Tuesday, July 8, 2008

Economics of Craft, Part 5 - Create Your Own Part-Time Job? If Only.

The indie craft world is so hipster that the dominance of older stay-at-home moms on Etsy blows my mind.

Creative entrepreneurship may be a quest for meaning. It might also reflect a desire for self-determination. Importantly, though, it also seems to mirror a struggle among women to find part-time work.

Some 60% of working moms would prefer part-time work, but just 24% of them actually work part-time, according to the Washington Post. Most moms choose either a full-time job or no job at all, when they'd really like to work somewhere in between. Why?

Basically, part-time jobs suck. Penelope Trunk rips the New York Times
for promoting "shared care." Shared care is when parents split both parenting and income-earning 50/50. Which is to say, both parents work part-time.

As Penelope Trunk points out, downshifting from full-time to part-time work is tough because your income potential drops dramatically once you do -- even if you are self-employed. Two part-time incomes are unlikely to add up to one full-time salary, in the real world.

Skipping around my Etsy favorites list, I am surprised by all the moms out there looking to earn income from the site. Then there are folks like my cousin's cousin Lisa, who was selling her art on Etsy as she waited for a transplant. (Which she has just recently had, and is rapidly recovering from. GO Lisa!!!) The prospect of earning a decent part-time income stream by selling on eBay, Etsy, etc is appealing.

Unfortunately, the average Etsy seller makes about $1000 per year. (How do you get this? $6.5 million in June 2008 sales divided by 442,000 sales equals an average item value of $14. In April, there were 73,478 sellers with at least one item for sale. 442,000 sales divided by 73,478 active sellers is 6 sales per person per month. At $14 per sale, that's 84 bucks a month or $1008 in a year.)

Of course, most people don't earn $1000 a year -- they earn a whole lot more or a whole lot less. For every successful person who makes $20,000 on the site, you might have 50 sellers who earn less than $500 per year.

This is not a criticism of Etsy, nor does it imply that there's any limit on the number of people who might become self-employed or earn decent part-time income on the site. And yet -

Successful part-time entrepreneurship is certainly the exception, not the rule, on Etsy today. And the success stories on Etsy are dominated by folks who are working 40 hours per week (or more!).

Half the work, half the income? Unfortunately, part-time work that truly competes with full-time gigs is still elusive... even in the land of crafty entrepreneurship.

Read more!

Wednesday, June 25, 2008

The Secret Spirituality of Craft and Career

The search for meaningful work seems to be a defining experience of young adulthood, and certainly fires up the ranks of indie entrepreneurs. Dissatisfaction with how this search is going is so prevalent that there's even a word for the malaise.

If there's anything I truly want - any reason I get my butt in gear to write this blog - it's the dream of getting closer to a fulfilling, world-bettering career.

But what if this longing for work that makes a difference is really a longing for something else?

Penelope Trunk, career blogger extraordinaire, sifts through the psychological and economic research on happiness and summarizes it as follows:

So you don’t have to make yourself crazy about finding the perfect job. All that stuff about how you need to find a job that you love is overstated. “Some people don’t seek fulfillment through their work and are still happy in life. All options are legitimate and possible,” says Amy Wrzesniewski, professor at the Stern School of Business at New York University.

What does matter, then, according to the scientists? Your level of optimism and your relationships, especially your romantic relationship.

If you even consider dethroning work as the #1 or #2 driver of life satisfaction, you start to ask: What made everyone think career was so important in the first place? And what exactly are we longing for when we dream of starting our own business or finding work that expresses who we are?

I've started to wonder how much our generation's embrace of career as salvation -- and craft as an additional path to fulfillment -- is a spiritual journey more than anything else. Of course, I'm certainly not the first one to have that idea. But I still find that there is a passion for the moment when we are finally able to live on our own terms, when our art or creativity becomes our livelihood. And maybe there's something delusory about putting that much hope on an income stream.

Building a rockin' small business could make your life better, but it's not likely to lead to the fundamental shift that so many of us are craving.

Pursuing your creative impulses or starting your own business certainly aren't pointless and futile -- in fact, the people least susceptible to burnout are serial entrepreneurs. But I am beginning to wonder, for myself if for no one else, if I haven't been expecting too much from work and acts of individual self-expression, and not focusing enough on the importance of relationships and a commitment to spiritual inquiry.

Read more!

Tuesday, June 24, 2008

Economics of Craft, Part 4 - Returns, returns, returns!

While launching this blog over the past few months, I've gotten all fired up about crafty small business.

At the same time, my Etsy purchases have slowed to a trickle.

It's an uncomfortable disconnect for someone passionate about increasing people's ability to become creative entrepreneurs.

