Last week, Etsy filed for a proposed initial public offering, or IPO. I’m somewhat chagrined but not surprised. I just hope the typical small-time seller will see some benefit.
In the email sent out to all Etsy sellers when the IPO was announced, Dickerson signed his name in the typical way as “Chad” with a small, smiling photo of himself. This struck me as a little funny. For years, Etsy has projected an image to its sellers that the executives and managers who run it are “just like us,” that it is a small company run by a bunch of young hipsters in Brooklyn.
I know that Etsy started out that way, but I am not sure how true that is now. Etsy now has 1.4 million sellers across the globe, about 685 employees, and offices in New York, Melbourne, Dublin, London, Paris, Berlin, Toronto and San Francisco (Source). Add to those figures an IPO in which Etsy hopes to raise $100 million, and this is not your friendly little startup for crafty people anymore. It doesn’t help that Etsy has been so poor at communicating with sellers about changes to the site and to its own vision. The largest breach between those at the helm at Etsy and us small-time sellers came when Etsy changed its vision statement, clearly omitting the previously sacrosanct edict on Etsy – that only handmade and vintage items were permitted. The current wording states as such:
Etsy is a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods.
“Unique” in this context is a fuzzy word with very clear connotations to Etsy sellers. It means that “handmade” is no longer Etsy’s bailiwick. Objects on Etsy may be produced on a large-scale or created by manufacturers. To be fair, Etsy has attempted to create some transparency by asking sellers to reveal all relationships with manufacturers as well as all employees. In practice, however, this is a voluntary exercise, with only the honest sellers providing optimal disclosure. It is now clear that those who fought to maintain the purity of Etsy as a “handmade” marketplace (including its own founder Rob Kalin, who quit over such changes) have lost the battle for Etsy’s soul.
The big question now is how an IPO will affect Etsy sellers going forward. I can’t help but wonder why shareholders who want to support the vision of Etsy would invest in the IPO when they could invest in Etsy sellers by buying their products.
What will Etsy’s shareholders demand? I think to answer this question, it’s instructive to look at Facebook’s IPO. If the example of Facebook is any indication, the demand will be the continued growth of sellers and listings. Etsy has almost doubled in size since I opened my own shop and shows no sign of stopping. However, the promise of more growth that Facebook “sold” to shareholders was based on the pattern of growth that Facebook was experiencing at the time it filed for its IPO. Economists and investors always seem to look at growth and predict more similar (and infinite) growth without questioning whether that growth is sustainable or advisable. In the case of Facebook, they perhaps failed to realize that Facebook’s spread was more akin to that of a virus moving through the population, with people eventually becoming inoculated against its pervasive influence. They also may have neglected to account for the rise of other platforms that would eventually lure users away.
For some reason, Etsy does not have this last problem. Competitors are not able to lure away Etsy sellers very easily. I think this is partly because opening an Etsy shop and building a costumer base all takes a lot of work and it is difficult to pull up stakes.
The spread of Etsy may have peaked or is slowing in the United States, thanks to a recovering economy and perhaps the waning popularity of handmade crafts (because that is a trend that seems to come and go). However, I see a lot of new sellers opening up shops in other parts of the world, especially Southern Asia, the Middle East, and Europe. I have no statistics to support these assertions, by the way, it’s just a hunch I have based on exploring Etsy a little more than the average consumer.
But the elephant in the room is what to do about all those sellers that do not seem to fit the profile of the stereotypical Etsy seller. Those shops that seem to be connected to no one but a city in China, or they have a crafted seller profile, but 900 listings for dirt-cheap jewelry. With so many sellers all over the world, who can police or regulate who opens a shop and what they sell? Who do you complain to when what is ostensibly a sweatshop somewhere sells you something cheap and not as described and then refuses to grant a refund? Will investors care about these problems, as long as predicted growth stays on track? The question on most seller’s minds seems to be, “What if Etsy is just on its way to becoming the next Ebay?”
For myself, although I am disappointed that Etsy is not what it once was, I still enjoy the look of the site and convenience of selling through it, even though, as has been noted by more people than me, Etsy isn’t really the best place to sell visual art. Still, I’ve made some very valuable connections on Etsy with talented artisans around the world and I have relished the chance to forge a personal relationship with my patrons.
I only wish that, in going through with an IPO, that Etsy continues to make its sellers a priority. It would be nice to see increased traffic and more advertising overall for the site — and not just for those sellers who are halfway there to running their own wholesale company, but for the same small-time artists, crafters, and vintage sellers who built Etsy from the ground up.