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.
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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.
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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.
:) Diane
Next up: Benefits of Your Own Online Shop.
As a footnote, I should add this:
ReplyDeleteI understand that a lot of people start on Etsy to try to get their business started and discount their inventory just to get a customer base and sales going. I also understand that selling fabric on Etsy is a hobby for a lot of shops there. All fabric (and otherwise) sellers have absolute right to price their items how they want to. And your customers have absolute right to choose where to shop. So I'm not judging anyone by this post, I am just being honest about my experience and sharing it with you.
-- Diane
terribly interesting. It's nice to know both sides of it. I wondered how fabric stores could sell prints for $10 a yard, and I go to etsy and buy it for $6... Thanks for the insight.
ReplyDeletethanks Diane for sharing this. I did realize that it was tough to sell fabrics, but I had no idea about all the costs. I am truly sorry that selling fabric didn't work out for you..but everything happens for a reason, and I'm sure something good will come out of this for you. I once was considering selling designer fabrics for Canadians...but after hearing some stories..I decided it was much too competitive and I wasn't gusty enough to go through with it. At least you tried, and I'm sure you have a nice stash of fabric left for future projects. Good luck with whatever you get into next.
ReplyDeletebest wishes,
Vanessa
As a seller myself on etsy (who sews) it's hard to make a profit when you are buying fabric, which is expensive, and people are expecting to pay the same price for my handmade bag as they are for a walmart bag. Literally people in Alchemy will say "I want this bag made for $18 max, by next week because I know I can get it in a store for that much." It's quite shocking how people view these things. I honestly try to get most of my fabric off of etsy just because I want to support these small businesses. Sometimes I'll go to big box stores, but that's just to get stuff like interfacing and snaps.
ReplyDeleteI'm glad you wrote this article to show people that selling isn't all what it's cracked up to be. And that buyers should be more aware about the costs and time that go involved into selling handmade items AND supplies!
Meghan, I agree with you. Etsy has enabled the handmade in so many great ways, and yet it has turned handmade into a discount item. It is the most confusing aspect of this whole thing. It's really an attitude - either you want to support an individual and pay them a respectful price, or you want to buy a cheap bag at any old retail shop. This is part of the reason I think Etsy should remove prices from the search results page - and why I never showed prices until you saw the fabric detail page - because when you shop in a brick and mortar shop you fall in love with the item and then look at the price. I think online should mimic that experience.
ReplyDelete:) Diane
Bless you for your insight & honesty.
ReplyDeleteI am researching the move to my own site now. I would add one thing that is stuck in my mind as I contemplate my move. I don't know that the Etsy name is as mainstream as it could be to provide the built in customer base that makes advertising unnecessary/minimal. So, I spend 20% of my day trying to drive traffic to my Etsy store. My point of contention is...why spend so much of my time to send a potential customer to a place where I have built in competition. This is my main motivator right now. (Assuming fees being equal for running my own site vs Etsy.)
Again, thanks for all your post-mortem posts. It is really helpful to sellers and is also educational for buyers to see "the other side".
"My point of contention is...why spend so much of my time to send a potential customer to a place where I have built in competition. This is my main motivator right now."
ReplyDeleteSeriously - I never thought of it like that!
I have both my own online shop and an Etsy shop. I get way more business on my own site but I have have been trying to build up my Etsy Shop and now I am wondering why? LMAO
Thank you for this post - very interesting! What are you going to do now?
I agree I never thought about the fact you would be driving customers into a place where you have more competition. As a buyer when I search for fabric I usually buy from the person that has the most prints that I'm interested in so that I can save on fabric and shipping but that mentality must hurt smaller fabric sellers without a large/diverse inventory.
ReplyDeleteI always assumed brick and mortar shop were more expensive because they pay for their space, utilities, etc but I suppose many of those same costs apply to online retailers and those are all things that weren't factored into your calculations.
Interesting, I'm really enjoying these posts!
Wow, I am so grateful for your post, I have an eBay and esty fabric store. You are so right, eBay means deals, and with the price of fabric, even at wholesale you need to give them deals or it will not sell. Therefore, the profit is very small for all the work. I will say I did go the web-site way, it lasted about two months. I did it all, google ad words yahoo ad words, everything I could do to get me name out there. I will tell you I could not make it work, a web site for me required way to much time, I did not have help, so if something went wrong with the site, I had to figured out how to fix it. So, after two months of selling about 10 items, I did both, web and eBay. EBay boomed and the site went down, sadly, I closed the site and now I stay on eBay and etsy. Thank you so much for all your advice and information. You WILL make it, and I WILL be buying from you, just as I did before!!
ReplyDeleteYour points are all very realistic. I agree that Etsy cheapens handmade to a degree. Sometimes I search my competitors and just shake my head at the low prices they charge.
