First and foremost, let me start by saying that Etsy is a great thing. A really, really great thing. If someone from Etsy called me up tomorrow and said, 'Hey Diane, we have an opening for an Information Architect. We want to improve the customer experience and usability on our website. Please come work for us.' I totally would. I'd brag that I am an award winning IA and I have many ideas of how they can improve the shopping and selling experience there and how I'd be honored to be a part of their team. One can dream, can't they?
Now that I've stated that, let me go back to telling my story. After spending my entire budget at quilt market, I arrived home full of energy with plans of building my website. I had black and white 'wireframe' drawings that I designed and was ready to hire a visual designer to make the site look as good as I planned for it to function. I had a friend lined up to code the site, and was looking to hire someone to implement the shopping cart.
I thought I'd have a month or so to get this all up and running, but a week or two later boxes and boxes of fabric started showing up. Thankfully I had my shelves ready to store everything, packing materials on hand and PayPal all set up. With the clock ticking (Jim Salina's words ringing in my head about the sizzle stage of the fabric) I knew I had to start selling now!
Thank you Etsy! I was selling baby quilts there already, so I was already very familiar with the site. I knew the lingo, the little tricks of getting noticed, the advantages to posting on the forums and the advantages of making and getting in a treasury. I cut some fat quarters, took some pictures and started selling. Things were good for a while. They were actually really good. Really, really quite good. I was selling fabric at about $9.60/ yard and people were buying.
Things were going so well that I abandoned my plan to have my own website. I was paying Etsy quite a lot of money in fees and I was ready to hire someone to help me pack and ship.
And then Etsy changed the way its search function worked. My business totally fell flat. I survived on repeat customers for about a month, and then, getting desperate, I started renewing my items for the first time ever (¢20 down the drain per renewal). When that didn't help, I started paying for advertising to try and rebuild my business. At this point I realized that Etsy was no longer for me. With crafting supplies out of Etsy's main search and the discounters opening shops like mad I knew it was time to go out on my own.
Here is what I learned about the financial side of selling fabric on Etsy. I can write about 'tips and tricks' for selling on Etsy in a later post, if you'd like. For now I am going to focus on the money side of it.
For some crazy reason the average price per yard sold on Etsy is well below a profitable price. Below is an example. Figures are approximate, but realistic. I apologize in advance to anyone in the industry who feels I am giving away too much information.
Let's say that wholesale price per yard is about $4.50/ yard (this price varies by manufacturer). Add in your landed cost (what you paid for the manufacturer to send it to you) and you get about $4.55/ yard. Add in Etsy fees (3.5% + .20) which makes it about $4.91/ yard. And then add in PayPal fees (2.9% + .30) and it brings your base price to about $5.34/ yard. (In realty the fees will be higher because they are based on retail mark up, not on wholesale price which I have used here.)
Since Etsy is so competitive, and supplies do not show up in the main search, chances are likely you will need to advertise. I understand that Etsy finally implemented Advanced Search so it may be easier to sell supplies there again, I can't say. Because I see Etsy shops advertising in the same places as non-Etsy shops, I will assume this is not the case.
Take your $5.34 and add in advertising. Let's just say you spend a mere 5% of your price per yard on ads. That now brings your base price to: $5.61/ yard.
If you sell everything at 'Etsy competitive' prices, without putting your fabric on sale and without renewing any listings, you are making about $2.00/ yard in profit. You need to reinvest half of that (or more) to purchase more inventory so that leaves you with about $1.00/ yard as your take home. However, it is inevitable that you will end up marking down at least some of your inventory so expect less than that.
Of course, this math assumes you have no help. And that you don't pay for insurance (health or otherwise). And you don't pay for storage/warehouse space. And you are including the cost of your shipping materials (printer ink, labels, plastic wrap...) in your shipping charges. Oh wait, this isn't the case? Your profit just plummeted to pennies.
And that is exactly why the 'big' shops sell their fabric at $9.00 - $10.00/ yard. Because they have to if they want to be viable businesses.
I think Etsy would be a great place to sell fabric if they made a few changes. I think it would be better if they didn't display prices in the search results. It would help if it were easier to gain access to supply-buying customers by allowing supplies its own portal/ homepage, or were even featured more on Etsy. Most of all, it would benefit all fabric shops if every fabric seller decided to implement manufacturer suggested pricing at least during that important 'sizzle stage.' And let's face it, the advantage to selling on a place like Etsy or eBay or Artfire is that you should have a built in customer base. You should be selling there to reduce or remove your marketing and advertising fees. Otherwise, you have to ask, what is the benefit?
This is just my opinion, and I know that many of you reading this are fabric shoppers, not fabric sellers. I personally love buying fabric on sale. I know how great it is to purchase fabric at a bargain.
Fabric is expensive, and if you're making a lot of stuff, you need a lot of it. Having been on the other side of it, however, I can't help but wonder how long these shops can last selling fabric at Walmart prices. Walmart can't survive selling at Walmart prices, so I'm pretty sure the independent seller can't either.
I know this is a long post, but I'd love your feedback on it.
Next up: Benefits of Your Own Online Shop.