Wednesday, April 21, 2010

Conspiracy Theories. Oh, We have a few.

In a flash of angelic harmonics that usually only sounds with the convergence of the alignment of the heavens and earth, it came to me as to why views have hit all time lows on Etsy.

Rokali had always wanted to take Etsy public. He's never really made that a secret. And so do the people who put $25 million into it. Sometime in the future, Etsy will have an IPO, but Wall Street doesn't care about handmade, they care about money... lots and lots of money. Which Etsy is still not making enough of to be considered one of the cool internet wunderkind like Zappos or Flickr. Yet.

Etsy made $12 million in 2009 from all reports I’ve seen. There were $200 Million in sales on site last year. Etsy’s percentage of that $200M comes out to about 5%.

And before you start to go off on me about the 5% number with a “Etsy’s take is only 3%!” Right, but on top of the 3% take from $200 Million in sales (Final Value Fee) there is listing fees, relisting fee, showcase and Dorque ads.)

Now that makes 5% sound like a big ass chunk - until you realize eBay probably makes 15% to 25% of it's seller's sales with many forms of “upsizing” your listing with all sorts of add ons, options and enhanced listing features - not to mention PayPal’s 3.5% cut of sales, since eBay owns that too. Up against that kind of major league double dipping, Etsy’s little 5% or so looks like a joke.

So then, what can Captain Swimmy McSwimmypants and the Snobby Investors League do to make enough money from Etsy sellers so that it makes Wall Street happy when they do decide to go public? See, adding more sellers is not good enough...they have to make more from each sucker seller that hasn’t yet caught on that the Etsy Dream comes with tears and broken dreams attached.

So as I see it Rokali and the Etsy Bored have a few options:

  1. Raise fees - seems pretty simple, ebay has done it for years, but it's very obvious and the sellers tend not to like it. If Etsy raised fees to something like .35 cents per listing and 4% final value fee they could bring in more money but would have a fight on their hands. I can see the forum now: "Oh noes guyz, my fees were 600 bucks this month instead of the 500 I normally pay! rabble rabble rabble" - it would be a popcorn worthy event to say the least.

  2. Reduce the number of months that a listing lasts, thereby increasing fees. Just changing the listing length from 4 months to 3 months would increase listing revenues 33% without any actual fee increase. “Hey guyz, at least they didn't raise the fees!”

    or

  3. The way Etsy appears to be going...contextual advertising...now try to follow me down this rambling path:

Several months ago Etsy purchased Adtuitive , remember that? They were a search engine advertising company, and the word was they acquired them solely to get their developers to work on search . But you know, if you work in the tech field that if you want to hire developers, you make them an offer they can’t refuse. If you want a company's assets, you buy the whole damned company. We’re guessing Etsy probably isn't after Adtuitive's desks and supply closet. The real asset is their search engine advertising platform.

Contextual advertising is like Google Adwords. It lets people bid on or buy search terms and place ads next to or within the results of those searches. It’s kind of like Etsy showcase spots, only more advanced, but it’s a tool that isn’t really useful without relevant search. (Which Etsy seems damned set in NOT providing.)

“Wait!” you say “Etsy started testing relevant search awhile back!”
CORRECT! Are you starting to see now why you haven’t gotten the basic seller tools you've been asking for?

See, an odd change happened a few months ago about the time Etsy bought Adtuitive, they started creating pages for searches. Etsy creates web pages for searches that people run on the site, and the ones that get searched pretty often get linked to from the Dorque, other searches, or maybe even a site map, so when Google crawls Etsy it finds these perfect keyword matches with good links. The keywords people use to search on Etsy are the same they use on Google, so this is a really good way to have Etsy pages show up high in Google searches.

The problem though, as many know, is that Google will only return a couple of links per website. The searches have a lot of authority and stay around for a long time, even if the items on them change. So while your items might not get returned by Google, Etsy's new keyword search pages do. So Etsy gets all the traffic for your items - not you.

Any move towards relevancy-based internal search results will line up everything perfectly for this new Google search advertising platform.

