
Etsy’s Success Raises Problems of Credibility and Scale - BobbyVsTheDevil
http://www.nytimes.com/2015/03/16/business/media/etsys-success-raises-problems-of-credibility-and-scale.html
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baddox
I was never aware that Etsy had explicit rules about things being handmade or
"vintage." I just assumed that the Etsy had that niche and that its community
liked things that way, and perhaps that Etsy purposefully highlighted
merchants that fit that description.

Given that it _is_ an explicit rule, I really wonder how there can be a clear
way to distinguish between compliant and infringing merchants. Even the word
"handmade" is tricky, despite having a seemingly clear definition. I once
purchased some plastic coasters with laser-engraved mathematical symbols on
them. By all appearances, it was a single person designing, cutting, and
mailing these out, and it seemed to me like a perfectly appropriate product
for Etsy, but it doesn't fit the most obvious definition of "handmade," and
the manufacturing process could be trivially ramped up a few orders of
magnitude if so desired.

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CPLX
This is perhaps a cynical take on the controversy, but it's hard reading this
and similar articles not to conclude that when Etsy critics say they want to
preserve the "handmade" or "artisanal" character of products on the site, what
they really mean is "not made by asian people"

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MBCook
Really? I don't see that.

It seems like having a factory or workshop with hundreds of people making an
identical item violates the spirit of the rule.

I don't see why you'd assume they don't like Asian people doing it. I'm sure
people would be just as annoyed if it was people in Africa or South America or
somewhere in Europe or even the US. When you have a factory dedicated to
making a good, it's no longer fair to call it 'artisinal' and compare it to a
guy who makes 3 chairs a month in his workshop.

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CPLX
I've seen reference to Alibaba and China in a lot of these kinds of articles
about Etsy. Seems like a bit of a dog-whistle thing to me, though I concede I
could be totally off base.

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Blahah
> _Though the site still loses money because of high development costs, it is
> booming, with gross merchandise sales reaching $1.93 billion last year. The
> fees Etsy collected on items listed and sold, as well as on services like
> the promoted placement of goods, reached $196 million._

This reads to me as though Etsy has spent more than $196 million on
development in the last year. Am I reading it right? If so, that's insane.

If they aren't capable of making a profit with $196 million in revenue, when
what they operate is a website, it seems unlikely to me that they will ever
make a profit. The problem is compounded by their model (as highlighted in the
article), which prevents any individual seller from scaling up very far. So
how will they ever make money?

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detaro
No, they spent ~37 million on "product development" and made a loss of around
15 million. (per their S-1 filing)

I don't really know what a "normal" distribution would look like (why does the
article attribute the loss to the development costs?)

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sb8244
Same questions here. Obviously there are costs involved with the business, but
basically $150 million (minus taxes they pay) revenue after development costs.
Where does it all go?

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smackfu
Another trend I've seen is for small shops to effectively replicate their
entire store on Etsy, because that's where the buyers are. So a small
commercial print shop may have an Etsy site, in addition to their "real" web
site, and the Etsy shop may not even sell anything except have placeholder
"deposits" that users can buy.

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cm2012
The biggest issue with the IPO that I can see is that marketing spend is
ramping much higher than revenue spend (120% vs 30%, respectively), and they
don't have a lot of experience with direct marketing dollars at that scale. In
addition, they're now relying on the direct spend to achieve scale, and they
used to rely entirely on organic. If they get it right - awesome. But there is
a risk that growing direct marketing that fast at that scale will have a
learning curve that will bite them.