Usually, uncomfortable disconnects offer the most valuable information of all - whether it's a disconnect between your conscious values and the choices you keep making in your life, or between status quo wisdom and your gut sense of what is best.

Q: Why don't I buy on Etsy anymore?
A: Because most of the stuff I buy on Etsy I don't like, and most of the time you can't return it.

I did a quick tally of all my Etsy purchases to date. Out of 36 things purchased for myself (that's a lot of things, isn't it!), I really like and use just 13 of them. A further 10 I use but am not in love with and wouldn't have bought if I'd been able to see them in person. The remaining 13 I've donated to my local thrift store.

Most of the Etsy successes are housewares and art. Most of the failures are clothes. As it happens, clothes, shoes and apparel are more likely to be returned than anything else purchased online. My beloved if embarrassing closet purging guide says you shouldn't buy clothes online, and I am beginning to think the authors are right. I've resolved to spend more money on amazing pillowcases like this one from brokesy and less on impulse clothing buys.

Being happy with only a third of my Etsy purchases is a very low success rate. Why is Etsy shopping so filled with duds?

First, with bricks-and-mortar shopping you can see things in person before committing. Not too much online sellers can do about that, of course (besides a big presence at your local craft fairs!). Another big reason for greater satisfaction with in-person (and Amazon.com) purchases?

Because if you don't like something, you just return it.

In earlier Economics of Craft posts, I dug into why you need to make truly special products if you hope to make a living selling handmade items online. I also promised to share how people hoping to be self-employed, or earn decent supplemental income, from their craft might be able to stand out in the crowd. One suggestion?

Returns, returns, returns!

Offer them gladly! The default among sellers on Etsy, eBay, and a surprising number of independent web storefronts is not to offer returns. While this seems to reduce a lot of hassle and risk, I think the sales benefit to offering returns would exceed the cost.


1. Offering returns creates a sense of security for buyers. Pressing that "Add to Cart" button is easier when you know the decision can be reversed. In a survey of online shoppers, a whopping 90% said that a convenient return policy is important in their decision to purchase from a new or unknown seller. 80% said they are not likely to shop again if they have difficulty returning an item. How many more buyers would Etsy attract if generous return policies became standard??

2. Offering returns demonstrates confidence in your product. How much faith can you have in the products of someone with a snippy "NO RETURNS!!!!!" message in their profile?

3. Even if people say they want the option to return stuff, most don't actually return things. Returning something by mail costs a few dollars and requires an inconvenient trip to the post office. Even if a buyer isn't 100% satisfied, many will simply not bother to make a return. One poll of frequent online shoppers showed that 51% had never returned a single thing. In fact, the longer somebody has shopped online, the less likely they are to return something. This is interesting, since most of the folks trawling for handmade items are likely to be people who buy lots of stuff online.

4. Prove you're a professional - and earn your markup. In the race to differentiate yourself from hobbyists who are willing to undercut you on price, you need to stand out on service. In the next Economics of Craft post, I'll take a look at another aspect of professional-quality service: rapid shipping and the creation of a 'gift experience.'

Moral of the story? A generous return policy is a low-risk way of demonstrating faith in your product, establishing yourself as a professional, and snaring extra sales from cautious shoppers. This is especially true if you are selling clothing.

Read more!

Friday, June 20, 2008

Economics of Craft, Part 3 - When Selling is Consuming

In Part One of this craftonomics series, I quoted the story of one Austin Craft Mafia member's run-in with sellers who are willing to sell items below cost.

One sentence has stuck in my brain:

At the price she was selling the necklace, not only was she not making a profit - she was coming in at a loss. That is not running a business, that is just having fun.

Etsy and eBay et al are home to (at least) two types of sellers:

1. The Entrepreneurs. These folks are business people who want to sell an item at or above the cost of materials and their labor. Optimal price = materials cost + fair labor cost (say, $10/hour or more).

2. The Hobbyists. This group includes craft lovers who want to sell an item to offset the cost of their hobby or to increase their satisfaction with their hobby. Optimal price = materials cost.

Many sellers seem to begin as hobbyists and move onto becoming entrepreneurs. The vast majority of sellers, though, appear to run their business as a de-facto nonprofit.

What is difficult for the entrepreneurs is that many if not most sellers of handmade items are willing to sell below cost. Why? Because, from a hobbyist perspective, there are several satisfactions to selling that are not financial:

* Finding a happy home for something you slaved over. Also known as the My Boyfriend Doesn't Wear the Scarves I Make Him phenomenon.

* Feeling validated in the quality of your crafty skills that someone will buy something you slaved over.