Etsy has been doing this for about 3-4 months, and sellers are definitely starting to notice the drop in search traffic to their items, even though Etsy says the Google traffic to the site is the same as always. Of course it is, they are just manipulating where Google goes, or doesn’t go.

What have the new Adtuitive developers been doing since December? Working on the new Etsy advertising opportunity, not on search (Etsy hasn't announced any additional search changes or plans).

Etsy's new sleazy gimmick...”HEY SELLERS! Buy ads on Search Results! That's where the traffic is!” Right, because they stole it from your shop! Etsy will use your item and content to get Google to direct traffic to Etsy search results pages so it can resell that exposure to the highest bidders. When sellers are so desperate to sell that they are frothing at the mouth more than ever for views, they will continue to renew, renew, renew even after internal search relevancy arrives. But will they be rabid enough to pay more to get favored status on those search pages - you damned well know they will.

The results that can be expected if Etsy does go this route:

  1. Renewing will continue to get exposure on category pages for buyers who browse the categories, and those who will choose to browse results by recency.

  2. People will pay to get spots or placement in the search pages.

  3. Google traffic will dry up completely to individual shops - you will have to pay Etsy for those views, and pay, and pay. Like good little sheep.

But don't completely discount the idea of reducing listing times and fee increases when these will increase their revenue even more. The end result - Etsy follows in eBay’s footsteps and moves further toward the 15-25% of all your profits that Wall Street wants to see, Rob gets an IPO, and the investors get their money plus a nice big payoff. Good for Etsy, not so good for any of us handmade sellers.

It's hard to know positively if this is what they are planning, but a lot of the pieces are starting to fall into place when you look at the scattered hint, and the non-relenting nosedive in seller Google traffic with this in mind.

The Plan: Etsy wants to redirect Google traffic and sell it back to sellers.... mo’money from the same group with no additional cost. CHA-CHING!

Conclusion: Etsy makes the cupcakes and keeps'em all to themselves. The bastards. But Wall Street will love it.

36 Comments:

embellisher said...

You know, I'm a conspiracy lover and you might be on to something here.

All that's gonna make me do is move to the venues that have no listing fees, and leave a one-line blurb in my etsy shop redirecting buyers elsewhere.

I'll be damned if I leap and run off that cliff. It's just a hobby and I can and have, started back selling in real life.

This ploy may have worked when they were the only frosting on the cake but check it, lots more cake around for sellers to eat, Marie Antoinette!

Just a Jewelry Designer said...

..after the 9 listings I have on etsy expire, I'm totally finished with them..no more dimes from me...and if people were smart they would do the same...

Cat Power said...

Oh, crap!

That's all I can say at the moment.

gottagetawayfrometsy said...

Holy crap! This makes a lot of sense. And I really really really hope you're wrong.

Libby at Picklevalentine said...

You may be right. All roads lead to Etsy and screw the individual sellers. Diabolical bastards.

And of course they want new sellers. Why advertise to buyers which would cost money when they can get new, naive, tender meat, (oops, I mean cupcakes), all the time?

But I think this whole ploy could seriously backfire. Many of the professional sellers, those of us who make a living or contribute heavily to family finances from our shops, are like rats deserting a sinking ship.

I've moved the bulk of my items off to ArtFire already. And some of my things are also going to Zibbet. I do list a couple things a day on Etsy just so my repeat customers know I am still there, and I link to FaceBook. I have links everywhere, actually.

I just found this on a forum. It's from Sky Valley Gems quoting Green Mamba and Rokali. "I have taken this from a Dec 22/2009 interview with Rokali-

'-- Will Rob be tweaking or altering Etsy's focus in any way? (GreenMamba)

Yes, I'll be (re)focusing Etsy more on what we call "social commerce," and less on retail. To get an idea of what this means, let's look at merchandising. For a retailer, merchandising means putting products on display that are likely to sell. In social commerce, our focus is on people, not products. It's our job to build tools for you to use, that help you promote items as you'd like to.'

(What the HELL does that mean?)

"Hmmmmmm maybe social commerce isnt working and we could go back to the old ways of retail. Rokali said he wanted to "get away from less retail" well thats exactly whats happening. Perhaps its time to say that isnt working and lets change back."

