Etsy Sellers Strike: Practical ideas how co-ops could help small, independent e-commerce sellers

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The Boom And Bust Of Amazon Challengers
Amazon is often perceived as one of the big winners of the pandemic, and for a good reason: due to online shopping skyrocketing, it made as much sales in 2020 as in the three previous years combined. However, there are caveats. While Amazon strengthened its position against brick-and-mortar competitors, it lost ground to two smaller e-commerce challengers: Etsy and Shopify. These two competitors increased their share price magnitudes more dramatically than the large incumbents, Amazon and eBay.
Share prices of Etsy, eBay, Amazon and Shopify
Share prices of Etsy, eBay, Amazon and Shopify
Another caveat is that the shift towards online shopping during the pandemic changed long-term shopping habits less than was expected: which has led to valuations being adjusted accordingly downwards, wiping off increases in share prices during the pandemic.
Many factors led many to make too optimistic conclusions. Not only did the pandemic cause many to be furloughed at home with few other options to spend their money on apart from online shopping, it also increased the number of people who started selling homemade goods online as they had little else to do. 
This was especially beneficial for Etsy, an online marketplace focused (but no longer exclusively only for) goods that are either handmade or over 20 years old vintage: typically home decor, jewellery, furniture, clothing, etc. The most typical buyer is a late millennial and a typical seller is a one-woman shop operating from home, generating additional earnings for themselves. 
One could make a convincing case that Etsy played its cards well during the pandemic and helped its sellers make more sales. However, many sellers could equally persuasively argue that Etsy made changes that allowed the platform to capture a greater share of the value generated at the expense of the sellers.
The standard fee paid by the sellers from sales has almost doubled from 3.5% to 6.5% since 2018 when the marketplace increased its fee for the first time in ten years. 
This sentiment manifested during the “Etsy Strike”, which organised 30,000 sellers to close their Etsy shops for a week in April 2022 as a protest against the fee increase. The campaign petition currently includes over 86,000 signatures and makes four demands in addition to scrapping the most recent fee increase.
One of them is scrapping a recently launched off-site ad program that all sellers with more than $10,000 in sales must be part of, in which Etsy advertises them and takes an additional 12-15% fee from sales made by customers who find them through the ads. The inability of sellers to opt out of the ads was perceived as questionable: if the program is good for sellers, why stop them from opting out?
The strikes also demanded fixing the perceived unfairness of Etsy expecting its sellers to respond to customers in 24 hours while the company itself provides slower or no response to sellers who have been erroneously removed from the site by mistake-prone algorithms. This demand to give authentic sellers of handmade goods the right to appeal if their store is unfairly removed is coupled with another demand: that Etsy does more to crack down on resellers who sell manufactured goods as handmade, which has been a growing problem. The final demand was ending a “Star Seller” program that the strikers perceived to favour high volume sellers.
The more than 86,000 supporters of the strike include Rob Kalin, the founder of Etsy, who expressed his support in the following tweet (breaking his 6 year break from Twitter):
Previously, he criticised Etsy for straying from its original mission of being an “anarchistic collective” and instead maximising shareholder value, a goal he called “ridiculous”. 
Some might perceive the strike as a failure, with only around 1% of all Etsy sellers participating. However, around 1% of sellers of a marketplace valued currently at over $13 billion is by no means a worthless effort: especially when considering that the organisers spent effectively no money on the campaign. If the strike were measured with metrics used by companies like Etsy to estimate the effectiveness of their marketing campaigns, its cost-effectiveness would be off the charts. 
Even if the strike did not manage to cause a big economic impact on Etsy, there are countless opportunities for such a large group of sellers to cooperate with each other in a way that provides substantial and tangible mutual economic benefits for them.
The organisers have since established a democratically governed network called Indie Sellers Guild that has stated that their goals include providing “services and resources to help sellers” (such as an online newsletter), creating “peer support spaces” (such as their Discord chat room that already has nearly 1000 users with more joining regularly) and eventually “support the creation of a co-operative alternative marketplace”. 
While the last goal is ambitious, it should not be mistaken for naivete: the organisers are under no illusions about the challenges and are aware of not yet being in a position to pursue the goal. 
The issue is not so much building an alternative marketplace but instead attracting customers to any alternatives. Most Etsy sellers have a shop also on other platforms but rely on Etsy for most of their customers. As the guild’s blog explains, Etsy provides an “instant inclusion in a search engine with more than 90 million built-in buyers… other marketplaces exist… but… none of them have buyers.” Sellers can launch a stand-alone store with relative ease using existing templates from services like Shopify and WooCommerce, but “none of these are marketplaces… you get zero buyers from joining them.” Leaving Etsy for a stand-alone store the seller owns means risking “losing all the sales that come from Etsy and (rely) on the ones that come from (the sellers) own marketing and promotion.
