Etsy is going Wholesale. Will It Work for You?

By Carolyn Edlund

 Artists and craftspeople who want to sell wholesale need to know the facts before they jump in.

 

 

Earlier this week, Etsy administrators made an announcement that they intend to launch an online wholesale marketplace in the near future. They don’t have a specific date, and are working out details, but have communicated with Etsy shop owners in an effort to introduce their wholesale concept to anyone who is interested.

Discussion threads opened up, with a dizzyingly wide variety of responses from Etsians – many of whom do not understand how to be in business wholesale, dispute the costs of the service, or wonder how they can possibly price their goods half off to wholesale buyers.

It will work for some vendors. And it could be the worst thing to happen to other Etsy sellers. A little knowledge can be a dangerous thing, and rushing headlong into something you don’t totally understand can be disastrous for your business, and cost you a lot of money.

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How do I know this? I owned a production studio selling wholesale for 20 years, and worked as an outside art and gift sales rep, calling on retailers with wholesale lines for over 7 years. Currently, I’m the Executive Director of The Arts Business Institute, a nonprofit organization presenting workshops that teach artists and craftspeople how to be successful in business at a wholesale level. So I definitely “speak wholesale.”

In my opinion, many vendors on Etsy fail because they don’t understand the fundamentals of business, including product development, pricing and marketing. Yes, there are successful vendors who sell quite a bit on the site. But I hear from many, many artists and craftspeople who barely make any sales on Etsy, and feel that they are forced to keep their retail prices artificially low because their competitors are priced even lower.

Of course, those cheaper competitors aren’t making money either. They may consider it a hobby, or have no clue that they actually should pay themselves for labor or other costs.

There are strategies to succeed on Etsy and other online sites, just as there are strategies for retailing and wholesaling in the non-virtual world. But for people who are not truly profitable retailing their work on Etsy, they may be jumping out of the frying pan and into the fire when they start wholesaling.

Common misperceptions people have about wholesale:

 

  • They believe that retail markup is double the cost of wholesale. Actually, it’s even more.
  • They think they can continue to sell their work at the same retail prices online, and only discount 30% or so on those products to wholesale buyers (thereby undercutting them at retail.) This is a surefire way to alienate buyers and lose business.
  • They believe that they need to keep opening new accounts to be successful. In fact, most of the sales volume for small businesses who wholesale is repeat orders from their existing customer base.
  • They struggle to understand their costs, and don’t know what they should be paying themselves for labor. And, they haven’t got a clue what “profit” actually means, or what it’s for. Hint: it’s an integral part of your pricing formula.
  • They cannot imagine how to charge less for what they are currently making and selling in their online shops without losing their shirt. This may be true – but there are ways to reconfigure your line for the wholesale marketplace that may actually work well.
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Another critical component to the wholesale equation is the artist/buyer business relationship. I cannot overemphasize this. Asking retail store owners to shop online, put items into a cart and click “place order” sounds easy enough, doesn’t it? But it’s not always that simple:

A Cautionary Tale. I once repped for a company that sold art into the mass market channel. They were the largest in the world in their category. New management came along who thought store buyers would simply place orders online, and that this would work just fine. So they got rid of their sales force, and asked store buyers to order online themselves. It was an unmitigated disaster. That company crashed and burned big time because they forgot that the important business relationships and personalized customer service provided by their reps were the glue that held their business together. True story.

In the same way, Etsy sellers who wholesale their work online must understand that they have to develop excellent working relationships with their wholesale accounts. This involves skill and the knowledge of how to create systems for your business, grow accounts, negotiate, develop workable policies, solicit reorders, cross-sell new lines, maintain regular communication with buyers and perform exemplary customer service.

How will Etsy work for you when you start wholesaling your work there? I don’t know. But if you don’t know either, you need to get a lot more information and education on how to wholesale successfully. Then you can proceed to make smart choices when you start wholesaling online, and possibly add a whole new stabilizing dimension to your creative business.

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Author Carolyn Edlund is the founder of Artsy Shark and a business consultant for artists and entrepreneurs. Looking to grow your creative small business? Find out more here.

 

Comments

  1. Thanks for this Carolyn!

    I’ve been an Etsy seller for years, and have just started wholesaling in the last 12 months or so. It’s been a learning experience for me, and I see sellers in the Etsy forums all the time struggling with some of the same wholesale questions. Your blogs, articles, and Etsy team postings have been really helpful.

    I’m not sure how Etsy will handle wholesale; it’s been a good venue among many for me. To be honest, I’m a little wary, not only of how they will handle wholesale, but also how adding a wholesale component will affect the rest of Etsy. They originally built their brand based on (the illusion of) micro-businesses selling artisan handmade goods. Adding wholesale (and opening the door wider for larger factories and resellers) could muddy the brand too much.

    Based on prior performance and customer service issues (Etsy still does not offer any phone support for buyers or sellers), I would never put all my wholesale eggs in the Etsy basket.

