Etsy’s quiet retail revolution has come to a whole new front as it prepares its initial public offering, scheduled for today.
The marketplace that once nearly universally gained the love of artisans and their customers across the globe has the air of an old-fashioned guild with all the advantages of 21st century technology. Now it's also a publicly traded company with investors to please.
As it has grown and made changes to appeal to Wall Street, the company has already alienated some of its biggest fans. Retail Dive looks at what’s going on, and what might be next.
Etsy (the name is still a mystery) was launched a decade ago by then 25-year-old Robert Kalin as an online marketplace for homemade goods. Kalin is the perfect Etsy customer (he happily pays extra for handmade things) — and the perfect Etsy seller (he makes his own furniture and his own underwear).
The timing was right, with a surging interest in well-made, hand-wrought things plus the tech to bring it to scale. The company quickly garnered funding from venture capitalists.
That steady growth was driven at first by the appreciation of both sellers and customers, who flocked to the marketplace. But with growth comes change, and, especially after Kalin left, the changes envisioned by Etsy haven’t always set well with many of the artisans who were early adopters.
“They did make some changes that made a weird shift in the ecosystem,” one seller told Bloomberg. Changes in 2013 included broadening the company’s guidelines for who qualifies as an indie seller and what could be considered handmade goods, an effort to accommodate larger sellers.
Some of the change was necessary in order to extend its reach and widen its customer base, but it’s been a tricky balancing act.
Growth and alienation
Etsy’s success brought logical changes that enabled growth, but it broke many artisans’ hearts. And sales of individual artisans have slipped, according to Bloomberg.
“When asked ‘Why are you leaving Etsy?’ one forlorn user put it bluntly: ‘Etsy left me,’" Aja Romano writes on Daily Dot.
Even Etsy’s biggest critics, however, will say that the artisanal revolution that sparked Etsy has in turn benefited immensely from its tremendous success and growth.
“I have to acknowledge this: Modern craft would not be as hot as it is without Etsy or something like it,” writes former Etsy vendor and freelance journalist Grace Dobush in Wired magazine. “Like book authors who hate Amazon’s policies, crafters who hate Etsy find it hard to leave because of the site’s immense traffic and generally positive public reputation.”
But, Dobush says, she did finally close down her Etsy shop. “There are more than 30 million items listed on Etsy right now,” she writes. “That popularity is, of course, great for Etsy. But new hobbyist sellers, desperate for clicks, often price their products so low as to make real profit an impossible dream. And that popularity isn’t good for shoppers, who have to wade through pages of crap to find what they’re looking for.”
Artisans not forgotten
For all the angst from former and even many current sellers, the site is hardly a hotbed of corporate manufactured goods. Artisans and vintage collectors still abound there. And last April, in one of its most profound moves, Etsy became a wholesaler, providing ways for its members to sell their products to retailers like Nordstrom, West Elm, and Anthropologie.
Etsy Wholesale is providing never-before-possible opportunities for artisans, small retailers, and micro-retailers, according Sucharita Mulpuru, vice president and principal analyst at Forrester Research.
“Trying to get a meeting with a buyer is hard to do, and you may not know where to go,” Mulpuru told the New York Times. “It requires a lot of marketing savvy. What Etsy has done is to allow the product to sell itself.”
The company is also qualified as a B Corp., which aligns it with strict social standards that appeal not just to their quirky buyers and sellers but also to many of the top-notch people they’d like to hire. In fact, it’s the largest B Corp-certified company to go through an IPO, according to certification firm B Lab.
And the company has given its sellers, who by and large still are small, independent vendors, a real opportunity to participate in its IPO. Etsy has set aside 5% of shares to sell to vendors and other small investors through a special setup where participants can offer to buy between $100 and $2,500 worth of Etsy stock, with typical account fees waived.
The company priced its initial public offering of 16,666,666 shares of common stock at $16.00 per share, the upper reach of its proposed range, to bring in $267 million. Based in Brooklyn, the company is now worth nearly $1.8 billion. Shares began trading on the Nasdaq Global Select Market on Thursday under the symbol "ETSY," making it just one of two Brooklyn-based publicly traded companies.
Even in its filings as it readied its IPO, Etsy acknowledged that there may be a danger if it strays too far from its own culture in the name of growth.
"The authenticity of our marketplace and the connections within our community are important to our success," said Etsy in its filing. "If we are unable to maintain them, our ability to retain existing members and attract new members could suffer.”
In the meantime, hard-core artisans who find Etsy’s newly publicly traded and widely accommodating seller profile may have more options as other sites come online to fill the void.
Erica A. Riegelman is president and co-founder of Etsy-inspired Aftcra, which launched in October 2013 right about when Etsy was changing its definition of handmade indie goods. The site has an uploader that makes it easy for an Etsy vendor to migrate goods over to its marketplace, and is “dedicated to American-made, hand-made goods,” Riegelman says.
Yet she has nothing bad to say about Etsy. In fact she sees its IPO as natural for Etsy and a good step for the artisanal community — and their businesses — as a whole.
“We definitely think this is a natural next step for them,” she told Retail Dive. “From our standpoint, they were the ones that created the industry. We admire them rather than viewing them as a huge competitor. We wouldn’t even be here if it wasn’t for them. The Etsy IPO is great because it puts the spotlight back on the artisan, the hobbyist, and their customers. People want these kinds of goods, they want things that are interesting and well made and unique in their homes.”