ReplyDeleteI may not always comment but I have enjoyed reading what you have learned.
ReplyDeletesuch interesting information, diane. thanks for sharing your thoughts on things. makes me glad that my quilting is just a hobby. :)
ReplyDeleteThank you so much for this post. It not only helps me not to feel so crappy about paying full price for fabrics at my local brick and mortar, but it also eliminates the guilt I get when I'm pricing the items I make for profit. I am in the handmade business not just because I love it, but also because I want to make money doing it! Otherwise I would just keep or give away everything I made.
ReplyDeleteThanks for your insight here.
ReplyDeleteI've recently been considering starting adding fabric reselling to my Etsy business, and this information helps. It seems that perhaps Etsy is not the place to do it, especially after the SEO fiasco.
Aha! You're an IA. It all makes sense now. I'm a PM for a web design agency in Seattle and I SO get everything that you wrote in this post. Amazing insights and written so well.
ReplyDeleteI really go back and forth on this topic.
ReplyDeleteI have been on Etsy for over a year now and I must say that it has been a great way to start for me. Yes, there is a TON of competition and I am forced to keep my price lower than I would like. But, I get tons of sales through the search (most of my customers know what they want before they get to my store) and you can't beat the that. With my own website I would not have people arriving at my shop that way.
When I first started my goal was to get my own website within one year, but that turns out to be an expensive affair since I have no skills to do that myself. Also, I keep wondering how I would drive traffic to my site if I was on my own, outside of Etsy.
If you felt inclined to post something about how to get traffic on an independent website, I would love it! :)
Randi
http://ihavetosay.typepad.com
I agree with the posts about Etsy making handmade items seem cheap and people thinking that handmade items have any comparision to bulk items sold in stores. If you want a bag from the store get it there, don't expect someone to make you a bag and you only pay $18 bucks for it. That's insane to me! People forget that stores buy stuff in bulk that is made overseas and costs pennies to make.
ReplyDeleteA handmade item is made by an individual who puts alot of time and care into their item.
As an example, I like to make handbags and I have been told by a few people that I should sell them on etsy, but when you figure a good size bag takes about 2.5 yards of fabric and 2.5 yards of interfacing, thats about $25-30 bucks give or take just for the supplies, not including the time it takes to actually make a bag. How much are you actually able to sell the bag for without being too expensive, and while still being able to actually make a profit? After thinking about the costs for me to make a bag and then the fees to sell it online, I don't know that it would be worth it. I'm still trying to figure that out...
Thank you for such an honest post! Honestly, this whole culture of "where can I get it cheap" I think hurts us all in the end. Everyone's work is cheapened. On my own site (The Fabric Shopper) I never post prices (other than sales) for this reason, I don't think shops should compete on price. What I actually found out through a survey I did of my readers is that most are loyal to a handful of shops that they love and only venture away for the occasional big sale on something they may have been looking for. Which says to me that, in the end, people want a good selection of fabrics and good customer service. Price matters, don't get me wrong, but it's certainly not the only consideration for many shoppers.
ReplyDeleteThank you so much for this series, it really adds a lot of insight into the business.
Thanks so much for these posts. As someone who has a dream of owning a fabric shop (brick and morter), you are answering questions nobody else has answered. Keep up the posts, I read them eagerly!
ReplyDeleteP.S. I would love a separate post on the "Tips and Tricks of Etsy". Honestly, I'm kinda lost when it comes to my etsy shop and how to get noticed. My full effort at this point is handing out business cards at the street fairs I participate in.
ReplyDeleteWow. I just stumbled upon your blog and read that whole post-- really interesting! It's funny to read because I buy a bit of fabric online and I only ever buy it from the one girl in Japan, just cause I like how she does things and I feel like I can trust her. I don't even check the prices of other places.
ReplyDeleteI sell toys on Etsy, and I am stumbling with similar issues in terms of cheapness and having to constantly relist things, and people are constantly asking for wholesale prices... which drives me slightly mad.
I'm sticking your blog in my delicious links for sure.
More useful and well reasoned information. Thank you again.
ReplyDeleteGreat information. Thank you so much for your honesty. I have considered being a seller also and am learning so much from you.
ReplyDeleteI think I've mentioned to you before that I've hoped for ages to have an independent site, but the costs associated with the development have been making me hold off--Etsy was always an experiment for me, and I wanted to do a lap before committing too many resources. I've made the jump now and am very proud of what I'm building, but the profit margin is quite, quite small. When I designed children's clothes, I very deliberately didn't go to Etsy because my examination of the competition made me ill: asking so little for something you've put your heart into! As a professional, I want this business that I love so much to allow me to be with my family, who I love much more than any work or level of success. Etsy does make the competition fierce, and I do advertise quite a bit--I'm hopeful, as you point out, that it may translate over into customer loyalty and allow me to move into my own site in the near future! I'm extraordinarily grateful that Etsy has been such a fantastic gateway to allow me to explore with little overhead or out-of-pocket expense and see if this was a path I'd like to pursue; that alone makes it a huge benefit to anyone creating handmade items. I'd love to see it more in the long run, though, as an incubator and a launch pad for businesses to utilize as they find their voice and their direction, to build a customer base as they develop their brand. There are so few places to do that on the Web, so Etsy certainly fills a necessary role.