My response to that was "Very interesting quote.

I come from a long line of merchants. We probably started selling somewhere in the Middle East 6000 years ago. I know that my ancestors were into selling to make money. All the neighborly-ness that came with having a stand of fruit, a saddlery, a box company, or a ship load of luxury goods from France were a benefit of being a successful merchant.

I have an image of 6,000 years of old bones rolling in their graves right now.

I am not sure what social commerce is, but I guess it might not be working for me."

***I did look up social commerce and I can't seem to wrap my brain around it, but I think it might have a lot to do with the way things are going right now.***

One rule my ancestors had was location, location, location. If the market where you were selling your whatsits started to see dwindling sales because the oasis dried up or the neighborhood went bad, you moved. 6000 years of old bones can't be wrong.

subeeds said...

This makes more sense than anything admin. has done in the last 6 months. I would bet a Swaro bi-cone that you have hit the nail on the head.

karmacrochet said...

What you said sounds logical so I think you may be right.

As I'm standing right now, my shop views are 50% in average from 2 months ago and dropping. Comparing to last year around the same 50% down. I'm doing the same thing so it is something that Etsy is doing, so I will have to change something or move away. What is very irritating is how Etsy is playing dumb. They may think that we do not know how to play that game.

Fortunately, I do not depend on it for income and I have a couple of shows coming up, after that will see.

I'm really pissed about it. We should call an strike. Get everybody to put the same day the store on vacation mode w/ a nice protest announcement and see what happens (I know this may not be doable)

Oh well

NailInTheCoffin said...

Wow.... that would explain a great deal.

Could it be that Rokali has been playing dumb and nobody thought he'd be smart enough to go this route?

Are they also too dumb to realize that a ploy like this would be about the fastest way to empty out Etsy so fast there'd be nobody left but the newbies - who'd go out of business with that kind of scheme - and the resellers?

Maybe they're OK with that.....

MovingToGreenerPastures said...

BINGO, BINGO, AND BINGO!!!

So glad I'm steadily reducing my items. Used to list well over 100 items. Now down to 62. My goal is to have about 10 just for any shoppers who do manage to find me there.

My repeat buyers know how to find me elsewhere - I made that abundantly clear to all buyers right from my very first sale on Etsy.

There was life before Etsy and there are now many more options for selling online. The best of these options being your own website and/or blog.

My goal is to get my website up and going. Point all tweets, and face slaps to it and go on. A blog is also in the works.

When a venue stops working for you, it's time to focus your energy elsewhere. I no longer bother to voice concerns in the forums. I need to take that valuable time and invest it in my other online venues and creating more.

Etsy can just shove it.

The Funny One said...

Etsy has been headed in this direction since the start of Year Two, so it's not surprising, even if only 50% of this theory turns out to be true.

It's been a setup since they latched onto their 100%-controlled promo model, which promotes the top 100 sellers who sell because they're promoted and are therefore willing and financially able to pay Etsy more money to give them top search ratings.

Their "exclusivity" ballgame will just get more exclusive.

However, what stinks most about this house of cards is that Etsy is one huge seller rip-off. a fraud, a scam. They are not who they say they are. It's not a "marketplace" ---- it's a very exclusive club that rewards the select few while charging all for some very unethical "business" bullshit that gets worse by the week.

I used to think that Etsy's bad behavior was extra-awful because it's influenced other sites who are making some pretty awful mistakes. Now I think that if Etsy fails, it will actually be the first positive thing to happen to artisans and the handmade product in 5 years!!!

besmarter said...

I think you should also consider the level of service you will get from admins who are awarded stock options when etsy goes public. scary.

Don't be stupid and move your wares to another ecommerce site. Get your own.

kissmytoes said...

if they wanted to make etsy successful enough to go public, they need to advertise it like a honest to god grown up business.

no one knows what etsy is other than a funny website run by an elitist navel gazer who thinks of his customers as total losers. ooops, i meant hobbyprenuers.

if regretsy is the only mainstream reference to etsy, you have to wonder who would invest in a website that specializes in tampon earrings and felted uterus pillows.