The organisers all but explicitly describe both network effects (everyone is on Etsy) and switching costs (losing your sales) depicted in the earlier article about interoperability. Whereas a cooperatively owned alternative to Etsy is a worthy long-term pursuit, there are many more immediately practical ways the indie sellers could use the cooperative model to produce mutual benefits.
This article describes some (hopefully practical) ideas on how the guild members could pool their selling and buying power together to collectively generate tangible and mutual benefits they could not individually afford. These ideas would be less ambitious than an alternative to Etsy: the launch and maintenance costs would be minimal, and it would not require a large critical mass of users to sustain itself or rely on network effects.
Pooling Selling Power Through Joint-Marketing
1. Easy activity for peer support: Cross-Promotion Match-Making Directory
Cross-promotions on social media or email could be a peer support activity that requires the least effort and money relative to the mutual benefit it can generate and the portion of all indie sellers that can potentially participate and benefit from it.
These can be simple reciprocal “I promote your product on my Instagram, you promote my product on your Instagram.” arrangements. It would require nothing more to start than a Google document with a list of sellers of handmade/vintage goods who want other sellers to approach them for cross-promotions, with a description of their goods and a link to their social media accounts. 
It could be called “Reciprocal Promotions Exchange”, “Cross-Promotion Circle” or “Mutual Promotions Match-Making”. Members could opt-in to be added to the “match-making directory” by ticking a box when they fill out their guild membership forms. Populating the directory would be almost like a “costless side product” that could be generated with little additional cost or effort from an activity the guild is going to do anyway: in this instance, going through  membership applications.
There are various ways to gradually develop more sophisticated arrangements for cross-promotions. Stand-alone store builders like Shopify and WooCommerce enable shop owners to improve their store with new features by installing plugins which there are thousands to choose from. Numerous plugins enable sellers to cross-promote each other in different ways that can be installed in a minute. 
For example, there is an entirely free, relatively unknown plugin called GoodCarts that enables stores to form “circles” for cross-promotions: with an already existing circle of artisans and other makers of handmade goods. The plugin creates a “digital version of coupons on the back of a store receipt”, in which customers who purchase from a circle member store receive an invitation after check-out to see offers from other circle stores. While the Goodcarts plugin itself will develop paid bonus features, they have pledged to keep this feature entirely free. 
Many other free and open source plugins enable arrangements for mutual peer support and cooperation, especially if used inventively and creatively. And there are even countless opportunities to develop exciting new plugins in the future.
2. Pooling selling power through a co-operative
One simple and straightforward way to find customers could be to launch an email newsletter that promotes handmade and/or vintage goods by guild members.
Many indie sellers could recruit a minority of their most enthusiastic customers and social media followers to sign-up for the newsletter, generating many small streams that flow to add value to a resource the sellers co-own together as a cooperative. Perhaps instead of paying a membership fee, sellers could become members by promoting the newsletter and be reciprocally rewarded with promotions in the newsletter.
The shared email newsletter could be a costless but valuable side-product that sellers of handmade goods could generate from the “business-as-usual” emails they send anyway, requiring them only to copy-paste a paragraph promoting the newsletter or add a banner ad on a sidebar of a WooCommerce or a Shopify store with a few clicks.
It would be a “renewable resource” that could be utilised without depletion or additional costs. For example, when sellers recruit new readers to the newsletter, the reader can receive a weekly newsletter for the remainder of their life with little to no cost to the guild. This contrasts with paying per click or view on Google or Facebook ads. 
Emailing is amidst a period where new technology enables upstart challengers to massively undercut pricing offered by even the biggest incumbents. Until recently, email pricing was based on a “the more emails you send, the less you pay per email” model. Cloud technology now enables effectively free email sending based on a one-time lifetime fee for an account. A service called Sendy is the flagship example, which charges $69 to set up an account, after which it costs $1 per 10,000 emails sent: 100 times less than the most popular alternatives. This makes email newsletters more feasible: emailing 10,000 people once a week costs nowadays $50/year with Sendy instead of $5000 with Mailchimp or Campaign Monitor.
The newsletter could grasp an opportunity opened by new technology to spark a virtuous cycle of compounding returns for the more comprehensive indie seller ecosystem: every new reader will make it cheaper and more accessible for future sellers to find a receptive and growing audience of interested consumers. Instead of relying on intermediaries that seek to extract monopolistic rents, the sellers would become more self-sufficient by relying on a newsletter they themselves co-own.
Pooling Buying Power Through Joint-Purchasing
1. Small activities of peer-support with shared services
Cooperative models might enable members to make savings by using shared services and resources, the provision of which is one of the stated goals for the guild.
