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Thu Dec 30 2010 09:51:56

What Can Etsy Do to Avoid eBay's Missteps?

By: Ina Steiner

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A number of readers forwarded me a New York Times article pointing out some of eBay's problems - to paraphrase, eBay has gone from resembling an overflowing garage sale to being something closer to Wal-Mart, and has alienated many of the smaller sellers that were once its lifeblood.

The article was actually about Etsy, and it had me wondering, not for the first time, whether Etsy will be able to avoid some of the mistakes eBay has made over the years. In the article, Etsy founder Rob Kalin says his company's focus on community and independent sellers will help it avoid eBay's missteps, and said eBay "looked to maximize profitability over community."

I can't help being skeptical that a company funded by Venture Capitalists to the tune of $52 million can be as altruistic as that. Etsy has seen GMV growth rates drop from triple digits in 2009 to double digits in 2010, despite a push for international expansion, and while Kalin's investors may be patient, they may not be so casual about profitability.

Over the summer, Kalin gave a somewhat contradictory answer to a question about taking Etsy public. When asked if Etsy would do an IPO (initial public offering) next year, Kalin talked about the importance of community and expressed distaste for Wall Street:

"To me, I like the idea of community ownership. I think that the company is part of the larger community - 5 million members. The only reason an IPO interests me at all is to be community owners. I have no interest in having people on Wall Street determining the value of my company."

But then he went on to discuss the timing of a IPO. "There is no way we are ready for an IPO next year. There's a lot more to do before I’m comfortable with that. Maybe three to four years. It's not something we have complete control over, either; the climate - it needs to be the right climate. We don't need to do it to raise money."

Early eBay users have heard that before. They have said they were promised shares in eBay, but were left out of eBay's IPO. And once eBay became a publicly traded company, maximizing shareholder value was placed above "community" needs.

eBay's explosive growth was aided by category expansion, going far beyond computers/electronics and toys/collectibles and into verticals such as Business & Industrial and Automotive. Etsy has locked itself into three categories: handmade, vintage and supplies. It has yet to demonstrate where sustained growth will come from.

The New York Times article quotes author Rachel Botsman, "Some people are more interested in buying an item or a good with a story behind it. There's a backlash against anonymous mass-produced goods, and eBay feels as though it's been taken over by mass-produced goods."

Yet Etsy itself is facing complaints by users that it is allowing mass-produced goods onto its site, and some report the company is not doing a good job of enforcing the policy that everything in the handmade category be made by the seller.

Readers who know eBay's history may be able to offer advice for Etsy, having lived through similar growing pains. What is Etsy doing right and wrong, and what can they do to avoid eBay's missteps?




Comments (22) | Permalink

Readers Comments

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: mclovebuddy.etsy.com
Web Site

Thu Dec 30 10:21:42 2010

etsy push and promotes most is handmade with vintage coming in second and rarely with supplies. this is their business model.

basically, 3 out of 4 times i've tagged an item or store being factory made, things were taken down within 20 minutes.

i miss-wrote a 1950s bottle description as being vintage style and i was flagged. i corrected my typo and was allowed to keep the listing up.

sometimes, it's hard to tell and it's getting to be a big marketplace... and etsy doesn't have an automatic system that can sniff some of these out when they open up shop.  

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: who knows

Thu Dec 30 11:06:38 2010

Given enough time and greed Etsy will become just another Fleecebay.

The clock is ticking for them.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: My Own Website Not Quite Paying My Bills Yet

Thu Dec 30 11:12:06 2010

The answer is in the article:

The troubles at eBay, he said, were caused by more than just bad business decisions. “It is a symptom of our times,” he said. “They looked to maximize profitability over community.”

I love the last line of the article too!

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: smallvillenw

Thu Dec 30 11:22:57 2010

Did Etsy ever implement a Google Shopping feed for all their members? They promised to do so for many months until I finally just closed my account.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Barbara
Web Site

Thu Dec 30 11:39:14 2010

Sadly, a site has a hard time growing without investors, and the Catch 22 of it all is when investors sink millions into your enterprise you are beholden to produce returns.  And lets face it... when you deal with venture capitalists, greed rules.  Ebay has taught all of us some hard learned lessons; I agree with and admire Rob Kalin's view; but can he control the tide... I am not so certain.  Its one more reason for sellers to diversify their selling venues. Sociopaths such as John Donahoe often make their way to the CEO spot.  It could easily happen to Etsy upon going public, and at that point it is no longer about community; Greed will rule.    

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Mitzi
Web Site

Thu Dec 30 11:53:25 2010

I sell on both eBay and Etsy in the vintage categories. It seems to me that Etsy needs to be relentless in staying with its original vision - a marketplace for unique handmade and vintage items, and craft supplies. They need to value their small, independent sellers and not allow larger retail type sellers to come in and take over - which they are already trying to do, search the forums for Reseller and you will see hundreds of threads complaining about the problem.

