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Archive for September, 2019

Anyone who has been to a trade fair, as those taking place usually on weekends in villages, small towns and some big cities, would know the kind of treasure goods one can find there: woodcraft decorative figurines (e.g., animals), dolls and puppets, handmade kitchenware, glassware (sculptures, vases etc.), knitting and embroidery articles, fashion accessories, and much more (including some local food products). A great part of the products sold in the fair are handicraft made by local and regional residents who present their creations to visitors. Often it is possible to find in such fairs also vintage items from years past (e.g., cameras, radio sets, coins). Now, consider shopping, or hunting, these kinds of treasures in an online marketplace.

Etsy offers an online marketplace similar in concept as described above: it is a special type of e-commerce website for handcrafted and vintage goods, where the sellers are small and independent entrepreneurs who interact directly and sell their merchandise to buyers in the virtual marketplace of Etsy, and then ship the sold goods to their destinations. So a buyer will not find there food products (e.g., homemade jams or local cheese) but he or she can find on Etsy.com a great variety of handmade and vintage goods beyond what is usually presented in any single physical fair (e.g., larger items of furniture that are more difficult to bring to a physical fair). It is not the same experience as strolling between counters in a physical fair, looking for ‘treasures’, but browsing handcrafted and vintage goods in an online marketplace like Etsy offers its own advantages and opportunities in  (almost) immediate access.

Etsy hosts 2.3 million active sellers (all must be registered members) and 47.2 million active buyers (membership is voluntary) as of the end of June 2019 (an increase of 17.7% and 19.3%, respectively, from same period last year). On Gross Merchandise Sales (GMS) of $2.1bn made in its marketplace in the first half of 2019, Etsy has generated a revenue of $350.4m (74% revenue from marketplace fees and 26% from seller services). While GMS increased by 20% from H1/2018, revenue increased by almost 40% (Etsy, Press Release, 1 August 2019). The company provides a platform for a community of sellers to trade their handcrafted creations or vintage goods worldwide. The ‘community’ is a cornerstone of its whole activity. Etsy also cherishes interactions between people (“connecting humans”) as the basis for commerce — its headline calling is to “Keep Commerce Human”. While the company is aiming to maintain the intimacy, reliability and convenience customers expect from a community, it wants to provide these benefits with the efficiency of a large corporation [Fortune: A; Etsy: About]. Making those ends meet seems like a non-negligible challenge.

Shopping for handmade products or vintage products has a special motif: it often gives consumers the feeling of treasure hunting. The pleasure in finding sought-for products as such only increases as they become less common in the world of modern (automated) production and marketing. The product item has to be useful, yet an emotional appeal can be further more important as a driver for buying the product.

Handicrafts are desired for being perceived authentic and genuine. People value the talent, skills and effort invested in their making. They like the human touch in both making the product and personally selling it to them by the person who made the product. Moreover, many of the handmade products are artisanal (e.g., woodwork, glasswork) and may exhibit an exceptional quality. Buying such a product is often considered a gesture of appreciation and a way of making a contribution to the creator.  Vintage products (especially from 1920s to 1960s) may hold a somewhat different attraction: They are associated with the past period of time they originate from (e.g., nostalgia, personal memories from childhood); different, possibly higher standards of quality; different ways of doing things (e.g., listening to music, cooking, taking photos); and vintage ‘treasures’ are also likely to be much less available in the market and even being rare. Vintage products may be handcrafted but that is neither a requirement nor their main source of value to the prospect buyers. (Note: Handcrafted artefacts may be made using just low-tech machinery and tools).

The pages on the website of Etsy appear spacious and bright. Items (text bodies, pictures) are placed over a white background, and the pages do not seem to be condensed and crowded with them. Some areas may be painted in pastel colours (e.g., as background for text on the homepage). This design endows the website with a soft and light feeling, and makes it easier for the eye to move around and observe product listings, pictures and other information on pages. There are very few product listings with images on the homepage, used for illustration rather than out-right promotion; a ribbon with images of products most recently viewed by the visitor appears on top of the homepage and on other pages, exercising relevance and convenience.

Six main categories are displayed in the top menu: Jewelry & Accessories; Clothing & Shoes; Home & Living; Wedding & Party; Toys & Entertainment; and Art & Collectibles. A drop-down menu with sub-categories can be ‘pulled’ from each of these main category items. However, on category pages the visitor also can see tiles for subcategories with sample images, and a sample of product listings in the category. Visitors can narrow down their search by using a key list on the left-hand side of the screen. For any category and sub-category, a visitor-shopper can choose to see all available products in that class or select to focus on either handmade or vintage products in that class (an additional item on the top menu labeled Vintage allows quick access for those interested only in vintage products).