Money Talks said...

ETSY earns the bulk of its revenue from a percentage of the sales. Less traffic means less sales and therefore less revenue for ETSY. How does this jive with your theory of their new business model?

The Righteous One said...

"ETSY earns the bulk of its revenue from a percentage of the sales"

And you know this how? Etsy doesn't break down their figures

chickory said...

a fine piece of investigative journalism! makes sense to me.

tired etsian said...

Etsy gets a good chunk from sales but they also get as much or more from other means.

A brief look at the weather report. I took June 09 and Dec 09.

June 09
12.8 million in goods sold - Etsy take at 3.5% is $448,000.

New items listed(this is completely new and relisted items, does not include renewed items) 1,315,547 - Etsy's take is $263,109.

Dec 09
25.6 million in goods sold - Etsy takes $896,000.

New items listed. 1,815,177 - Etsy takes $363,035.

December was their best month, the fall was a bit better then June's numbers but most of the year was at June's level or less.

Now for our purposes, lets say Etsy made the same in sales in December all year long. That is $10,752,000. If as I have seen mentioned, Etsy pulled in around $20,000,000 last year that means that listing, renewing and showcases account for half of Etsy's income. Knowing that most months Etsy made only half what it did in December 09, that means that the bulk of Etsy's profits are from things other then sold items.

Cher said...

Well, let the lemmings follow them into the sea then. I'm getting a bit cranky myself, because I think you nailed it... they keep mucking with the site and telling us everything is fine, just fine... your eyes are getting heavy, sleep little one, we'll take care of everything... Bullshit!

nuggets said...

"ETSY earns the bulk of its revenue from a percentage of the sales."

I don't think that is true. My Etsy bill each month says the opposite. Everything about Etsy is designed to make money from sellers.

Etsy's mission: to make money from people who want to make a living making things.

The Funny One said...

tired etsian said had the most interesting breakdown of Etsy profits I've ever seen, and I'd sure like to know if others have been able to decipher the numbers.

If 50% of their take is from other than sales is for real, it's less than I thought, but it explains some of the fundamental problems with a biz that based it's entire revenue structure on listing fees; everything else went to pot.

I'd really like to know if anyone else has broken out the numbers.

Etsy's monthly reports on "sales" (March is over $22 million) are so full of financial reporting standards holes, that they actually do more PR damage than good, and I've always wondered why they choose to perpetuate a rather devious "report" that turns off a whole new crop of sellers every time they print the numbers with false and misleading claims about what portion is "sales" and hide what portion is "fees."

I think the daily profit on rip-off showcase spots is much higher and may be how they pay for so many non-revenue producing employees (editorial) whose only job is to blog, tweet and pick out favorites.

bohbi said...

wow--is this ever depressing.

what do all of them do? said...

Etsy currently has 91 employees according to the picture list on the About page. 91!

conan said...

"Etsy's new sleazy gimmick...”HEY SELLERS! Buy ads on Search Results! That's where the traffic is!” Right, because they stole it from your shop! Etsy will use your item and content to get Google to direct traffic to Etsy search results pages so it can resell that exposure to the highest bidders."

This makes so much sense. They've routed away our individual shop and item views via google, and are going to give them back to us via selling ads. That will be our reward for sticking with them. Disgusting. Depressing too. Time to go elsewhere, I've had it.

Money Talks said...

I am not privy to the details but the model for ETSY for a seller is that your costs are less than your income. If ETSY provides various methods for promotion and those services result in more sales than it is worth while. If it is not, than one would not use them. While I do not have any information about their income stream the entire site/business model fails if sellers do not earn money selling their goods and therefore it is not in their interest to deter sales. If they do go that route and it becomes prohibitive, someone needs to build ETSY 2 - and everyone will jump ship.

summary: I still fail to see how rerouting web traffic benefits them. More traffic = more revenue.

also there are numerous stories and bed selling books detailing the relationship between Google's search engines and web traffic. I'm sure that applies to the other search engines as well.

perhaps the reason for dramatic increase in traffic on ETSY, and I have seen it on my page, is something a little less sinister.

