Small Business Labs

Etsy Makes it Easy for Sellers to Move Off Etsy

One of the challenges online marketplaces face is sellers often do their best to move their customers off the marketplace to their own ecommerce site.

They do this for two main reasons. First, they want to avoid the fees associated with selling through a 3rd party marketplace. They also want to have a direct relationship with customers. 

Most marketplaces try to discourage this. 

Etsy has decided to embrace it.

Etsy's new Pattern service allows Etsy sellers to quickly and easily set up their own independent ecommerce site. 

What makes this really interesting is Etsy Sellers using Pattern will be able to automatically sync content, inventory and commerce from their Etsy marketplace site to their own, independent ecommerce site.

This effectively means they can run both storefronts with roughly the same effort as running one. Pattern even allows sellers to see analytics from their Etsy store and their Pattern store side-by-side on the same dashboard.

At only $15 per month (after a 30 day free trial), our guess is a lot of Etsy sellers will give the new service a try. 

We also suspect Etsy sellers who already have their own ecommerce sites will find the time and cost savings associated with Pattern attractive and migrate over.

On a more strategic level, we see this move as showing Etsy is seeing themselves less as a marketplace company and more as a platform for entrepreneurs. This shift certainly entails risk. It's possible Pattern will lead to lower overall revenues for Etsy due to sellers shifting business to their own sites.

But we think the greater opportunities Etsy has by adding this service - and positioning themselves as more than just a marketplace - outweigh these risks.

And after thinking this new service through, we (disclosure) became an Etsy shareholder. 

The Return of Guilds

The New Yorker's The New Guilded Age provides an excellent historical overview of guilds and their potential return. Key quote:

From roughly the turn of the first millennium to the French Revolution, guilds operated as associations of independent craftspeople, setting standards for their lines of work and cultivating lively subcultures around their labor. 

The article focuses on Prime Produce, a New York city coworking collective. Instead of being owned and operated by a company, Prime Produce will be owned by the members. Again from the article:

Prime Produce is exploring a model in which many members will be co-owners of a cooperative firm, which will manage the proceeds of their dues and pay rent to the sympathetic investors who own the buildings. 

We first got interested in guilds way back in 2007 when we were doing research for the Intuit 2020 New Artisan Economy report. Based on this work, guilds seemed like a logical way for new artisans to organize.

And the growing interest in co-ops and other forms of collective ownership is clearly leading to increasing numbers of guild-like organizations, with Prime Produce being a good example.

We're also seeing a rise in the number of "loosely-coupled" groups of independent workers who team up to work together in a guild like way. Key quote from the 2015 MBO Partners State of Independence report:

In 2015 36% of independent workers reported spending about $101 billion in the past year hiring other independent workers on a contract basis ... This is roughly the equivalent of employing 2.4 million full-time workers via traditional hiring.

Independents’ hiring of other Independents is part of a broader collaboration trend in the new economy. In essence, Independents team up with other Independents to pool their talents and address more complex challenges in the marketplace … These teams effectively constitute a new form of project-specific small business that operates with a flexible and agile staffing model. 

These loosely coupled groups of workers look in many ways like the guilds of yore. We continue to think guild like organizations make a lot of sense in the new economy. We expect to see more of them.

Portland's Artisans

The Portland Made Collective is an association of Portland-based Makers, artisans and manufacturers. It promotes its members and their products through media and marketing support, public education, promotional events and retail sales.  

They recently conducted a membership survey which yielded a lot of interesting results. The full report can be accessed here.

Some of the key findings include:

• Most of the firms are young: 82% have been in operation 10 years or less and 63% five years or less.
• Most of the firms are small: Only 12% had revenues greater than $1 million; 50% had less than $100,000 in revenue
• Most self-identify as Makers or artisans

We found the last point really interesting, although not surprising. More and more people are seeing themselves as artisans and Makers who combine their skills, passions and interests to create their products.  

The report chart below shows how the members of Portland Made self-identify.

5 Interesting Thought Pieces on the Future of Work

Really interesting set of thought pieces - they call them frameworks - from Society and Data on the future of work.  The 5 papers are:

• Understanding Intelligent Systems unpacks the science fiction stories of robots to look at the various ways in which intelligent systems are being integrated into the workforce in both protective and problematic ways. Much of what’s at stake in this domain stems from people’s conflicting values regarding robots, drones, and other intelligent systems.
• Technologically Mediated Artisanal Production considers the disruptions introduced by 3D printing and “maker culture,” as the very act of physical production begins to shift from large-scale manufacturing to localized creation. The implications for the workforce are profound, but there are other huge potential shifts here, ranging from positive possibilities like democratizing design to more disconcerting concerns like increased environmental costs.
• Networked Employment Discrimination examines the automation of hiring and the implications this has on those seeking jobs. The issues addressed here range from the ways in which algorithms automatically exclude applicants based on keywords to the ways in which people are dismissed for not having the right networks.
• Workplace Surveillance traces the history of efforts to using tracking technologies to increase efficiency and measure productivity while decreasing risks for employers. As new technologies come into the workplace to enable new forms of surveillance, a whole host of ethical and economic questions emerge.
• Understanding Fair Labor Practices in a Networked Age dives into the question of what collective bargaining and labor protections look like when work is no longer cleanly delineated, bounded, or structured within an organization, such as those engaged in peer economy work. Far from being an easy issue, we seek to show the complexity of trying to get at fair labor in today’s economy.

