Running a Handcrafted Business in a Mass Market World

Craft MBA has an awesome post from earlier this week about running a business handcrafting items in a world where mass-produced, low-priced things are king. It's about Etsy in particular, but it brings up a lot of larger issues.

But you need to go read it. And then read the comments. Go. I'll wait until you come back.

There's a lot to unpack there.

I think when many people look at a price, they only mentally factor in how much value there is in the materials (if they are even able to infer that). Most consumers lack the ability to factor in all the other costs associated with running a business – whether it’s a multinational corporation or a one-woman show – that effect a price.

I'd change "lack the ability" to "don't think about". I don't think they lack that ability, I just don't think it crosses their mind. You see a thing and you think only about what's to hand when you think about what goes into it. Not about running the structure behind it.

There's probably something to say in there about how a company is a group of people who working together can produce something more efficiently than they each could on their own. And so there should be price gains -- or some other kind of gain -- to be made from getting everyone to work together.

While there are sellers on Etsy who make a full-time living from their work (often using Etsy in conjunction with retail shows, wholesale and consignment, and other selling venues), there are many more who view Etsy as an extension of their hobby. They knit scarves in their spare time, and someone suggested that they sell them on Etsy. These sellers don’t consider labor, profit, or many of the other costs of running a business when setting their prices because they don’t have to. And because these low prices occur on Etsy, more and more buyers expect them. Which creates a vicious cycle where sellers feel they need to lower their prices in order to sell.

This is really interesting to me, particularly in light of the my above comments. I think the gains to be made from creating/selling full time (particularly when Etsy is just one place you sell) is that there is likely going to be a difference in quality. The more you do something, the better you get at it. Someone who makes things full time is likely going to have a higher-quality product than someone who sells as an extension of their hobby simply because they're typically spending more time on it. The business problem then becomes: how do you communicate the higher quality to the customer, particularly online where they can't inspect the goods side-by-side?

I think there are potential implications for who's going to be selling what on Etsy as a result of that -- if they don't provide the tools to show higher quality goods for professionals (or if the professionals end up leaving Etsy en masse for whatever reason) -- then Etsy will become a byword for poorly-made stuff. However, I have faith that The Powers That Be are thinking about that and working on it - they don't make as much money if there aren't any sales.

From the comments: "Etsy is not the only place where prices have been slashed in order to pull in buyers. People are broke and they want to spend less; art and adornment being commodities that are wants and not needs only further justifies the slippery slope of price reduction. Places like Wal-Mart are running small time manufacturers into the ground with their price gouging and relentless, market annihilating negotiation techniques. There’s just a really profoundly awful convergence of circumstances that prevent people from justifying a purchase that identifies them as an individual – especially when what they want is made by an individual who supports themselves with the profits. This is kind of the American dream crumbling in upon itself."

Honestly, this is what keeps me up at night. Having a kid makes the abundance of cheap plastic crap in our society just so blindingly obvious. One of the reasons I love working on This Charming Candy is because it helps me be more aware of what things cost, what they should cost, and where they come from (aside from having an awesome business partner and loving spread joy through a little bit of sugar).

Of course, I'm also extremely lucky in that I *can* think about where my stuff/food comes from. Low prices have allowed a whole lot of people to eat and have things that they wouldn't otherwise be able to - I don't want to overlook that.

This doesn't mean that Susan and I are going to be changing our selling strategy in the next week or so. But it definitely gives us something to think about, particularly as we continue to plan for the next year or two.