Etsy also has a lot of work to do on site functionality - their search and category/tags structure is a mess, I am hoping to see improvements there in 2011. They have been working on their seller tools. but still have a long way to go - for example, how can a site as large as Etsy not have a shipping calculator? There is no excuse.

I think with careful thought and dedication to their original vision Etsy can avoid a lot of the problems that eBay has faced. I really like Etsy and have high hopes that things will only get better there - though I suppose as some of the other posters have pointed out, greed winning the day is always a possibility...

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Digby
Web Site

Thu Dec 30 12:16:54 2010

Why did they need 20 million
What can an auction site do with that much money ?

Funny that they get articles in the mainstream press now they a "Wall Street" company.

I think we will watch them get more commercialised.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

This user has validated their user name. by: Ming the Merciless

Thu Dec 30 12:25:41 2010

It's really not in Rob Kalin's best interest to reveal his business plan or objectives or how those might change if and when Etsy becomes publicly traded.

We all know or should know what to look for based on how ebafia has behaved since it went public.

IMO, the only way Etsy would survive more or less as is after an IPO would be if Kalin became the majority stockholder.

Otherwise, the Wall Street venture vampires will force Etsy into the same screw your customer, outsource American jobs, eliminate customer service corporation that dominates this country today.

Right now, Etsy sellers hold the trump card. After an IPO, it wouldn't be long until an Etsy seller will have as much control over their business as an ebay seller does.

The corruption and greed on Wall Street go hand in hand with sociopathic CEOs, and I can't realistically see how a publicly traded Etsy could escape the same fate as ebafia in spite of whatever good intentions Rob Kalin has now.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Patricia This user has validated their user name.

Thu Dec 30 12:56:12 2010

Its unavoidable unless Etsy keeps a close eye on it.  As Etsy grows and becomes more profitable it will lose that connection between itself and its community and become a task master instead - more rules and regulations on the little seller and more concessions to larger sellers.  That's how Ebay went...and it came from pure greed.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Rick1313

Thu Dec 30 15:02:02 2010

To answer AB's opening blog question, I go to the basics that I keep harping on here on AB (and on eBay's forum boards before they censored and banned my postings to protect their fraudulent business practices, along with the fraudulent Mr. Griffith).

Liability and good faith.

I have not read the user agreement (UA) or policies on Etsy (nor will I at this point in time), but having a good faith UA and policies has to be maintained throughout changes that Etsy feels it has to implement to grow and (hopefully) have their sellers grow with them....without trying to transfer or deny all liabilities, which has been the case for eBay,inc. under Mr. Donahoe's multi-year site change plan.

eBay's selling venues UA's and policies are a shambles and are starting to come to light with lawsuits, small and large, filed against them (PayPal too).

I am not saying that a selling venue cannot make any changes, buy it has to be shown that it is not just for their benefit and at the expense of those paying to use their services (sellers) and, this is very important, build up a business on that selling venue.

If a selling venue shows, like eBay,inc. has done and is still doing, that it cannot be trusted to keep the good faith that is required of ALL PARTIES involved in a business transaction, then it will catch up to them in affected sellers holding them to the liability that the selling venue wants to deny ever having.

Apparently Mr. Donahoe and eBay's board of directors believe they have enough cash and clout to weather the storm clouds that are bellowing above their corporate headquarters.

Time will tell if eBay,inc. calculated correctly or will have to re-do their entire way of doing business.

Smaller venues, without the cash backup and business clout like eBay,inc. has, may not be able to survive mounting liability issues if they arise.

A seller (which includes all selling venues), no matter how tiny or massive must accept their liability when they stray from the good faith path that must be maintained at all times with their consumers, and must do what they can to put themselves back on the correct path if they start straying.

When denial is used (ex: eBay,inc.), then we see the results. Lawsuits and endless postings on endless discussion boards about the endless bad faith business dealings of those denying their liability.

Not a way to run a railroad.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Adam

Thu Dec 30 15:12:42 2010

There are sellers, selling Psychic readings on Etsy.... now come one this is not 'Handmade, nor Vintage or supplies' even....

They are flooding the place and its very hard to be seen.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Lisa This user has validated their user name.
Web Site

Thu Dec 30 19:10:41 2010

Hi Ina,

as an etsy seller and an abused ebay seller who went through the meg to john transition, i am going to simply state to etsy

stay true to your original vision and quit over complicating things by adding new features. less is more.

i am actually very happy with etsy. having lived through the abuse of ebay, i can say for me, etsy has been an excellent & viable alternative.

as for psychic reading @adam, those are considered handmade and are etsy legal provided the seller offers something tangible with it.

Lisa

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

This user has validated their user name. by: Tula

Thu Dec 30 19:23:46 2010

Etsy is already suffering some growing pains and has a lot of technical problems. Check out the etsybitch blog (etsybitch.blogspot.com) for a roundup of some of the issues. They can be a little over the top, but they point out valid problems with the site.

I haven't had much luck selling vintage there, since they have similar problems with item visibility as you see on eBay these days. I've been listing on Artfire lately and find that site to be technically superior (very much so) and better-showing in Google. It's not as well-known (yet) and doesn't have the overall traffic of Etsy, but is also not as "crowded", so you have a better chance to have your items seen.