Three basic information elements appear on each product page: a title describing the product, price, and a photo image. In addition, three more components are noteworthy: (1) Handmade products (e.g., a TV stand with cabinet, mid-century modern, made of oak wood) are accompanied by a description on materials and ways of their application, modes of use, design trend, dimensions, etc. For vintage products (e.g., antique Teddy Bear from the 1930s, Dutch Arthur van Gelden), the viewer may find a background story on the artefact, materials, history, any versions if available, etc. (2) Sellers offering their own handmade goods may provide options for personalisation (e.g., first name, a phrase, and photograph in picture frames and displays) and customization (e.g., type of wood, surface finish- colour and texture , size, and extra features for furniture). Furthermore, additional images may show the product from different angles and in different versions that can be customized to the preference of the prospect buyer. (3) The page is set to include reviews contributed by buyers regarding the product purchased and any aspects of their relationships of exchange with the seller.

The complementary information in words and pictures may fulfill an important role in persuading visitors who view a product page to complete a purchase order. Giving a visitor the flexibility to make adjustments (modest as they may be) to the product to better fit his or her needs and preferences can only strengthen the shopper’s conviction to buy. Victor Yocco (‘A List Apart’, 1 July 2014) well-explains in his article key implications of the central and peripheral routes to persuasion (in the Elaboration Likelihood Model [B]) for e-commerce websites. He stresses the importance of including cues that may be applied at different levels by visitors who browse pages, process and evaluate product offerings through a central route or peripheral route. In the case of Etsy, we may distinguish between visitors who get their impressions and make judgement based on the images and reviews, and perhaps use price also as a cue for quality (peripheral route), and those visitors who extensively and carefully consider the technical details and background of the product offered, and may also inspect the images provided in greater attention (central route).

Etsy enables prospect buyers to engage in conversation with sellers and make queries before a purchase, and it encourages such interactions (e.g., buyers tell in their reviews about satisfying enquiries they have had with sellers who were particularly helpful in their responses). Sellers can use a community forum to consult and discuss any matters that concern their activities from craftmanship to e-commerce. Furthermore, Etsy publishes workshops it offers to sellers in different disciplines of craftmanship, and a special section of the website is dedicated to craft supplies and tools, thus extending its hand to help entrepreneurs-sellers in their creative work. Shipping, however, is in the responsibility of the sellers, and trust between them and their buyers-customers can be particularly crucial at that stage of the exchange.

Some recent initiatives taken by Etsy could be a more delicate matter and a source of friction. For instance, the company started encouraging sellers in the US to offer free shipping in the country. It provides some guidance and assistance in shipping, but a question hangs as to how Etsy actually facilitates and makes it easier for American sellers to offer free shipping (e.g., does it give any ‘subsidy’ to the seller, or should the seller raise the product price, or absorb the extra cost alone?). Without practical support in shipping, the legitimacy of asking sellers to eliminate shipping costs is weak. Etsy has also taken action to improve the payment functionality. At first it was a matter of ensuring to buyers the confidentiality of their payment information. Next, however, sellers were required to use only the payment platform of Etsy. That has allowed Etsy to collect commissions that had previously gone to other payment providers. While this initiative helped in standardizing the checkout procedure and improved customer service, it also led to raising the commission rate sellers are charged from 3.5% of revenue per transaction to 5% [A]. A third initiative involves a new programme of advertising for sellers in co-operation with Google — sellers who join in an advertising plan can get their product offers promoted or prioritised inside the platform (e.g., in displays of product listings) and outside (i.e., in Google search results). This would create two classes of sellers that did not exist before.

Etsy under the leadership of its CEO Josh Silverman (since 2017) is set to put more emphasis on quality over price, reports Wahba in Fortune. At a time when online retail is primarily concerned with low prices and price promotions, it is suggested as remarkable that Etsy succeeded in cultivating loyalty. First, by its focus on handcrafted goods and small businesses, Etsy succeeded in making its marketplace feel like a community, but it still aims to deliver with greater business efficiency. Second, Etsy intends to give greater weight to higher-priced and better-quality products in search rankings (a change from how its search engine worked so far) with an aim to elevate the image of Etsy’s brand to an upscale status. Etsy also expects to encourage shoppers to level-up their purchases with complementary products (e.g., if one wishes to buy a lamp for a desk, consider also buying a desk). [A]

Etsy offers a special type of online commerce: bringing the richness, spirit and originality of a trade fair for handcrafted and vintage goods to consumers’ homes. It is not only the attraction of the goods, but also the experience of browsing collections and finding precious treasures, and the interaction with small businesses of independent entrepreneurs and creators (‘people more like us’ the shoppers might say). Etsy has seen success in improving its business performance since early 2018 and is ambitious to move ahead in strengthening its online marketplace. However, Etsy will have to take extra care not to lose the friendliness and comfort of its marketplace and community, for the pleasure of treasure hunting.

Ron Ventura, Ph.D. (Marketing)

 

Note:

[A] “Crafting a Comeback at Etsy”, Phil Wahba, Fortune (Europe Edition), August 2018 [Global 500], 180 (2), pp. 31-33

[B] “Central and Peripheral Routes to Advertising Effectiveness: The Moderating Role of Involvement”; Richard E. Petty, John T. Cacioppo, & David Schumann, 1983; Journal of Consumer Research, 10 (Sept.), pp. 135-146

 

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