4 ms·

Margins aside, anyone selling hand-made goods has a very limited stock and can't really scale up production. What is the value of this advertising to a seller w

by mreome 7y ago

Margins aside, anyone selling hand-made goods has a very limited stock and can't really scale up production. What is the value of this advertising to a seller who is already selling at the rate they can produce goods?

IAmEveryone 7y ago
The value in that case might be the teaching moment when they realise they should have raised prices a long, long time ago.
- mandelbrotwurst 7y ago
  Says who? It's possible that the sellers have goals other than profit maximization. Maybe they're happier simply providing as much supply as they are able at a price that feels fair.
  - tomnipotent 7y ago
    The market? Every other marketplace charges 10-15% - Etsy has been a bargain for years. Even eBay will cost a seller more than Etsy, and no one's complaining about that.
- stordoff 7y ago
  To what end? They're still at capacity, Etsy take a bigger cut, and they might not be particularly interested in making more money. Some sellers (I suspect especially on a marketplace like Etsy) might be happier making a product _everyone_ can afford to buy.
- _jal 7y ago
  Individual maker-types are all over the map, in every way. Making blanket MBAish statements about what's good for them is (a) a fool's errand[1], and (b) rather arrogant in assuming you even know what's good for them. And even if price optimization is what's good for what ails everyone and we just didn't know we all need to pay 12% more, the result of this lesson underwrites Etsy while complicating everyone else's life. Um, thanks? [1] Just one of many points one can make here - a large number of crafty folks are very much not profit-maximizers. I know this is true for me (I don't sell on Etsy) - running my hobby like a business would be stupid, because not only will my day job will always pay better, but more importantly, chasing fashions, accounting and caring about competition would suck all the fun out of it.
- groby_b 7y ago
  Spoken like somebody who has no idea how that particular market works. Let's take handmade jewelry for an example, because I happen to know that somewhat. Unless you want to do luxury goods, you're talking mostly beading & wire wrapping. There's a very clear ceiling on the price by mass-manufactured goods from mostly Mexico. People still want to buy handmade in the US, because they can talk to the seller, because they can influence the design somewhat, because it has a feelgood factor. That gives you room to charge a small premium. That premium, however, is limited. Demand for jewelry is fairly price sensitive, especially given that there's a fallback good that's almost as nice at a lower price. And so there is both an upper limit to the price you can charge, and an upper limit to what you can produce. (You could manufacture, but it's fairly easy to tell, and so you lose the "handcrafted" clientele) Yes, in a rational market, you'd fold up and move to higher margins. We know for a while now that markets aren't rational. And the craft market especially is deeply suffused with all kinds of emotions. So, no, that's not going to happen either, because people like making stuff with their hands, and this particular market allows them to finance that. Maybe save the glib advice next time and ask some questions first?
  - kkarakk 7y ago
    None of this is true if you have the skills to chase whatever trend is ruling the market. For eg custom keycaps - what should they cost? i've seen anything from 60USD for brass moulded ones to 200USD for resin ones with miniature landscapes in them(that sell out literally within 1 minute of listing)
tomnipotent 7y ago
> who is already selling at the rate they can produce goods? This is a pretty good question. If you sell handcrafted hard maple tables that go for $5k, it only takes two orders and you're suddenly coerced into a program. However, if that program leads to one sale more it only cost $500 - that's a pretty good ROI. The problem will be if Etsy is transparent and can demonstrate the incremental value of this service, and that it's just not cannibalizing existing sales.
- gnicholas 7y ago
  > if that program leads to one sale more it only cost $500 - that's a pretty good ROI Not if you don’t have time to make another table...
  - tomnipotent 7y ago
    Then reduce available inventory. No one is forcing you to sell things you don't want. This is a fake argument.
    - gnicholas 7y ago
      I think it’s an argument you don’t understand. Also, just because you sell tables for $5k doesn’t mean you would want to “buy” another sale for $500. Just because the margin of sale price over COGS is high doesn’t mean that — after factoring in the cost of labor — it’s a high-margin endeavor. Edit: typo fixed
      - tomnipotent 7y ago
        > I think it’s an argument you don’t understand I've sold hundreds of millions of merchandise over the last decade. Think I understand just fine, thanks. > doesn’t mean you would want to “buy” another sale for $500. Of course you do, this is why it's called business. No one is on Etsy because they don't want to make money, and most people I know have excess labour and are willing to trade that for money. > after factoring in the cost of labor This isn't how cash flow works. You cannot get fixated on the margin of a single order, but on the blended margin across all orders.