I'd love to see Etsy fix their issues and have a lot of success, but I fear they're going to squander their popularity by chasing the latest fads in marketing and taking a vague and haphazard approach to bringing in the customers. Only time will tell.

For a good laugh, check out regretsy.com
That site really makes me wonder about people sometimes  ;-)

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Quicksilver Messenger This user has validated their user name.
Web Site

Thu Dec 30 21:01:34 2010

I believe when it is time for me to offer up some of my hand made creations, I will go with ArtFire. I have heard nothing but positive things about them. I just need to find the energy to juggle that ball as well.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Sandra
Web Site

Thu Dec 30 22:38:56 2010

This article made me laugh as I have had an Ebay shop2 times and an Etsy shop 2 times.
I thought it fair to give them both a second shot. I always thought in the back of my mind the old saying ''The Bigger they are the Harder they fall.''
IMHO Ebay was basically a Mercedes and Etsy at best is a VW Bug and possibly heading to being a Pinto.
I made a few sales at both of them but one sells itself all along as an auction which is expected with all that entails but the other reminds me of a large college frat house.
IMHO of course. I know many love the place.
I have sold in real world since 1996 and online since 2002 on at least 8 or 9 venues so not a novice. My vintage eggs will never be seen in one basket.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: mclovebuddy.etsy.com
Web Site

Fri Dec 31 03:41:41 2010

i've done rather well with the etsy shops i've set up to experiment, one of which is www.mclovebuddy.etsy.com.  

it's a much more open system than ebay and i the social network (in a product oriented way) will drive sales and visibility within the site. it's ingenious what they're doing. i can see where the money is going. the production value, user interface trumps first generation ebay.  as for dealing with wall street, i don't know the specifics. i would think kalin is smart enough to maintain control. that's what the new generation of founders have figured out. they are much more dynamic and savvy than their older counterparts. i really think this is his baby and i hope he can outmaneuver the suits the way mark z. at facebook has done. etsy has been a game changer for the true artisans and artists.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Watchingthe Wheels

Fri Dec 31 12:26:37 2010

If Etsy truly wishes to avoid the mistakes of Ebay, they need to stop the continual politically correct non answers and non tangible ways with which they deal with reality.

I think that it might be more important for them to look at, ''How do we compare with Amazon and Ebay.'' Both sites ARE the venue giants with Etsy nipping at their heels as far as traffic, growth and potential.

Amazon enjoys a reputation for a quality product which is reflected in their stock price. Ebay comes in at a very sloppy second and had lost quite a bit of value per share.

Etsy does tend to skim the surface of any issue with barely understandable explanations, just like Ebay.

If you look at anything within Amazon, it is very clearly explained and guess what? They have a working customer service phone number whereas, Etsy opted to fill a room with stuffed toys after promising to create a real customer service department.

Etsy IS, and at an ever increasing frequency being compared to Ebay. Cranking out the above mentioned PR article via the New York Times will not stop this ever growing comparison. Correcting the poorly implemented ''back of the house'' functionality would do much towards stopping the comparisons.

BUT, Etsy PLEASE feel free to implement a working search with fully fleshed out catagories. On Ebay it is still possible to locate goods, even though it appears as though Ebay and Etsy both enjoy creating exit ramps away from the seller's goods and steering the public to what they really want you to buy.

Etsy could also consider hiring someone that actually knows how to demand excellence in work habits and who has no problems getting rid of the incompetant.

And in the off chance that the VC's read this blog; Do you want Amazon's ROI or Ebay's? If the current course is continued, I'm predicting that you'll get Ebay's numbers as opposed to Amazon's.

Amazon offers quality whereas Ebay ran with quantiy. The results speak for themselves.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Joe Average

Fri Dec 31 13:46:37 2010

Etsy? In the bigger scheme of things they are irrelevant. Who has even heard of them?

Maybe when they are a household name like eBay, they can afford to get cocky.

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: margret
Web Site

Sun Jan 2 10:29:45 2011

really , really, want google checkout.
wish they would consider that a priority

What Can Etsy Do to Avoid eBay's Missteps?   What Can Etsy Do to Avoid eBay's Missteps?

by: Rick1313

Sun Jan 2 12:44:55 2011

Any service provider that only has PayPal as an electronic payment option should seriously, and quickly, offer other electronic payment methods. The whole ''eggs in one basket'' scenario.

My understanding is that this site does allow sellers to state that they allow paper payments. Not enough to compensate for those buyers who insist (and they have a right to do so) that they will only pay with an electronic means of payment.

Choices can only help a sight grow, for both sellers and buyers.

eBay,inc./PayPal is not dawdling around in trying to fixate in a buyer's mind that PayPal is the only electronic payment method they need (and thus avoid sellers who do not offer PayPal).

Selling venues/website vendors should take note and act post haste as eBay,inc. is trying to shape how their venues operate.

To put it bluntly. It is not your venue, but eBay.inc's.

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