Thursday, March 5, 2015

Etsy goes public

Almost all companies go public when they can, which means when they're successful enough that the public will want to invest.  So it's a mystery to me that Etsy going public seems to be a shock to many people.  There's a lot of concern about how this is going to change "the Etsy experience."  I think it's obvious.

Chad Dickerson, CEO of Etsy
When a company is public, it is answerable to the stockholders.  That means it has to make more money, quarter after quarter, until the universe explodes or some other calamity happens.  The need to always make more money drives companies to do things they otherwise wouldn't in terms of how they treat their clients and customers.  (As sellers, are we clients or customers?  Maybe we are custients.)
Initially, we'll hear a lot of promises about how "nothing is going to change right now."  This is always the message when a company is sold or bought.  Whenever you hear this, take it as a reliable warning to duck and cover, because almost everything is going to change, and soon.

In this case, the handmade niche marketplace that was Etsy will probably be phased out.  This is a good bet because it's already happening.  Niche is great for a startup.  It's a hook, the thing that makes the company different from its competitors - in this case Ebay.  Niche is not great when a company needs constant profits.  As those of us who manage a store offering handmade items know, niche is slow and unreliable as generator of money.

We already have an Etsy that doesn't care much about the definition of "handmade."  In fact, the handmade section is beginning to look like an aisle at a Dollar General store. Under this category we find entire shops dedicated to putting a key or a medal onto a piece of string or wire.  We also have glass dildos galore, which almost certainly are not handmade by the seller.  (Is there a group of domestic experts hard at work in their basements producing glass dildos?  Possible, but unlikely.  Also not a pretty picture.)  This last item is also not vintage or a supply, and yet Etsy has shown by its history of inaction that it simply doesn't care.  Etsy has been protecting and ignoring resellers for a long time, and they won't give these things a second thought after they go public.

Recently, all the shop categories were shuffled around, in what at first seemed like a senseless exercise in change for its own sake at the expense of shop holders, but which is rumored to actually be "Ebayification," because apparently the new categories are more in line with those on Ebay.  I don't know about that, because I don't go to Ebay.  It seems like a bad neighborhood.

Of course shop fees will be raised.  This will probably be called a "recalibration" or a "readjustment," and we'll be told that our costs overall will not be affected much.  That will be untrue, and it will only be the first rise in costs.  If I were Etsy, I'd change the entire fee setup, so that a seller could not possibly figure out if they were going to pay more.  Something like "The fee for each of your first fifty listings will be 18 cents, but you will be charged 25 cents each for your next 50 listings and 30 cents for any listing over 100.  However, if you upgrade to a platinum membership for $19.95, which we strongly recommend because of the free gym membership that comes with it, you will be charged only 16 cents for each listing."  It would take a seller months to figure out if he's being charged more overall, and the answer would be yes. A dollar or two extra from each seller would mean a huge profit for Etsy.

No doubt soon there will also be a charge for each additional photo we upload, or even for descriptions of over a certain number of words.  This will benefit those sellers who only put up one dim photo and already act like they're being charged by the word in their descriptions.  What will rise to the top will not be cream.

There are probably a lot of other changes which we won't like, assuming we do like the current setup.  My feeling is that Etsy will end up disappointing a significant number of its current sellers and buyers, but that they will attract new sellers and buyers who will make them a lot of money, in a more crass reseller marketplace.  In short, it might resemble a new Ebay.

The reason I think these things will happen is that the profit has to come from somewhere, and it has to continue to increase each and every quarter.  Either sales will rise dramatically across the board (and why would they?) or seller fees will rise dramatically.  The only other thing I can think of as a revenue generator is a different kind of seller.  Baby socks by the gross.  Nearly-expired fun-sized bags of candy.  That kind of thing.

Certain things happen when a company goes public.  With an initial cash infusion there is a feeling of buoyancy on all levels.  Promises are made with a high degree of insincerity.  Moderate investments, hailed as huge improvements, are designed to make the company flashier and more commercially viable.  Then begins the gradual, inexorable squeezing of the original storefront until what's left does not resemble the parent company in any way but name.

In the near future, many current sellers will probably establish another web platform from which to sell their work.  Since diversification is a good idea anyway, selling-wise, Etsy's transition might end up helping a lot of us to do what we need to do for ourselves.

Because everything - even a business -  is part of the circle of life (hakuna matata and all that), in a short time another company will come along to be a mothership for our quality handmade products.  How I look forward to that day.  It really can't come too soon.

Bye bye, plastic fetus rings.  Bye bye, crocheted penis covers.  Hello, art.