All the papers are full of insights and information and well worth reading. 

Craft Brewers Continue to Gain Market Share

Back in 2008 we reported that craft brewers - also known as microbrewers - had captured almost 6% of U.S. beer sales, up from effectively 0% a decade or so earlier.  

We revisited the industry in 2010 and found craft brewers 2009 revenue share of the U.S. beer market had grown to about 7%.

Since 1% of the U.S beer market is worth about $1 billion (Americans drink a lot of beer), this was strong growth - especially given the country was in the midst of the Great Recession.

Since 2009 the craft beer industry has continued to advance, with 2013 being a banner year. As the chart below from the Craft Brewers Association shows, craft beer sales increased 17.2% in 2013 despite an overall beer sales decline of 1.9%.  

Craft brewing is now a $14.4 billion industry (a 14% revenue share) and is showing no signs of slowing down. It's a great example of niche firms effectively competing with giant corporations.  

The beer industry also continues to be an excellent example of the increasingly common barbell industry structure.

This industry structure consists of a relatively few giant corporations on one end, a narrow middle consisting of a shrinking number of mid-sized firms, and a large and growing number of small, micro and one person (solopreneur) firms on the other end.

See our Industry Structure section for more examples.  

The Infrastructure Behind the Rise of Crafters, Makers and Hobbypreneurs

Back in 2009 we released Today's Hobbyists are Tomorrow's Hobbypreneurs, a report on the Maker Movement with our partner Intuit. Our conclusion was:

"Makers increasingly create new products and build small businesses based on innovative use of technology, processes, and business models. They represent a growing force of hobbypreneurs contributing to the U.S. and global economy."

At the time we wrote this report,this was controversial.

Makers were considered hobbyists, amateur crafters, tinkerers and the heirs to the DIY consumer movement of the 1950s and 1960s. They weren't viewed as a source of new businesses. The folks from Maker Faire even told us we were wrong to think of Makers as potential entrepreneurs.  

Much has changed over the last 5 years. 

As the Reuters article Do-it-yourselfers inspire hardware renaissance in Silicon Valley explains:

"a proliferation of high-tech but affordable manufacturing tools and new sources of funding are empowering a generation of handy entrepreneurs and laying the foundation for a hardware renaissance."

The rise of Makers, crafters and others turning hobbies, passions and interests into small businesses is being enabled by a growing support infrastructure that allow these businesses to be started cheaply and easily.

Etsy, of course, is an obvious example of this growing infrastructure. It makes it inexpensive and easy for a crafter to open an online store with immediate reach to millions of potential customers.

In addition to their consumer site, they've also created a wholesale channel for their sellers. This makes product distribution into the retail channel much easier.  

They also recently acquired Grandst.com, which is an Etsy-like marketplace for "creative technology". This will likely greatly expand the customer base for all kinds of gadgets developed by Makers and small manufacturing companies.  

Other infrastructure services include shipping and logistics services targeted at small businesses, a growing array of cloud-based software systems designed to improve the operations and efficiency of small and micro-businesses and a number of new, cheaper, payment system options.

Financing has also gotten easier.  A range of companies are now offering various forms of loans and advances to small and micro businesses. Crowdfunding and more recently equity crowdfunding are also being increasingly used by these types of businesses.  

But although it's gotten cheaper and easier to turn a hobby, passion or interest into a business, for most hobbypreneurs it's still about their passions.  The chart below - from Etsy's Redefining Entrepreneurship report - shows starting these business is about much more than the money.

     

The Rise of Experiential Luxury

According to a study released by the strategy consulting firm BCG, the global rich (and well off) spent $1.8 trillion in 2012 on luxury goods and services.

What's interesting about the study is the finding that market for luxury services and experiences exceeds the market for luxury goods and is growing faster. 

As the study chart below shows, what BCG calls the "experiential luxury" market is now over half of the total luxury spending market.  

The Guardian's Super rich shift their thrills from luxury goods to costly experiences nicely summarizes the study.  Key quote:

... the rich are increasingly hunting for unique objects and experiences ... luxury is shifting rapidly from 'having' to 'being' – that is, consumers are moving from owning a luxury product to experiencing a luxury ...

We agree but would add it's not just the rich shifting their spending to experiences. Consumers in all income brackets are looking for unique and unusual experiences.

One example is the growth of food trucks.  Their patrons come from all income groups. Key quote from our Food Trucks Motor Into the Mainstream report:

For many, it’s the experience that attracts them to food trucks. More than 80 percent of those interviewed used words like fun, exciting, new, different, unusual and unique when asked why they dined at food trucks.

