In an effort to expand their $1.35 billion enterprise, Etsy has announced that the company will officially be expanding into brick-and-mortar shops across he U.S., and eventually into a worldwide market.
Forbes discusses the reasons behind the company’s decision to expand into an offline marketplace. In the words of Etsy’s CEO Chad Dickerson:
In a world where 90% of retailing [still] happens offline, you have to have some kind of offline strategy.
With this move, Etsy shop owners can now join for a flat $100.00 fee and will be charged a transaction fee of 3.5 percent for the right to have their goods sold in an Etsy Wholesale shop. The program has been in beta testing for the last few years and users working within that beta program have not been required to pay the sign-up fee during the testing phase. The project is called Etsy Wholesale and utilizes strategic partnerships with big box retailers like Nordstrom.
More than one million active sellers sell their goods, which range from homeopathic treatments to refinished furniture, to over 40 million users on Etsy. Etsy’s business model of allowing vendors and artists to sell their merchandise at a minimal cost for listing fees and transaction fees has proven to be a successful endeavor for Etsy, according to Dickerson:
We’re in this cultural moment where uniqueness is not only desired, but it’s possible.
“We can connect you to one million active sellers around the world and 26 million active listings. In the old days of big box retailing, it was cool to have what everybody else had,” says Dickerson of Etsy’s curb appeal, but it seems that consumers now “want to have something that nobody else has.”
While the beta program has proven successful, the brick-and-mortar move has been called “counter-intuitive” by New York Magazine, with some analysts basically saying, “if it’s not broken, why fix it?”
Still, the beta program showed great promise for the concept of Etsy Wholesale. Big box retailers are finding that adding a creative twist to the merchandise that they already carry is giving them an edge over their competition. Furthermore, while Etsy Wholesale is currently dependent on these larger anchor stores, the company has not completely ruled out the possibility of specialty brick-and-mortar Etsy shops in the future.
The new brick-and-mortar program will be open to Etsy sellers officially beginning August 5th.
What do you think about Etsy’s new brick-and-mortar initiative? Do you think it will be a win or a fail?