-made items, from candles to toys, and works of art to head scarves.
Common sense will tell you that the average income generated by these businesses likely isn't startling, but the problem with averages is that they don't focus on individual successes. While there are certainly people making next to nothing from their efforts (perhaps just using their Etsy.com account as a way to pay for their hobby), others are making tens of thousands of dollars a month.
What's more, Etsy is keen to help its small-business-owner members expand. To that end, the site has just released a major revision of the rules.
The "hand-crafted" challenge
The difficulty with building a profitable business based on sales of hand-crafted items is often the substantial production time required. There are well-documented stories of Etsy store owners who have created extremely popular items, only to find they don't have the capacity to keep up with demand.
That may sound like an ideal situation but, as any business person knows, the majority of customers will only wait so long for a product. Eventually they'll simply find an alternative from a competitor.
But if you automate or mechanize, can it truly be called "hand-made"? The Etsy view until now has been no, it can't. However, a combination of store-owner pressure and the continuing growth in demand for craft and custom-made goods has brought a change of attitude. The result should benefit anyone with ambitions to build a thriving business using the Etsy marketplace.
The new policy allows store owners to take advantage of the economies of scale provided by outside manufacturers -- for example, they're permitted to use a woodworking shop for assembling furniture, or a factory for clothing -- as long as the items were originally designed or created by the store owner.
Policing these new rules will be handled by the store-owners themselves (who have the right to report anyone they suspect in breach of the regulations) and by Etsy's Marketplace Integrity Team. A video on the site, recorded by team manager Sarah Abramson, helps explain the details to current and prospective new store owners.
Although Etsy has always allowed stores that sell craft supplies to become members, the site won't be allowing the resale of merely imported goods, nor will it be opening the doors to existing manufacturers and retailers who sell ceramics, clothing, jewelry or other "arts and crafts"-type products.
They want to give their existing members the opportunity to grow their business without risking the dilution of their offerings.
Better tools, better education
Etsy understands that many of its store owners would rather be making things than dealing with administration. The site has an ongoing policy of providing a set of online tools that's as simple as integrated as possible. This approach has, this week, resulted in an upgrade to the way shipping is handled.
Developments like this are a collaborative effort, with store owners involved through the use of what are called "prototype teams." This ensures new ideas for the site are not just the product of some software engineer's imagination but have real value for the people who will use them every day.
The company has also become involved in educating sellers about basic business skills. The recently launched Craft Entrepreneurship Program covers everything from financial management to marketing. Initially starting in Rockford, Illinois and New York, there are plans to expand coverage in 2014.
It's certainly been an invaluable resource for some. Retired cabinetmaker and Etsy store owner Bill Benson pointed out: "All my life, I could make anything except money."
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