    • Rowan, thanks so much for your comment. I think it may depend on whether Etsy will just consider themselves as a “meeting point” for buyers and sellers, or whether they want to manage sellers’ wholesale businesses in that all transactions must go through Etsy. The latter doesn’t sound like a good plan to me. There are so many variables that haven’t been mentioned, and I wonder how Etsy will handle them: returns, trading back unsold inventory (or resets), exclusivity, custom orders, large retailers who will demand discounts, and more.

      Wholesale as an ongoing business is more complex than just an online shop. The dynamics are totally different. I know artists who have 10 – 20 year relationships with galleries who buy from them wholesale. That is built on a strong understanding of the business from both sides.

  2. Yes, this is going to be interesting, thank you for your insite.

  3. i didn’t realize Etsy was getting into wholesale…very interesting. What piqued my interest is something you wrote…There are strategies to succeed on Etsy and other online sites. And so was wondering if you will be offering any on-line courses in this?

    • Kathryn, I do not offer an online course on how to succeed on Etsy, and I think that the best source of information is to go to Etsy itself for their videos and written information. They do have frequent tips and advice on how to be successful selling on their website.

      At the Arts Business Institute, we have a bigger view in that we approach wholesale as a topic, wherever it is done – online, at trade shows, through reps, or even by the entrepreneurs themselves contacting retailers to sell their line.

      ABI does have a course on Marketing for Artists and Craftspeople, which can be found here http://www.artsbusinessinstitute.org/marketing-guide/

  4. Wow.

    Thanks for this info, Carolyn. This seems like a mess waiting for a mop. I do mentoring and the lack of knowledge about how to wholesale (and profit) is overwhelming and pervasive. So I sit here scratching my head at the idea of people who don’t even understand how to retail jumping into wholesale. It is such a different biz model!

    But what really concerns me – as someone who is involved with a wholesale only on-line website (wholesalecrafts.com) – is how multi-dimensional THAT site is and how hard they work to keep it sane and lovely and filled with quality hand-made work and better than average photos. Trickier still is having (mostly) competent sellers who have at least a basic understanding of the wholesale model – they jury for quality and for business acumen. I wouldn’t have joined them in 2003 without THAT assurance.

    But even if Etsy did some kind of filtering or accreditation/means testing, I don’t see myself ever joining Etsy. The only thing I might gain from this idea is more clients for my mentoring services. LOL.

    Your immensely important knowledge base and very important biz courses offered at ABI would surely gain clients, too!

    • McKenna, I must admit your mop comment cracked me up! In theory this concept sounds nice, but as you pointed out so well, there are a lot of “moving parts” here that must be taken into consideration. People who do not have a solid foundation and understanding of how to wholesale effectively have a much greater chance of failure.

      As an artist who has a solid wholesale base, I’m sure you know better than most how you must handle your business carefully, and that each customer and each situation may be a little different. Building strong relationships requires insight and a personal touch. Although I encourage interested artists to pursue wholesale, it is done with mentoring and preparation to give them the greatest potential for success.

      • Yes… the mop comment actually made me snicker, too! I will use that line again!

        and yes… each account needs unique care and it can never be a paint by numbers relationship. Sometimes you need to paint outside of the lines and knowing just how far out takes a solid foundation. And knowing what colors to choose and how few or how many to use is mandatory. As you said, “there are a lot of “moving parts”! And while I am also concerned that failing is a strong – even likely – possibility, I am also always concerned that one bad apple can spoil the whole bunch. Being a small studio artist, I want to make sure that my reputation stays intact: which is the main reason I would avoid Etsy and do a wait and see for several years before “jumping” into the fray. I don’t want to get lumped in with beginners who may discredit the entire concept if the site is not carefully monitored. I see a row of mops!

  5. Etsy has this perception of a place where the customer can buy unique, hand crafted items directly from the artist. In my mind, wholesale is a completely different entity that I don’t think meshes with the original character of the site. Or maybe that doesn’t matter. I hope ArtFire doesn’t plan to go the same way.

    • Deborah, you make a very good point. Many Etsy sellers are not prepared for wholesale, and artists who are wholesale-oriented and want to sell are using other methods, including their own sites, trade shows, reps, etc. I know artists who would never have an Etsy shop because their wholesale customers would disapprove.

  6. What a helpful article, and very timely for me. After years of selling directly on etsy and other sites, and in person at small galleries and shows, I’m dipping my toe into the wholesale market with a few of my products. Your points about pricing and the value of using sales reps are valuable and right on the mark. Thanks for this.

    • Heidi, you have much in common with other artists who are considering new ways to market and sell their work. I often suggest to artists who want to start wholesale that they build their collection from the ground up price-wise, rather than trying to cut prices in half. There are many strategies that can be used to do this.

  7. Once again, Carolyn, you hit the nail on the head. I , too, deal with so many crafters that, unfortunately, do not have a clue about wholesale.

    So to inform more readers, I did a review of Etsy’s and your article on my blog. Hopefully, it will make folks think thoroughly about their business and where they want to go before jumping on the bandwagon.

    http://sellingtogiftshops.com/2012/09/29/sell-wholesale-on-etsy/

    And yes, Mckenna’s mop comment was priceless!

    Gift Rep Sandy

  8. Thanks Carolyn!

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