This is all part of the broader shift to an experience economy that we believe will continue to gain strength over the next decade.

Trends and Budweiser's Puppy Love Commercial

It's pretty likely you've seen Puppy Love, Budweiser's Superbowl commercial.  

I'm writing this article on the Friday before the Superbowl and it's already been viewed online 25 million times.  For those who haven't seen it, it shows a labrador puppy making friends with a Clydsdale on a ranch. 

While I like the ad, I'm more intrigued by the trends the ad represents.

The first is the growing role pets are playing in society and the broader trend of pet humanization.  This is the trend towards pet owners seeing their pets as full fledged family members and themselves as "pet parents" instead of pet owners.  

While puppies have long been an advertising staple, this ad truly humanizes both the puppy and the Clydsdale in the way they make friends and interact. This, of course, will appeal to the large and growing group of people who humanize their pets.  

The ad also taps into the trend towards a return to simplicity, authenticity and quality.

In the ad the farmer/dog breeder - who's obviously a rugged and independent yet sensitive kind of guy - is shown working with hands. This harkens us back to the authentic, quality oriented days of yore.  

This is, of course, our stylized view of the days of yore and not how the days of yore really worked. But hey, it's advertising.  

This vision of the solo farmer working his ranch ties into several related trends we track: 

New Localism is shift towards Americans relearning the value of community and reestablishing stronger ties with family, friends and their communities.  Part of the new localism trend is a growing interest in local, unique, products that look and feel authentic.  

The New Artisans are people focused on exploring the combination of new and old ideas, approachs and methods to create high-quality, niche products.  

It's interesting to see Budweiser tie into so many trends in one ad - and do so with great effectiveness.  

Book Review: The Fifth Age of Work

The Fifth Age of Work describes how a broad mix of shifts and trends are transforming work and the workplace.

The author, Drew Jones, is well suited to take on this subject.  

He's a cultural anthropologist, partner in a coworking facility, business professor at Texas State and the co-author of one of the first books on coworking - I'm Outta Here. 

The book's premise is changes and shifts in technology, social trends, economics and demographics are leading to a new age of work, which he describes as:

The Fifth Age of Work is an emerging world of work broadly defined by the rise of cloud-based technology such as remote computing, file storage and retrieval (e.g., Evernote, Dropbox), and communication channels (e.g., Skype, Google Hangout), as well as the decentralization and de-localization of work characterized by distributed teams, remote work, flex work and telecommuting, contract and project-based work, and the rapid growth of the coworking movement. 

He goes on to say that a key driver of this shift is people want more "independence, trust and honesty in their working lives".  

A lot of ground is covered in this book.  It includes discussions on the importance of design and design thinking, activity based work, results oriented work environments (ROWE), coworking, innovation and various way companies and leaders can increase trust, openness and collaboration.  

The Fifth Age of Work does a great job of covering all these trends and tying them back into a understandable framework.  Anyone interested in the future of work - which is pretty much everyone reading this blog - would find value in reading this book.

And it's only $7.99 for the PDF or Kindle version. The paperback version is $15.95. 

I do have one required disclosure since I just suggested you read this book. Several of our studies are referenced and cited included our New Artisan Economy report and Intuit 2020 report.  

We are, of course, thrilled and honored to see this, but our recommendation would have been just as strong if we weren't cited.

The Rise of the Naked Economy

The Rise of the Naked Economy is a new book by Ryan Coonerty and Jeremy Nuener, founders of the successful coworking chain Nextspace. It covers the paradigm shift from traditional jobs and employment to a world of contingent work, projects and tasks.  

The title is meant as a metaphor to help explain the uncertainty, positives and negatives of the new economy.  

According to the authors, this is "like being naked, can be scarey, but can also lead to some of the best moments in one's life".

Because the authors are leaders of the coworking movement, they have deep expertise and experience with the new world of work.  

They do a great job of explaining the social, economic and technology trends and shifts driving the changing nature of work.

There are several parts of the book that jump out at me.  

One is the growing role of "Super Specialists". These are people who have become even more specialized that traditional specialists.  They focus tightly on a specific area, niche or task.  We see this need for increased specialization both in our research and in our own work.  

I also like the chapters on networks and tribes.  They describe networks as the close ties that we turn to on a regular basis for help and support.  Tribes refers to what is commonly refered to as "weak ties" - a wider group of people with complimentary skills that often provide new insights, ideas and job leads.  

Many independent workers don't understand the value of weak tie tribes. Just reading this chapter will result in an ROI many times the cost of the book.  

The Rise of the Naked Economy closes with an excellent set of advice for the new world of work:

1. Find your niche (the book actually says "find your turtles" - read it to see why).  This is the skill or area where you can be world class.

2. Keep your costs low.  

3. Work your network, find your tribe.

4. Get out of your head - get feedback from others.

5. Remember why you work - to make a living and a life.

Anyone who is interested in how work is changing and what it means (and that's just about everyone) will find this book of value.  Buy it, read it.