* Clearing out your overflowing craft closet. This is why Autumn Wiggins' idea
to promote materials "upcycling" on Etsy is so genius. Upcycling involves people listing raw craft materials, possibly as free items, for others to use. Like Craigslist's free stuff for fabric and so forth. Heck, I'd pay someone to put my yarn stash to good use! It just sits there making me feel extravagant. Which leads me to:

* The ability to create without waste. No one in your life needs an adorable crocheted dog, but you might die if you don't make one. The answer: sell it on Etsy!

What does this mean for entrepreneurial sellers? It's crucial to create well-made and truly awesome products that people can't get anywhere else, if you want to get paid for your time. This is discussed further in Part One, "Why You Can't Make Money as a Middleman on Etsy".

The most interesting implication of this transformation in hobbyists' choices is what it means for mainstream, bricks-and-mortar craft stores, from Jo-Ann to the friendly local fabric store. So what does it mean?

* More sales. The rise of Etsy is unambiguously good news for craft supply sellers. Hobbyists buy more supplies, the rising class of entrepreneurs buys more supplies, and craft is cool so the ranks of the hobbyists are increasing. Unambiguously good.

* Especially, more sales for online suppliers and wholesalers. As the selling hobbyists buy in greater quantity, and perhaps with more lead time, than before, they will be more tempted to buy online and/or comparison shop.

* More young buyers. This is crucial and I still don't think big box craft chains understand, at all, the new demographic. You can tell they try, but the cover of industry mag Craftrends' January/February issue kind of says it all:

Selling as a form of consuming, instead of profit-making, is the dominant form of "business" on sites like Etsy. Many sellers dream of making craft their full time business. But most appear content with using sales to support their enjoyment of their leisure time. The very low cost of listing online allows these folks to jump into the game - hence "the Etsy effect" on pricing.

What else can entrepreneurs do to stand out in a field of hobbyists? Offer superior service. I'll dig into this in the next Economics of Craft post.

Read more!

Tuesday, June 17, 2008

My new green jeans - a little too punk rock??

Just purchased my first pair of organic cotton jeans! They are made by del forte denim. Check them out!

I am vaguely afraid that the back is too glam rock for a capitalist lady like myself. It's like I think I am dating Richie Sambora or something. What do you think? (Picture after the "Read More!"..)

Also on the green clothing tip, I am totally in love with Beklina, an online shop for "sustainable style." Be warned: the style is Barney's-worthy, but so is the price point. Unfortunately I'm not that big of a capitalist yet.

Read more!

Wednesday, June 11, 2008

Economics of Craft, Part 2 - The Quiet Doldrums of Miniscule Sales?

Let's have a Word of the Day! Today's word: premise (n). A proposition upon which an argument is based or from which a conclusion is drawn.

A premise is usually a statement of "what everyone knows." If there is any flaw in an argument, it can usually be found in the assumptions about "what everyone knows," not in the lovely argument that unfolds from that starting point.

Case in point: Kevin Kelly's thoughtful 1,000 True Fans post - hat tip, Chris Guillebeau - begins with a startling premise:

The long tail is famously good news for two classes of people; a few lucky aggregators, such as Amazon and Netflix, and 6 billion consumers. Of those two, I think consumers earn the greater reward from the wealth hidden in infinite niches.

But the long tail is a decidedly mixed blessing for creators. Individual artists, producers, inventors and makers are overlooked in the equation. The long tail does not raise the sales of creators much, but it does add massive competition and endless downward pressure on prices. Unless artists become a large aggregator of other artist's works, the long tail offers no path out of the quiet doldrums of minuscule sales.

I'm gonna lay it all out on the line and say that this makes no sense to me. The vast online marketplace we have today creates both more sales opportunity and higher profit margins for creative entrepreneurs, if you are thoughtful about what you sell.

As I argued in the first part of this Economics of Craft series, market competition on Etsy - or any other market aggregator - will crush pricing power for people selling "commodity" goods. But profit margins and income can actually be higher for craftistas who sell online than would've been the case pre-Etsy or pre-Internet. Why?

1. The "Who'd Want That Piece of Crap?" phenomenon. One woman's trash is another woman's treasure. I can't walk into a Betsey Johnson store without seeing anything I'd wear in a million years. Meanwhile, I think Candystore in San Francisco is a palace of transcendent clothing. My own personal hot-or-not: HAWT, the black label san francisco two-toned silk dress at right, and NAWT, the pink concoction from Betsey Johnson at left.

The Interweb allows sellers to better connect with people who think their stuff is awesome. People who think your stuff is awesome will pay more for it. Therefore, the more you can access people who love your work, the more likely you are to receive a higher price for it. I would never in a million years pay $400 for that pink eyelet-ridden ruffled thing, but many people would -- and Betsey, lucky and talented lady that she is, has found enough people who love her clothing to open stores across the country! As you work your way up to becoming the next Betsey, the Internet can connect you to people who think your work is invaluable.