ReplyDeleteThanks, as always, for the openness and insight. Know anyone looking to code a new fabric site?? :)
wow. great post. I feel a little sheepish. We sell fabric on etsy, at rediculously low prices. We don't, however, sell fabric at the sizzle stage. We are a small children's clothing company and we sell our leftover fabrics from previous seasons. At the point that we are selling it, we just need to clear out the old fabric and hope to cover our costs, so we price it low so that it will move. We even offer a discount if people buy in quantity. It does not cease to amaze me, though, when people complain about the prices (less than $6 a yard) and complain that we don't sell 1/2 yards. It just isn't worth our time since we aren't making a profit AT ALL.
ReplyDeleteThank you for your insight - very interesting.
Good luck to you.
I guess I'm in the dark ages.
ReplyDeleteI thot etsy was for 'made by hand' items.
I prefer the purchase of fabrics website direct. Would this help shave some costs off of that model you described?
For what it's worth...
Wow! Your post is sooo true..I own a fabric shop on Etsy. I have been in business since 05/2009. Even though I have around 150 sales, I have not seen any profit......
ReplyDelete.. I have to say, I don't even know if it's worth it ..but I really love fabric ..
Who knows, it's too soon to say if I will sale off my merchandise and close shop or stay open .. this may just happen to alot of fabric shop owner who sell fabric really low.
..... I too have thought maybe selling fabric would be easier if Etsy changes some things ..
There are so many competitors who offer certain fabric I carry way lower than I do and sometimes I wonder why, how can they pay money just to sell that yard, because really its what they are doing??
Even though,I must admit my prices are pretty low too.. But I feel I have to keep them low if I want to get a sale.
Another thing too is that I recieve alot of convo's from Etsy shops asking for more discounts! It eerrkkss me but I give in because I need to move the fabric.
Sometimes I wish all fabric shops could team up together and sell retail (yeah right! lol)..just wishing ;)
Its not just supplies and fabric... and I totally understand your frustration.
ReplyDeleteAs retailers, we price at retail. I'm sure we lose sales to others who are determined (for whatever obscene reasons) to not make a profit. But really, its just good business sense.
It's interesting to read your story - and see similarities and differences in our experience! I am in shock that you could get fabric to you for as little as 5 cents/ yard. Maybe it's b/c most of them are back east - but I'd be jumping up and down in my shipping costs from the manufacturers were ever that low!
ReplyDeleteHi There, Wow, I just found this post through Deborah, and I had wished to have seen it earlier. Everything you've said is true. I'm currently in the process of trying to make a move to raise prices, and I hope that others will follow. Sadly not only does it hurt ourselves to price the fabric so low, but it honestly hurts our entire industry. The designers themselves are frustrated, and I fear it won't be long before Etsy, isn't just considered the Grey Market, but the Black Market. The prices are just too low, not only on fabric, but also on handmade goods. If people charged what they should for their hard work then they could afford the actual price for fabric that they would pay anywhere else. I know that many people that posted here did so anonymously but I'm really making a big push for all of you to raise your prices. Even if it's just a hobby and you are doing it for fun and not for profit. Think about how you might be hurting others, who really need to make a profit for their hard work. I sincerely appreciate this post and perspective and I hope that a change will start in the near future.
ReplyDeleteMany, Many, Gracious Thanks!!
Cynthia
fabricworm@gmail.com
(any one and every one interested in a group raising of prices on Etsy e-mail me, I will be setting up e-mail threads on the matter)
Some wonderful info here!
ReplyDeleteEbay and Etsy are great for boosting your SEO for your own website! Most the fabric we sell on these sites are novelty and or 1 of kind! I look at ebay/etsy as a form of advertisment for my website and store front. My store front has around 15,000 yards of fabric and were slowly getting it loaded on the web. adwords is a good way to go but you need to have an ebay/etsy and other social media outlets established 1st in my eyes then start spending money on adwords!
Good luck to you all and happy fabric hunting!
Thanks for the info. I have been dreaming of selling fabric on etsy myself... Now, I'll stick to buying.
ReplyDeleteHi, thanks for the post :)
ReplyDeleteI've been thinking on joining Etsy as a seller, but I need to do kinda research first, "coz to be honest, my budget is limited. This post help me to consider what to do.