For example, many members pay $139/year for Zoom but use it only for an hour of video meetings a day, which is like booking a hotel room for 24 nights but staying only one night. Two members in opposite time zones could be matched to share an account to save both $69. However, Zoom might not have designed or desire for its services to be shared this way. In this case, it opens an opportunity for competitors to design their services to welcome users who are turned away by Zoom for wanting to share an account or accounts. 
One such competitor is the cooperatively-owned alternative to Zoom, Meeting Coop. A group of sellers could cancel their Zoom subscriptions and save money by sharing a Meeting Coop room(s) they could book when needed. In addition, they could cooperate with Meeting Coop to develop new features tailored to their needs: such as enabling video auctions or online craft workshops. 
Video meeting rooms are one of many possible shared services. Perhaps the most appealing are services that can be purchased for a one-off fee for unlimited lifetime use, similar to Sendy.
One such example is DaVinci, a popular video editing tool that has a free basic version and a premium version that costs a one-off $289 lifetime fee, in contrast to its competitors who charge a recurring subscription. DaVinci also differentiates itself by encouraging collaboration, such as sharing of accounts. One account can be used by two users simultaneously, but there is no limit to how many users can share the two “studio rooms” by booking them at different times. Many sellers who make videos to promote their products with DaVinci could benefit from buying a premium account together with others and sharing the two “studio rooms” to cut costs: many probably already have a premium account they could share with others for no cost.
2. Pooling buying power through a co-operative
Sendy, the email service mentioned earlier, has a simple “refer a customer” program that could provide a worthwhile form of organising for the guild. All Sendy customers receive a link that can be used to invite others, with a $12 finder fee paid per customer referred.
Many sellers who supported the strike are going to switch to Sendy or similar services anyway sooner or later: a bit like how people switched from paid text messages to free messaging apps like WhatsApp. In the process, for no additional cost for themselves, they could generate a $12 commission to a referrer of their choice by simply clicking on an invite link. What if that referrer was the Indie Sellers Guild?
Indie Sellers Guild organisers have demonstrated their ability to mobilise 30,000 sellers to make an economic sacrifice for a common cause by temporarily closing their Etsy stores. Mobilising an equivalent number of sellers to save money by switching to Sendy could generate $360,000 in referral commissions to support the exact cause. Etsy’s recent fee increase led many sellers to open a Shopify store, which costs a minimum of $29/month. Shopify’s refer-a-customer program pays a recurring 20% commission: or a minimum of $69/year. 30,000 Shopify store referrals would generate at least two million annually.
This provides an opportunity for a cooperative that earns commissions from customer referrals and is owned by the referred customers: such as sellers of handmade goods that use Sendy and Shopify. It enables them to capture and pool value they can generate for no additional cost when they purchase a digital service by giving a cooperative they co-own a referral. 
The members could democratically decide to spend these earnings in whatever they perceive to be in their best interest. The most streamlined and basic cooperative mechanism of sharing profits is as rebates: if the cooperative earns a $12 referral commission from a member setting up a Sendy account, the member is paid a $12 rebate.
The commission earnings could also be invested to provide more valuable shared resources and services. For example, $360,000 earned from Sendy commissions could be used to reward 100,000 new readers with a $3.6 gift card to a member store of their choice when they sign up for the co-owned email newsletter.
In conclusion
To summarise, these ideas are based on simple reasoning:
  1. Identify something that many online sellers of handmade goods are already doing or are going to do. 
  2. Identify how they could do it in a way that creates a “byproduct”, that is as costless and effortless for them individually to produce and can be captured and pooled to collectively cut costs, increase income and save time.
For example, when it comes to joint marketing, most makers are already sending digital receipts to their customers. They could simply add a promotion of the email newsletter for handmade goods & vintage on it the seller co-owns together with other guild members. This would be costless and nearly effortless for the individual seller while adding value to a shared resource by recruiting more readers to the co-owned newsletter.
Similarly, when it comes to joint-purchasing, many makers are setting up Sendy or Shopify accounts. When doing so, they could use a referral link or promo code for no additional cost to themselves to generate referral commission earnings to a cooperative they co-own together with others in the guild.
Any group of online users whose shared interests lead them to buy the same services from the same providers could benefit from similar cooperative organising.  These ideas illustrate how an organisation like Indie Sellers Guild can form what could be called “inter-platform cooperatives”. In contrast to a “conventional” platform cooperative that owns and operates its own platform, an inter-platform cooperative operates across many third platforms. This niche online community that sells handmade and vintage goods and buys digital services was picked to illustrate how the inter-platform cooperative model could work in two product categories that exist on polar extremes: digital services are costless to copy, whereas handmade goods and vintage goods by definition cannot be mass-manufactured into countless identical replicas.
Before delving deeper into how inter-platform cooperatives could be used to reduce switching costs in digital services, it can be valuable to look at the big picture of the existing economy and its recent history. That is the topic of the next issue of this newsletter.
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