by mreome 7y ago

IAmEveryone 7y ago

The value in that case might be the teaching moment when they realise they should have raised prices a long, long time ago.

mandelbrotwurst 7y ago
Says who? It's possible that the sellers have goals other than profit maximization. Maybe they're happier simply providing as much supply as they are able at a price that feels fair.
- tomnipotent 7y ago
  The market? Every other marketplace charges 10-15% - Etsy has been a bargain for years. Even eBay will cost a seller more than Etsy, and no one's complaining about that.
stordoff 7y ago
To what end? They're still at capacity, Etsy take a bigger cut, and they might not be particularly interested in making more money. Some sellers (I suspect especially on a marketplace like Etsy) might be happier making a product _everyone_ can afford to buy.
_jal 7y ago
Individual maker-types are all over the map, in every way. Making blanket MBAish statements about what's good for them is (a) a fool's errand[1], and (b) rather arrogant in assuming you even know what's good for them. And even if price optimization is what's good for what ails everyone and we just didn't know we all need to pay 12% more, the result of this lesson underwrites Etsy while complicating everyone else's life. Um, thanks? [1] Just one of many points one can make here - a large number of crafty folks are very much not profit-maximizers. I know this is true for me (I don't sell on Etsy) - running my hobby like a business would be stupid, because not only will my day job will always pay better, but more importantly, chasing fashions, accounting and caring about competition would suck all the fun out of it.
groby_b 7y ago
Spoken like somebody who has no idea how that particular market works. Let's take handmade jewelry for an example, because I happen to know that somewhat. Unless you want to do luxury goods, you're talking mostly beading & wire wrapping. There's a very clear ceiling on the price by mass-manufactured goods from mostly Mexico. People still want to buy handmade in the US, because they can talk to the seller, because they can influence the design somewhat, because it has a feelgood factor. That gives you room to charge a small premium. That premium, however, is limited. Demand for jewelry is fairly price sensitive, especially given that there's a fallback good that's almost as nice at a lower price. And so there is both an upper limit to the price you can charge, and an upper limit to what you can produce. (You could manufacture, but it's fairly easy to tell, and so you lose the "handcrafted" clientele) Yes, in a rational market, you'd fold up and move to higher margins. We know for a while now that markets aren't rational. And the craft market especially is deeply suffused with all kinds of emotions. So, no, that's not going to happen either, because people like making stuff with their hands, and this particular market allows them to finance that. Maybe save the glib advice next time and ask some questions first?
- kkarakk 7y ago
  None of this is true if you have the skills to chase whatever trend is ruling the market. For eg custom keycaps - what should they cost? i've seen anything from 60USD for brass moulded ones to 200USD for resin ones with miniature landscapes in them(that sell out literally within 1 minute of listing)

tomnipotent 7y ago

> who is already selling at the rate they can produce goods? This is a pretty good question. If you sell handcrafted hard maple tables that go for $5k, it only takes two orders and you're suddenly coerced into a program. However, if that program leads to one sale more it only cost $500 - that's a pretty good ROI. The problem will be if Etsy is transparent and can demonstrate the incremental value of this service, and that it's just not cannibalizing existing sales.

gnicholas 7y ago
> if that program leads to one sale more it only cost $500 - that's a pretty good ROI Not if you don’t have time to make another table...
- tomnipotent 7y ago
  Then reduce available inventory. No one is forcing you to sell things you don't want. This is a fake argument.
  - gnicholas 7y ago
    I think it’s an argument you don’t understand. Also, just because you sell tables for $5k doesn’t mean you would want to “buy” another sale for $500. Just because the margin of sale price over COGS is high doesn’t mean that — after factoring in the cost of labor — it’s a high-margin endeavor. Edit: typo fixed
    - tomnipotent 7y ago
      > I think it’s an argument you don’t understand I've sold hundreds of millions of merchandise over the last decade. Think I understand just fine, thanks. > doesn’t mean you would want to “buy” another sale for $500. Of course you do, this is why it's called business. No one is on Etsy because they don't want to make money, and most people I know have excess labour and are willing to trade that for money. > after factoring in the cost of labor This isn't how cash flow works. You cannot get fixated on the margin of a single order, but on the blended margin across all orders.