(i am not trying to be an apologist for ETSY. I think they are wankers. But I don't think they are some kind of evil geniuses either. Ockham's Razor)

Indigo said...

Ugggg! *headdesk* This makes a lot of sense. More sense than the crap Admin and McSwimmy like to spout off. I always thought I was too dumb to understand what they were saying in the forums, but now I understand, it was all just smoke and mirrors to confuse us all....

time to move on said...

I really and truly think you're on to something here. I knew I had made a mistake setting up shop there. Fortunately, today I started taking steps to begin moving my items elsewhere.

Lost said...

Money Talks said

"I am not privy to the details but the model for ETSY for a seller is that your costs are less than your income. If ETSY provides various methods for promotion and those services result in more sales than it is worth while. If it is not, than one would not use them."

But that is exactly the problem. Etsy's model is working well - for the favored sellers whose work gets promoted on FP, old Gift Guides, Storque articles, etc . . . and if the OP is correct - those who are willing to pay extra to have Google routed directly into their shops. All fine and good. I wouldn't even have an argument with this sort of tactic if Etsy were going to be honest about it.

The problem is that Etsy promulgates this fantasy that all sellers are equal and all have equal opportunities for success. They have never provided much in terms of down to earth, honest and useful business training for sellers who do not have enough experience or education to make good business decisions. It's all about re-listing, taking better pictures, buying a showcase, tweeting about your shop and playing nice with all the other kids in the sandbox, even though half of them are your competitors and a few of them honestly want to cut your throat.

I have never seen an article from Etsy that advises sellers to make a financial plan for how much they can afford to "advertise" each item in their shop. Newbies are not trained to keep track of how much they spend on listing, re-listing and showcase fees. Discussions about pricing issues in the forums often become raging fire storms that get shut down, in part because real business people are trying to help incompetent sellers actually make a profit.

The Etsy model preys on new sellers who do not understand how to price, advertise, sell and ship their goods. If the current conspiracy theory is true, then etsy is upping the ante in a game that they are already good at. Yes, sellers will be welcome to list and re-list right down to their bottom dollar with the 'promise' that their wares are visible to the whole wide world - and then some, if you want to pay a little extra for access to search terms. A few sellers will catch onto that trick and will become wildly successful. The rest will languish in the backwaters of etsydom wondering where all the customers are. Etsy will still be able to say that they have the largest online marketplace for handmade - ever! while raking in billions from people who never, ever see a sale.

Yes, some people will bail out, but new sellers will jump on and lots will stay just because Etsy is familiar and/or they are loyal or because they are not savvy enough to find another market.

This model is the equivalent of a B&M shop charging rent for artists to bring their work in but locking everything in the basement unless the artist pays extra for public viewing. Every time a non-viewed artist stops in and asks why their work isn't out on display they get told something like "Oh - we're just re-arranging things today to spruce the shop up. We'll be bringing your work up tomorrow - Don't you just love the new paint on the gallery wall and did you notice the gorgeous new doors we had installed last week?

FantasyClay said...

Lessening the time a renewal lasts won't make much of a difference since so many people renew at least some items daily

Dilby Dooloffer said...

I love a good conspiracy theory, and this is as good as any I've heard.

I don't claim to understand it all completely, but what would happen to Etsy in this scenario if every seller got their own domain name, put up just one simple webpage with the same announcement they have on Etsy, and a handful of product pictures with exact titles to ones they have on Etsy each linked back to their Etsy item for purchase?

Because Google doesn't like duplicate content, do you think they'd choose the 'stand alone webpage' over Etsy content if it were 'duplicate'?

The reason I suggest this instead of just going somewhere else or building your own website is that most people can't or they would have one already. But domain names are easy and inexpensive and there are free web hosting sites out there with easy template setups and there would be no need to integrate a shopping cart until or unless you decided to go that route.

I know there are those who consider their blog their 'website' and some can integrate a shopping cart, but I don't think blog content is picked up in the same way websites with specific domains are, but I could be way wrong on that.

The reason I think this idea might be feasible is because in all the threads I read about people's views and sales going down, a number of people mentioned that their website sales remained steady or showed improvement.

