RENEE MONTAGNE, HOST:
December is retail's biggest month and in today's Bottom Line in Business we're visiting Etsy, the site that calls itself the world's handmade marketplace. As NPR's Elizabeth Blair reports, Etsy is trying to do a balancing act between selling handmade crafts and reaping huge profits.
ELIZABETH BLAIR, BYLINE: Etsy has gotten very big very fast. This year sales are at about $800 million.
ROB WALKER: Their growth on all the major metrics you want to look at has accelerated really consistently.
BLAIR: Journalist Rob Walker recently wrote a story for Wired Magazine with the headline: "Can Etsy Go Pro Without Losing Its Soul?" Here's why: Etsy makes money from its sellers, 20 cents every time they list an item and three and a half percent of every sale. Today, there are some 800,000 sellers. But they don't all share the values Etsy promotes.
WALKER: This kind of moral purity of the handmade as a response to alienation of mass manufacturing culture, and so on and so forth; and a lot of almost political ideas that were crucial, I think, at the be ginning of the life of Etsy, but are less crucial now to probably most of sellers, but still very important to some of the sellers.
BLAIR: Etsy has gotten so big it's hard to know what motivates each seller.
HEATHER NOSS: So I was a government worker...
NOSS: ...yearning for a more creative outlet.
BLAIR: Four years ago, Heather Noss quit her day job and opened a shop on Etsy where she sells handmade stationery.
NOSS: I was at my kitchen table by myself for a year and a half, rolling every single piece of paper, printing, cutting every single piece of paper. I was my own bookkeeper.
BLAIR: Pretty quickly the books started filling up with orders for wedding invitations and Christmas cards. She hired an assistant. She rented studio space. But eventually her success became a loss for Etsy.
NOSS: I need more management tools that are not present on Etsy.
BLAIR: For example, she says the messaging system made it tough to sort through a lot of customer emails. So Noss set up another business. Now, 80 percent of her revenues come to her directly, so Etsy is making less off her than they used to.
NOSS: I love Etsy. I was able to make sales that I'm sure I never would have been able to make if I'd even attempted to, say, create my own website.
BLAIR: Etsy doesn't want its biggest sellers to go elsewhere. So they've made changes, like making it possible for sellers to take credit cards and offering online sales training.
CHAD DICKERSON: We're always looking for new ways to make our sellers more successful and find new channels for them to sell.
BLAIR: Chad Dickerson is Etsy's CEO. He says even though e-commerce is growing, the vast majority of retail sales still happen offline. So Etsy partnered with the Williams-Sonoma retail chain, West Elm.
DICKERSON: As West Elm opens up new stores around the country, they actually wholesale items from local Etsy sellers and put those items in the store.
BLAIR: But that also means that Etsy sellers will be in some shopping malls.
WALKER: It goes back to the ideology discussion of isn't Etsy supposed to be the response to the mall? Aren't we tearing down the mall?
BLAIR: Journalist Rob Walker.
WALKER: I think that the new thinking is instead of fighting traditional retail, we should figure out ways to infiltrate traditional retail on our own terms.
BLAIR: And Chad Dickerson says one of those terms is handmade. But that's another problem Etsy has been having: some sellers complain that there are mass produced goods being sold on the site, says April Winchell, who started a blog called Regretsy.
APRIL WINCHELL: Let's say I'm a buyer and I'm looking for wedding gown. One gown is $78 because it's from a factory in China, but the woman has a cute little name like Joanie Sews - and so you think it's a person. And the other gown is $600 because it really is one woman trying to make this thing for you for your wedding. Which one are you going to buy? So it sets up a really unfair competition between factories and homemakers.
BLAIR: Etsy's Chad Dickerson says they do monitor the site. He says Etsy users flag shops that look suspicious and then Etsy investigates.
DICKERSON: We ask for documentation and photos and basically proof of how the item is being produced. And then we make a decision on whether to allow that item or that shop the ability to stay on Etsy.
BLAIR: Chad Dickerson says they're working to keep 800,000 sellers around the world happy. After all, sellers are Etsy's most important customers.
Elizabeth Blair, NPR News.
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