Note: We hear a lot about "buying local," but "selling local" is not the best path for crafty small businesses. Two of my favorite Etsy clothing designers are based in Montreal and Guam. This doesn't seem environmentally tragic -how much pollution is generated shipping a T-shirt? - but of course correct me if I'm wrong.

2. Capturing the entire purchase price. In a wholesale environment, the producer sells a garment to a retailer for roughly half of the final price. On sites like Etsy or an independent website, producers can and do often sell at prices on par with standard retail prices.

Selling direct to consumers without a retail middleman is a classic profit enhancer for people who make stuff. It's not so much that retailers are evil as that store owners need to pay rent, utilities, staff, etc.

Selling online means you avoid all those costs. Even if you invest in setting up your own site, you get extra buck-olas every time somebody pays all of the retail price straight to you. That means higher profit margin, sista!!

Note: You can still make good money selling at the fatter part of the tail - in the mass market. Ashley G, who actually sold me my first Etsy purchase!, recently talked on the Storque about a project she did for Urban Outfitters. It's not a choice between niche and mass - if you're great at what you do and build a strong niche business, the mass opportunities appear. The economics of mass sales - low profit margin, high number of sales - will then apply.

3. Is it worse to sell a little of something than nothing at all? The whole point of the Long Tail is that little guys can make a few sales, instead of being totally shut out by mass market items. "The quiet doldrums of miniscule sales?" Isn't that better than the narcoleptic torpor of no sales? You can always build miniscule sales into a sustainable income with a surprisingly low number of people who love your work - which is, in fact, the entire point of the 1,000 True Fans post.

Miniscule sales can become modest sales which can pay your rent. Long live the long tail!

Read more!

Tuesday, June 10, 2008

Finding Freedom through Work

While there’s a case to be made that [DIY] is an art movement, or an
ideological movement, or a shopping movement, it is also — and probably
fundamentally — a work movement.
-Rob Walker, "Handmade
New York Times

In revisiting this New York Times article for yesterday's post on craftonomics, I started thinking about the term "indiepreneur." The moniker suggests a desire to live outside the mainstream, produce more sustainably, etc, etc.

For many crafty entrepreneurs, these goals are no doubt important. Yet I am wondering if other motivations are not more powerful in driving the explosive growth of Etsy, craft fairs, and so forth.

For one thing, it's not exactly a dirty-haired youth movement. The article quoted above points out that the average Etsy seller is 34. There's a lot of Obama craft on Etsy, but there seems to be a sizable apolitical demographic as well.

Could it be that the key motivating factor is a desire to support oneself on one's own schedule and terms, without having to choose from the existing universe of employee opportunities? To have the flexibility to build your work around your life, not the other way around? To trade-off an hour of work for an hour of earnings at will? To escape the choice between a 40 hour per week career (or 60 hours, or 80) and a job that pays $8 an hour? To be yourself instead of being whatever variant of yourself you think plays well in Cubicle Land?

If control over one's own time and money (also known as "work-life balance") is a key goal of the movement, that might explain why so many women are at the forefront. Ladies are leading the charge both in the crafty small business world - over 90% of Etsy sellers are female! - and in other arenas, within and outside of corporate structures.

This blog devotes itself to indiepreneurs. Maybe now's a good time to have a look at other folks who are shaking up the possibilities of viable work. Let's call them the "intrapreneurs."

The Intrapraneurs: Results-Only Work Environment.

Six years ago, two women working at Best Buy's corporate headquarters started a stealth movement to work whenever they felt like it and be judged only on their work product, not the amount of time they spent in their cube. They called this a results-only work environment, or ROWE. The idea caught fire and other groups and departments at Best Buy began to implement the ROWE system, under the radar of senior management. By the time the CEO heard about it, most of the corporate HQ was quietly following this protocol. The system turned out to dramatically improve productivity and employee turnover, and has now been embraced by the higher-ups at Best Buy.

Now these ladies -- Cali Ressler and Jody Thompson -- have a book out called Why Work Sucks and How to Fix It. Check out a nice interview with the authors at Tim Ferriss' blog, AKA the guy who gave us a book on The 4 Hour Workweek.

Crafty small business offers a way to create your own schedule, live authentically, and connect more personally with the people who benefit from your work. But it's interesting to think that there's no reason why corporate life couldn't offer the same benefits... if thoughtful people started an underground movement within their own company. Let's end where we began, with a quote, dedicated to my fellow cubicle dwellers:

The foolish man seeks happiness in the distance; the wise grows it under
his feet.
- James Oppenheim.

Read more!