And while some people are fed up with Etsy and don't want to direct traffic to them in any way, shape or form, we all know that the majority of people will stick it out and hang on to some kind of hope either through blind loyalty or the fact that they've invested so much time and energy in their shop they just don't want to give it up.

So rather than trying to get everyone to jump ship, how about finding a way to beat Etsy at it's own game?

Amenhotep IV said...

According to Etsy, the drop in views and sales is in everyone's imagination:

http://www.etsy.com/forums_thread.php?thread_id=6502513

tired etsian said...

All in my imagination. Google Analytics says otherwise. My Accounting sheet which shows I am making 1/4th of what I made at this time last year is lying to me.

Amazing.

I should go spend some of that money that apparently I'm making without knowing about it.

Amenhotep IV said...

tired etsian said:
I should go spend some of that money that apparently I'm making without knowing about it.

Indeed.

And I'll take everyone out to dinner on the money that I'm apparently making with all of the sales that are supposedly there, because everything is miraculously "up."

It was a formal, official dismissal. No doubt.

And all of the people whose sales and views were NOT affected, i.e. the people who have been telling the constructively curious people to clam up, have joined in the fray to "tisk" and waggle fingers. "See, we TOLD you it was all in your heads, silly sellers!"

The Funny One said...

Amenhotep IV is on to something! The Admin forum post (in Site Help which is another joke at sellers' expense) not only dismisses all the seller complaints about traffic, views and sales, the "research" itself is so full of holes that it's laughable.

If I were the boss and one of my employees posted something as false, misleading, and snarky as that one, I'd have their head on a bagel 'n schmear platter at breakfast the next morning.

Public comments that are as faulty as that post will come back to haunt you, Etsy. Count on it!

Virginia said...

I used to be 'Lost' but now I'm just so dang mad that I don't care of Etsy figures out who I am. eetzee's dismissive post with thinly veiled accusations of sellers lying about decreases in shop views and sales really ticks me off. I don't know how I will find the time, but my Etsy shops will both slowly disappear as I build my ArtFire shop and my own website.

I know its just a drop in their bucket, but I'm thinking I could probably hire someone to help me build my website with that 40-80 bucks a month I've been forking over to etsy and their rude, dismissive admins.

minnie mouse said...

They bought Adtuitive because the company consists of data mining experts, and Etsy has a lot of data that needs a lot of analysis.

This was NOT an ad platform acquisition. It's called a 'talent acquisition'. You think 'real asset is their search engine advertising platform'? Go read the bios of the people that they hired.

And yes, they've already screwed you as much as they can so far, for free advertising, excessive fees, unspecified services in exchange for money, etc. You haven't seen anything yet... we THOUGHT they couldn't get worse...

craftygeek said...

"Etsy's mission: to make money off of people who want to make a living making things." Well..... duh.

OF COURSE they're trying to make money off of us. And OF COURSE they're cutting off our traffic and making us pay for exposure. Whether you sell on Etsy or pound the pavement looking for a real live shop to carry your goods, exposure costs--either money or blood, sweat, and tears.

Etsy is not a charity for people who craft, nor is it a crafting 'community' where we all support each other; it's first and foremost a business. And you can still do really well on Etsy without buying into their promotion crap--the only thing is, you have to work at it. Most people don't want to work at it; they show up at Etsy and complain because they're not getting enough exposure through search engines. If you're leaving your business to search engine hits without getting out there and networking and self-promoting, your business will fail.

Etsy is a tool for sellers to use, no more. It's cheap to list and the percentage they take is not too high. If one isn't inclined to make one's own website, it's a great alternative. But shop promotion is still a seller's responsibility. Don't list and re-list like a maniac if you can get people to your shops in other ways--blogs, Facebook, Twitter, real life stores and shows, you know, those things you would have to do if you didn't assume Etsy was going to do it for you.

Amenhotep IV said...

Adtuitive rears its head.

http://www.auctionbytes.com/cab/abn/y10/m05/i11/s02

http://www.etsy.com/forums_thread.php?thread_id=6517585&page=1